Upgrading your home from a conventional heating and air conditioning system to geothermal gives you some powerful benefits: Geothermal is safer, quieter, more energy-efficient, and helps you reduce your home’s carbon footprint.
Today, we want to put those benefits aside and focus on one: Saving money. Millions of homeowners in the Northeast will save money on their annual heating and cooling bills by switching to geothermal.
We recently used Dandelion’s software to calculate the savings for a sample homeowner, who we’ll call Danny. Danny owns a 2,500-square-foot Victorian-era home in Geneva, NY that runs on heating oil. If Danny switches to geothermal and pays in cash, we expect him to save over 76 percent on his heating and cooling costs per year. If Danny switches to geothermal and decides to finance his system, we expect him to save 51 percent on his heating and cooling costs per year.
Here’s how we got to those numbers.
Danny’s 2,500-square-foot house has a 15-year-old furnace running at 75 percent efficiency. Based on his home's size, age, and location, we calculate that it uses around 1,084 gallons of fuel oil per year for heating. At the current price of fuel oil of $3.40 per gallon, plus the operating costs of a fuel oil furnace, Danny spends about $3,756 each year on heating his home. At current electricity prices of roughly 9 cents per kWh, we estimate Danny will spend around $226 per year on electricity to run the air conditioning. That comes out to a total energy spend of $3,983 per year for fuel oil heating and conventional air conditioning.
Now, let’s compare that to the cost of running a Dandelion Home Geothermal System instead. Danny can choose to pay cash or finance his system for no upfront cost and low monthly payments over 20 years.
Here’s the cash option: Danny will pay around $11,433 in cash for a Dandelion Home Geothermal System (after state and federal incentives). In the process, he will totally eliminate his fuel oil and conventional air conditioning bills.
To operate his Dandelion Home Geothermal System, which provides year-round heating and air conditioning in a single unit, Danny can expect to spend just $950 per year in electricity. That’s a savings of $3,033 per year on heating and cooling his home – over 76 percent cheaper than his old conventional system.
Since he paid $11,433 in cash for the geothermal system, he can expect the system to pay for itself in under 4 years!
Now, the financing option: Danny pays nothing upfront, and $82.31 per month or $988 per year on loan payments. Bundling his monthly loan cost with his normal operating costs (above), Danny will spend about $1,938 per year with geothermal if he chooses to finance his system. In the process, he’ll get a brand new heating and air conditioning system -- and save money doing it. Compared to his old system, Danny will save $2,045 per year heating and cooling his home with financed Dandelion Home Geothermal -- saving 51 percent annually at no up-front cost. And since Danny didn’t pay anything upfront, the savings are immediate.
It’s important to remember that the prices of fuel oil fluctuate, and were as high as $4.40 per gallon in New York state as recently as 2014. With higher oil prices, Danny’s savings with geothermal would be even greater.
See if your home is eligible for a Dandelion Home Geothermal System here. If it is, we look forward to calculating savings for your home.