I have a gas furnace that is about 20 years old and on its last legs. I am considering replacing it with a geothermal system or a high-efficiency (96.6% AFUE) gas furnace. I understand the huge monthly savings geothermal offers, but how does the high-efficiency gas furnace compare? Thank you.
Answer from Green Energy Efficient Homes
In general a ground source geothermal system will cost you quite a bit more up front than a high-efficiency furnace, but will probably save you a lot of money over its operating lifetime, when compared to any form of fossil-fuel based heat, because you are getting free heat from the earth (and cooling as well) for just a small contribution of electricity to run the system.
According to the US Department of Energy, a geothermal heat pump should cost about $2,500 per ton of capacity, with $7,500 for a 3-ton unit being typical for a home application. If you compare this to the cost of a high efficiency furnace plus air conditioner (since the geothermal heat pump can do both), you’re probably looking at $4,000. Of course that assumes you actually need central air conditioning, or have an inefficient air conditioner that needs replacing.
When I had a geothermal company give me a quote a few years ago for my Toronto home, a geothermal system (with vertical loop) was going to cost $35,000, while a horizontal loop, assuming there had been a yard big enough for them to dig it into, would have cost around $20,000. At that price, there was no way I could justify a geothermal heating system. But clearly prices have come a long way down since then, and you can also get generous tax credits in many states and provinces (and from some federal governments as well) that offset a chunk of the cost. Note that you can also get generous tax credits for installing high-efficiency furnaces and air conditioners, so if you’re doing a cost comparison don’t forget to factor in the credits on both sides of the comparison.
Let’s do a little math to figure out how much energy you’d save using a geothermal system, compared to a 96.6% AFUE furnace. A typical geothermal system can extract between 3.8 and 4 units of heat energy from the ground, per unit of electrical energy consumed. That means the system appears to be almost four times as efficient as the high-efficiency furnace (380% compared to 96.6%).
Except that the electricity itself is not generated at 100% efficiency. If it is generated from a fossil fuel in a high efficiency gas turbine, only 60% of the energy in the gas is converted into electrical energy. With transmission losses of 6-9% of that 60% between the power plant and you, only 55-56% of the original heat energy from the natural gas even reaches your home. For older coal-fired plants, which can operate at efficiencies in the low to mid thirties, with similar transmission losses, only 30-35% of the heat energy from the coal reaches your home as electricity. So now we have a geothermal system at 380% efficiency running on gas-generated electricity that arrives at your home at 30-56% efficiency, which means the geothermal system is only operating at somewhere between 115% (coal) and 215% (gas) efficiency in terms of total energy used in the system. Compare that to the 96.6% AFUE of a new gas furnace, and the geothermal system is somewhere between 11% and 107% more efficient than the 96.6% AFUE furnace.
For a total cost of ownership comparison, you then have to make some assumptions about raw energy costs. It seems pretty likely that in the long term both coal and natural gas will become considerably more expensive than they are now. Supplies of natural gas are dwindling, and with the likelihood of carbon cap and trade legislation, a carbon tax, or carbon sequestration requirements on generating stations, there will be strong pressure for power generators to switch away from coal to natural gas (since coal produces a lot more CO2 per kilowatt hour of electricity generated than natural gas does). That will drive prices up for coal-generated electricity (even if the coal price itself falls as a result of reduced demand – because of the added cost of carbon trading, carbon tax, or sequestration), and it will also drive up demand for natural gas (as more and more new power plants are built to run on the less harmful fuel). The end result is increased natural gas prices. So whatever you think you’ll be paying for natural gas now, you’ll be paying a lot more for it in 5-10 years – double or more sounds reasonable to me.
If your home site lends itself to a horizontal loop installation, which is typically much less expensive than a vertical loop, you may be able to justify a geothermal installation on economic terms alone. But if you want to do your part to reduce your carbon footprint, I would think a geothermal system can easily be justified on a combination of financial and environmental grounds. Consider the fact that if you switch to a green electricity supplier, you can run a geothermal system and not release any CO2 into the atmosphere, whereas with a natural gas furnace you pretty much can’t avoid releasing CO2. Not only that, but your energy saving geothermal system can heat your home, cool your home, and even heat your hot water, all with no CO2 emissions on site and with little human-generated energy use.