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Case Study: Is Geothermal Cheaper Than Propane?

Home Hacks Bryson Buehrer July 10 4 minutes reading time

How much will you save if you switch from a traditional heating and cooling system to a geothermal system? We've seen massive annual savings of up to 70% on a homeowner's heating, cooling, and hot water bills, but what does this look like in a real-life scenario? The savings numbers vary widely based on where you are, and what you currently use for heating and cooling. Today, we're going to talk about propane! Since more than 10% of U.S. homes rely on propane for their heating needs, we thought it would be a great system to tackle in today's case study. Let's break down the savings when switching from propane to geothermal for this midwestern homeowner. 


Savings When Switching from Propane to Geothermal

Savings on Domestic Hot Water

Most people don't regularly think about their hot water usage, but it's something we use daily. Between showers, dishwashing, and laundry, your method of water heating permeates your everyday life. In the case of this homeowner that used propane, it amounted to almost $70 per month in added utility cost. For this homeowner - let's call her Julia - her annual Domestic Hot Water (DHW) load equated to 17.8 MMBtu (million Btu), requiring 361 gallons of propane to heat over the year. In her location, propane costs around $2.30 per gallon. She was spending almost $830 every year just to supply her home with hot water.

Now, looking at the same load assisted by a geothermal unit, we see the annual costs drop significantly. The 17.8 MMBtu load would require a mere 2,869 kWh (kilowatt-hours) of electricity. In Julia's area, electric power runs about $0.10 per kWh, and with the operation of the geothermal heat pump handling 55% of the hot water usage, this reduces her annual hot water costs to only $287 per year. That's a 65.4% decrease in yearly fees and would bring her average monthly bill down to under $24.

Savings on Cooling Costs

If your air conditioner has been replaced in the last 10 years, it's probably pretty efficient. Still, geothermal remains king, and in Julia's case represented an annual savings of 30% on cooling costs.

Julia's annual cooling load is 29.1 MMBtu, and her cooling system had to pull 1996  kWh from the grid to keep up with the summer heat. Again, with the cost of electricity in her area at around $0.10 per kWh, that put her annual cooling costs at $200 per year.

Things become really interesting when we begin to look at the differences in system efficiencies. Julia's old system operated at 14 SEER (Seasonal Energy Efficiency Ratio), while her new geothermal solution runs at 20.8 EER. This allowed Julia to pull less energy from the grid to cool her home and reduce her cooling costs to just $140 annually.

Savings on Heating Costs

This is where many homeowners see the most significant savings when making the switch to geothermal. For Julia, the savings were fantastic, with a 73% reduction in annual operating costs for heating her home. Geothermal uses a far cheaper energy source and uses it more efficiently than any traditional furnace. If you look at a "high-efficiency" propane furnace, like our homeowner's, the unit will consume 1 unit of energy and output 0.90 units of heat energy (measured in AFUE) into the home. In this homeowners case, her geothermal heat pump pulled 1 unit of electricity and distributed 3.84 units of heat energy throughout the house. That's a 90% efficiency (energy loss) versus a 384% efficiency from the geothermal unit.

All in all, with Julia's traditional propane solution, her annual operating costs were set at around $3,125. After she made the switch to geothermal, her operating expenses were cut by a total of 68%, bringing them down to a very reasonable $988 annually. See the GeoAnalyst® reports below:

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Interested in learning more about how much you can save by making the switch to a geothermal system? Contact us today and get a free geothermal design!

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Bryson Buehrer
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