Empower Your Home, Enrich Your Future
Geothermal Power
Geothermal Power
Typical energy savings: 30-60% on heating/cooling costs
Summary Survey of Your Current Options
1. Horizontal Loop Systems
- Most common for homes with large yards
- Cost: $10,000-$30,000
- Requires 1/4 to 3/4 acre of land
- Trenches 4-6 feet deep
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2. Vertical Loop Systems
- Ideal for smaller lots
- Cost: $20,000-$45,000
- Needs minimal land area
- Drilling 100-400 feet deep
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3. Pond/Lake Loop Systems
- Lowest cost option if water source available
- Cost: $8,000-$25,000
- Requires nearby water body
- Minimal land disruption
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Best Environments
- Any climate zone works
- Most cost-effective in areas with extreme temperatures
- Ideal soil conditions: moist, easy-to-drill ground
- Sufficient property space or water access
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Brief History - Timeline and Trends
- First residential systems: 1940s
- Current US installations: Over 2 million homes
- Growing 10-15% annually
- New innovations reducing installation costs
- Federal tax credits available (up to 30% of cost)
- Expected system lifespan: 25-50 years
- Typical energy savings: 30-60% on heating/cooling
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Investment Perspective
- Initial cost higher than traditional HVAC
- Payback period: 5-10 years
- Increases property value
- Minimal maintenance costs
- Consistent performance regardless of weather
- Reduces carbon footprint
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Summary: With an ROI of almost 300%, it is a much better investment than historical stock market investments, with minimized risks!
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Investment Analysis Scenario
This presents the potential ROI and TCO using geothermal energy in an "average" (3 bedroom, 2 bathroom, family of four) house located in Boulder County, Colorado.
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This location is chosen because it needs cooling in the summer and heating in the winter.
Initial Investment: $35,000
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Federal Incentives:
- 30% tax credit: -$10,500
- Residential Clean Energy Bonus: -$2,000
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State/Local:
- Colorado RENU loan program: Low-interest financing
- Boulder County Renewable Energy Grant: -$3,500
- Xcel Energy rebate: -$2,000
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Net Initial Cost: $17,000
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Annual Financial Impact:
- Energy savings: $1,950
- Maintenance costs: -$150
- Property tax benefits: $300
- Depreciation (MACRS): $1,400 first year
Net annual benefit: $3,500
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20-Year Analysis:
- Total savings: $70,000
- Total costs: $20,000
- Net benefit: $50,000
- ROI: 294%
- Payback period: 4.8 years
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Carbon credits and additional utility incentives may be available.
A Home's Hidden Heat Source:
Understanding Geothermal Energy
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Geothermal energy harnesses Earth's natural underground heat. Think of our planet as a giant battery that stores heat from the sun and its core. This heat remains at a fairly constant temperature year-round, usually between 45-75°F just a few feet below ground.
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How It Works
Residential geothermal systems, also called ground-source heat pumps, use underground pipes filled with fluid to transfer heat between your home and the Earth. In winter, the system pulls heat from the ground into your home. In summer, it removes heat from your home and deposits it underground.
Detailed Data for the Analysis Scenario (Above)
Initial System Cost
Base installation: $35,000
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Federal Incentives:
Tax credit (30%): -$10,500
Clean Energy Bonus: -$2,000
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State/Local Incentives:
Boulder County Grant: -$3,500
Xcel Energy rebate: -$2,000
Net Initial Cost: $17,000
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Annual Operating Costs
Electricity usage: 4,800 kWh
Electricity rate: $0.146/kWh
Annual electric cost: $700.80
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Maintenance:
Annual service: $100
Filter replacement: $50
Total Annual Operating Cost: $850.80
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Annual Savings:
Current HVAC costs: $2,800
New operating costs: -$850.80
Property tax benefit: $300
Depreciation benefit: $1,400
Net Annual Savings: $3,649.20
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Depreciation Schedule (MACRS):
Year 1: 20% = $7,000 × 20% tax rate = $1,400
Year 2: 32% = $7,000 × 32% tax rate = $2,240
Year 3: 19.2% = $7,000 × 19.2% tax rate = $1,344
Year 4: 11.52% = $7,000 × 11.52% tax rate = $806.40
Year 5: 11.52% = $7,000 × 11.52% tax rate = $806.40
Year 6: 5.76% = $7,000 × 5.76% tax rate = $403.20
20-Year ROI:
Initial investment: -$17,000
Annual savings × 20: $73,000
Depreciation benefits: $7,000
Avoided HVAC replacement: $8,000
Property value increase: $15,000
Net 20-year benefit: $86,000
ROI = ($86,000 / $17,000) × 100 = 505.88%
Simple payback = $17,000 / $3,649.20 = 4.66 years
Notes:
- Assumes 20% marginal tax rate
- 2.5% annual energy cost inflation
- 3% property value appreciation
- Excludes potential carbon credits
- RENU loan program can finance remaining costs at 2.75% APR