Homeowners nationwide are turning to climate-friendly ways to heat and cool their homes, moving away from gas furnaces in record numbers. Boulder County is also embracing this trend.
Last year, over 250 Boulder residents installed electric heating with air-source heat pumps through the county’s rebate program. Yet a more energy-efficient, though costlier, alternative exists: harnessing earth’s winter warmth through geothermal systems.
Read: How Boulder is warming up to cold climate heat pumps
In 2023, only two Boulder County homes installed geothermal, or ground-source, heat pumps through the rebate program to draw heat from underground. As the technology advances, it will likely become more common. For now, in Boulder, electrifying commercial buildings and large multifamily residences using geothermal can be more cost-effective. Much of the money spent on geothermal systems goes to drilling deep wells, and for larger projects, the efficiency gains quickly recoup those costs.
But if innovations reduce the cost and lessen the drilling impact, neighborhoods of single-family homes could see a spike in this technology.
Micah Parkin, director of 350 Colorado, a nonprofit focused on combating climate change by curbing oil and gas operations, had a geothermal heat pump installed at her Old North Boulder home last month.
“I chose ground source because it uses less energy than an air-source heat pump,” Parkin said. “And of course, we’re trying to use as little energy as possible while maintaining comfort.”
As Boulder Reporting Lab watched, a drill chewed 300 feet into the earth under Parkin’s driveway, excavating one of two wells that would allow her home to stay cool in the summer and warm in the winter.
For those thinking of replacing their old gas furnace with an electric heat pump or a geothermal system, here are factors to consider.
Air-source vs. geothermal heat pumps: efficiency and benefits explained
Air-source heat pumps often look like large metal boxes with vents and a fan, similar to air conditioning units. They typically sit outside a building or on its roof and feature a coil for exchanging heat with the air.
Heat pumps warm buildings by extracting heat from the outside air and moving it inside, but their efficiency decreases in extreme temperatures. In winter, heat pumps struggle to extract warmth if temperatures fall below freezing, increasing electricity usage, though new cold climate heat pump technology enables them to operate well even during Colorado’s cold snaps. In summer, when functioning as air conditioners, they work harder to expel heat on a 95-degree Boulder day.
Geothermal systems, or ground-source heat pumps, differ from air-source heat pumps by having no visible outdoor units. Instead, they use a network of underground pipes, sometimes called a loop field, containing a fluid solution to exchange heat with the consistently temperate ground. Inside a building, the main visible component is the heat pump unit, resembling a furnace and connected to the ductwork.
Geothermal heat pumps function like air-source heat pumps in heating and cooling but use the earth as their heat sink. In winter, they draw heat from underground; in summer, they dispel heat into the ground. This significantly improves energy efficiency since temperatures below the earth’s surface remain relatively constant year-round. Even if it’s below freezing above ground, it could be 50 degrees a hundred feet down.
Geothermal systems are often twice as expensive
Experts say the average cost to install an air-source heat pump is around $10,000, but this can vary by a few thousand dollars based on home size and insulation. Geothermal systems can cost more than double that, and if the drilling area is hard to access, the price can rise substantially.
Contractors in Denver told Boulder Reporting Lab that the average total cost of an air-source system, after incentives, ranges from $13,000 to $16,000. In suburban areas, the total cost for geothermal installations is between $30,000 and $35,000.
“But in Denver proper, in an urban area, it can be $40,000 to $60,000, or more,” said Aydin Mehr of UniColorado, a heating, air conditioning, and electrification contractor in the Denver Metro area, “because the type of drilling is very different.”
A new furnace combined with an air conditioning unit, similar to a heat pump’s dual functions, typically costs about the same as an air-source heat pump.
Lance Nelson, president of CanAmerica Drilling, explained that drilling can cost $30 to $60 per vertical foot. For Parkin’s Old North Boulder home, this meant drilling could cost around $20,000 or more.
Nelson noted that the major costs of geothermal drilling are not from the drilling itself but from associated overhead, such as accommodations for workers and mobilizing the drilling rig. He estimates it takes about five to seven years for homeowners to recoup the costs of geothermal systems over air-source pumps.
In larger projects, geothermal becomes more cost-effective and common. For instance, after completing Parkin’s well, Nelson’s drill moved to a Snowmass project involving 45 wells for a condominium. He also mentioned potential projects like the Reno airport, indicating growing demand.
Local experts differ on geothermal heat pumps for homes
Stuart Cummings, co-founder of Go Electric Colorado, argues that geothermal heat pumps are not the best choice for most homeowners due to their high cost and significant disruption to property.
“Geothermal,” he said, “is almost always not recommended.” Besides cost, “the performance differential with the top-tier air-source systems is pretty small.”
However, Shawn Rupp, a specialist for Boulder County’s Partners for a Clean Environment program, sees promise in geothermal, especially in new residential construction where the costs can be embedded into mortgages or shared. “The loop field or boreholes can be installed before the home is constructed, and the cost of the system can be financed in the mortgage,” Rupp said.
He noted that when a developer builds an entire subdivision with geothermal systems for every home, the costs can be distributed among homeowners. He cited the Whisper Valley development outside Austin, Texas, as an example. This approach could also be implemented in established Boulder neighborhoods if residents decided to switch to geothermal simultaneously.
Rupp mentioned that tax credits and rebates under the Inflation Reduction Act increase the financial viability of geothermal projects, covering 30% of project costs. These can be combined with additional rebates from Boulder County, Xcel Energy and the State of Colorado. With Boulder expected to ban gas in new construction this winter, except for some commercial buildings, geothermal becomes a more attractive option. Rupp explained, “All of these financial incentives can be stacked,” which can “significantly offset the upfront cost of a system.”
Read: Boulder City Council moves to ban gas in new buildings, aligning with climate goals
Rupp believes innovation will make geothermal energy increasingly accessible to homeowners despite its stagnation due to high costs and a shortage of skilled contractors. With growing demand, the industry could see advancements like fewer wells per project, reduced drilling times and compact rigs that fit into smaller spaces.
Even if homeowners opt not to invest in geothermal systems, utility companies might shift from selling gas to providing geothermal heat. Rupp mentioned U.S. gas utilities piloting projects where they manage all underground equipment, citing a program in Framingham, Massachusetts.
CanAmerica currently has three competitors in Colorado, but its president, Nelson, said there’s more than enough business to go around. While drilling Parkin’s well, he said his company was financing another drilling rig to handle the expected increase in demand as more municipalities ban gas in new construction.
“The future is bright,” Nelson said.
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