Is Geothermal Heating Cheaper Than Natural Gas?

Written by MiquelM in Heating

Whenever we upgrade houses or start building a new one, we always consider geothermal heating and figure out if it’s really smart to have one. After all, it requires a substantial investment and is one of the most expensive upgrades you can have, but let’s take it up a notch by comparing geothermal heating and natural gas.

Geothermal heating is not cheaper than natural gas, but only for the initial cost. When it comes to the cost of operation and maintenance, things can get complicated. You’ll have to consider various factors, including the cost and reliability of services, and more—things that may vary by location.

There’s no simple way to determine whether geothermal heating is really cheaper than natural gas, but we’ll discuss all the factors you need to consider to help you make a wiser decision. Stick around because this article will provide you with insights that can help you find the cheaper option.

The Cost of Geothermal Heating and Natural Gas

When looking at heating options—or any household upgrade—most homeowners always look at the initial cost. There’s nothing wrong with it because it’s the one that’ll take a huge chunk of cash from your budget. 

Unfortunately, making your decisions based on the initial cost may not be the wisest thing to do. You’ll have to consider many factors, and many of them can affect the efficiency of geothermal heating and natural gas.

For example, it may be cheaper for you to install a high-efficiency HVAC system for natural gas for your home. However, if your house is a bit off the road, you’ll have to spend a bit more to tap into it. There are some people who’ve spent at least $4000 just to tap into natural gas in their area.

If you’re thinking about installing geothermal heating because it’s more efficient, you still need to consider the actual reduction in energy consumption versus the cost of installing one. It may be cheaper to use geothermal heating in the long run, but will the savings really pay for the installation in a reasonable timeframe?

Multiple variables can affect the actual cost of geothermal heating and natural gas. Although important, homeowners shouldn’t only consider the cost of installation. The cost of operation, the actual reduction in consumption, and the reliability of services also come into play. For example, different areas have different pricing for natural gas and electricity.

These variances in pricing can make it even more complicated to determine the cheaper option for homeowners.

Last, but not least, there is also sustainability to keep in mind and how the fight against climate change could modify prices in the long run. To help you make a more educated decision on which option will be cheaper, let’s talk about the factors that affect the total cost.

Factors Affecting the Total Cost for Geothermal and Natural Gas

  • Cost of installation: How much is the total amount you’d have to spend to install geothermal heating or natural gas? Usually, natural gas is a much cheaper option unless you need additional things, such as tapping into the source. This metric is crucial because it helps you determine your return on investment and which of these two will be cheaper in the long run.
  • Cost of electricity: Geothermal heating uses underground heat to regulate the temperature inside your house. However, it still needs electricity to run, and it can affect the cost of running geothermal heat pumps. Sure, it’ll help you reduce your energy consumption, but will your savings be enough to pay off the cost of installing one?
  • Cost of natural gas: Often, using an HVAC system for natural gas will be slightly more expensive than using electricity, especially if you also took your electric consumption off-grid. To determine which of these two is a more practical option, you’d have to take the cost of natural gas over a long period.
  • Reliability of services: If your area has a history of frequent electric failures that lasts for several hours, using geothermal heating will be more costly than your initial investment. You’d have to invest in a generator or another electrical circuitry in the event of a power failure. Many homeowners tend to miss considering this crucial factor, but nobody wants to invest thousands only to find out that they need to invest more.
  • Federal tax credits: Homeowners may be eligible for a 26% federal tax credit for the total cost of geothermal heating, including labor and installation. It’s one of the biggest incentives that can make homeowners switch to geothermal heat pumps, but there are requirements that your system needs to have to be eligible for it.
  • Size of the house: Despite the efficiency you can get from geothermal heating, it may not always be wise to have it in your house. A small or medium-sized house may get better returns from having better windows, insulation, and air sealing than geothermal heat pumps. Even if you can save money from electricity, the savings may not be enough to pay for the whole system.
  • Sustainability: As we said, the fight against climate change is undergoing and, in the future, there will be more and more incentives to use sustainable heating systems, while non-sustainable ones become more expensive. While natural gas is not as pollutant as fossil fuels, it is still a non-renewable energy source, so we can expect the price to get higher with time.

Can You Really Save Money From Geothermal Heating?

Geothermal heating uses underground heat to help you regulate the temperature inside your house, so it must be cheap, right? If you consider all of the factors we’ve discussed, we can say that geothermal heating is efficient and cheap. Unfortunately, installing one in your home isn’t.

Although the cost of using geothermal heating depends on your area, it is almost always cheaper than natural gas. Geothermal heating may help you reduce your energy consumption and make your home a bit more eco-friendly. However, it doesn’t necessarily mean that you can save money or get a good return on investment with it.

Many experts say that unless you have a medium or large house, geothermal heating won’t give you the savings you need to pay off the installation cost in a reasonable timeframe. There are many other ways to make your home more comfortable (and sustainable) for you and your family, and installing geothermal heating—or natural gas for that matter—may not be the best investment you can make. For example, adding insulation would be an initial better step than changing your heating system.

So, we wouldn’t recommend tearing down your current system and replacing it with either geothermal heating or natural gas. However, if you already decide on switching or your current system is already due for a replacement, you’re already on your way to make a more educated decision.

Should You Switch to Geothermal Heating or Natural Gas?

If we take sustainability out of the equation, you can’t go wrong with either geothermal heating or natural gas. You can use the factors that we’ve shared with you to determine which of the two will be cheaper. However, we believe that because of climate change, in the long run, geothermal heating will be a much better option for you.

Having said that, if you’re only planning to replace your current (still working efficiently) system, it may not be wise to make the switch. There are other options (such as adding insulation) That will give you better returns.

Conclusion

Using geothermal heating is a lot cheaper and more efficient than natural gas. However, the amount you’ll need to install one will be significantly higher. So, it would be best to consider the factors we’ve shared to determine which of these two will be cheaper for you.

If you take into consideration sustainability and climate change, the answer is clear, geothermal heating is a better option.

Without putting sustainability into the picture, though, there’s no straight answer to this question because different areas have different pricing and service conditions—things that only you have the answer to.

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