Geothermal Heat Pump Payback Calculator

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Table of contents

• How to use
• Common mistakes
• Definitions
• Methodology
• Limitations & assumptions
• Sources

COP: Coefficient of performance. It means the heat made for each unit of electricity used. A COP of 4 means 4 units of heat are delivered for 1 unit of electricity.

Btu: British thermal unit. It is a small unit of heat energy used to compare fuels.

kWh: Kilowatt-hour. It is the electricity unit shown on most electric bills.

Therm: A natural gas billing unit equal to 100,000 Btu in this calculator.

Delivered heat: The useful heat that reaches the home after current heater efficiency is applied.

Bill-based payback time: The estimated years of heating bill savings needed to recover Extra upfront cost after incentives.

Net savings after chosen years: Total estimated heating savings over Years to compare minus Extra upfront cost after incentives.

Mistake: Choosing Current heating fuel that does not match the bill units you enter.
Fix: Match Current heating fuel to Heating fuel used in the last 12 months, such as therms for natural gas or gallons for propane.

Mistake: Putting a whole-house energy bill into Heating fuel cost in the last 12 months when only part of it was for heat.
Fix: Use the heating-only part if you can, or enter your best heating-only estimate for Heating fuel cost in the last 12 months.

Mistake: Entering only the supply charge in Electricity price for geothermal.
Fix: Use the full delivered Electricity price for geothermal when your delivery charges are billed per kWh.

Mistake: Treating Extra upfront cost after incentives as the full geothermal install price.
Fix: Enter the geothermal cost minus the non-geothermal system you would buy instead, after rebates and tax credits.

Mistake: Leaving Current heater efficiency at 90 percent for electric resistance heat.
Fix: Set Current heater efficiency to 100 percent when the old system is electric resistance heat.

Mistake: Reading Net savings after chosen years as a guaranteed project profit.
Fix: Use Net savings after chosen years as a heating-bill estimate only, then add financing, maintenance, cooling, and upgrade costs separately.

• This is a heating-only estimate. It does not include cooling savings, maintenance changes, service-panel work, ductwork, loop repairs, financing, tax timing, or home value changes.
• The last 12 months may not match a normal weather year. A colder or warmer year can move the payback result.
• Geothermal heating COP is treated as one seasonal average. Real COP changes with ground loop design, entering water temperature, thermostat settings, and equipment condition.
• Current heater efficiency is an estimate. If the old system is less efficient than entered, geothermal savings may be higher; if it is more efficient, savings may be lower.
• Fuel heat contents are average conversion values. Actual natural gas, propane, and heating oil energy content can vary by supplier and location.
• Yearly energy price increase applies the same percent increase to the old heating fuel cost and the geothermal electricity cost. It does not model fuel prices moving differently.
• If Yearly heating bill savings is zero or negative, the calculator shows no finite heating-only payback because yearly savings do not recover the extra upfront cost.

Heat from the current system

The calculator starts with your actual Heating fuel used in the last 12 months. It converts that fuel to heat energy and then applies Current heater efficiency to estimate useful heat delivered to the home.

delivered_heat_btu = annual_fuel_used * fuel_heat_content_btu_per_unit * (current_heater_efficiency_percent / 100)

The fuel heat content used is 100,000 Btu per therm for natural gas, 91,500 Btu per gallon for propane, 138,500 Btu per gallon for heating oil, and 3,412.142 Btu per kWh for electric resistance heat.

Geothermal heating electricity

A geothermal heat pump uses electricity to move heat. Geothermal heating COP is treated as the average heat delivered per unit of electricity used for heating [3].

geothermal_heating_kwh = delivered_heat_btu / (geo_heating_cop * 3412.142)

geothermal_annual_heating_cost = geothermal_heating_kwh * electricity_price

Savings and payback

Yearly heating bill savings is signed. A positive value means geothermal is estimated to cost less for heating. A negative value means geothermal is estimated to cost more for heating under the entries used.

annual_heating_savings = annual_fuel_cost - geothermal_annual_heating_cost

if net_extra_upfront_cost <= 0, payback_years = 0

if net_extra_upfront_cost > 0 and annual_heating_savings > 0, payback_years = net_extra_upfront_cost / annual_heating_savings

if annual_heating_savings <= 0, payback_years = no finite payback

Multi-year net savings

For Net savings after chosen years, the calculator grows the yearly savings by the Yearly energy price increase, then subtracts Extra upfront cost after incentives.

if g = 0, net_savings_after_years = annual_heating_savings * comparison_years - net_extra_upfront_cost

if g != 0, net_savings_after_years = annual_heating_savings * (((1 + g) ^ comparison_years - 1) / g) - net_extra_upfront_cost

Here, g is Yearly energy price increase divided by 100.

Worked mini-example

Example: 1,000 therms of natural gas, $1,600 heating fuel cost, $0.16 per kWh electricity, $20,000 extra upfront cost, 90 percent current heater efficiency, and COP 4.0 gives delivered heat of 90,000,000 Btu.

geothermal_heating_kwh = 90000000 / (4.0 * 3412.142) = 6594.10 kWh per year

geothermal_annual_heating_cost = 6594.10 * 0.16 = $1055.06 per year

annual_heating_savings = 1600 - 1055.06 = $544.94 per year

payback_years = 20000 / 544.94 = 36.7 years