New York Years to System payoff

Discussion in 'General Discussions' started by Reddart67, Jan 28, 2020.

  1. Reddart67

    Reddart67 New Member

    I’ve tried to estimate years to get system payoff. Looking at this study (, assuming a $20,000 cost after rebates, it looks like the average system savings would be much more that the 7-10 years that is often stated (more like 15 years), and maybe only the best ones in that study would be in the 7-9year timeframe. If the initial cost is higher, it will be even worse.

    I know there are many reasons to go geothermal other than cost, but this is giving me pause. Is there anything about this study or the estimates they use that is flawed for some reason?
  2. waterpirate

    waterpirate Well-Known Member Industry Professional Forum Leader

    Hi and welcome!
    Every situation is different. I chose years ago to never talk about payback, this is the reason. Everything we do in life is a choice. We make choices based on need, feelings, even philosophy. No other appliance or fixture in your home is purchased based on pay back. Choices are based on initial cost, operating cost, and life expectancy of the appliance. When we look at all the factors I mentioned, every persons situation will be different. Do your homework, get the numbers, and make the best choice for your situation. Geothermal is a option to be considered, not a wonder fuel as it is marketed, NY being the worst offender for marketing.
    Hope this helps
  3. ChrisJ

    ChrisJ Active Member Forum Leader

    I looked at it this way, homes need a heating/cooling system. I was building new.

    So the money to be paid by savings was the difference between the cost of a traditional system and the ground source system.

    Of course it's different for a retrofit situation unless the fossil fuel system is ready to be replaced.
  4. Deuce

    Deuce Member

    When I built in 2015 / 2016 I chose a WF 4 ton and a WF 2 ton system. The cost was about $5,000 more after tax rebates than a Trane 20 SEER air to air system. I live on the VA Outer Banks and the outdoor compressor of an air to air system has a 8 to 10 year life because of the salt air, my WF system could last 2 to 3 times longer. Payback for me is about 4 to 5 years.
    Last edited: Jan 29, 2020
  5. Reddart67

    Reddart67 New Member

    It would be a retrofit. Currently an 8year old oil furnace, with air handler and evaporator for A/C (but would still have to purchase a condenser to have A/C) in a 1700sf ranch with a partially conditioned basement (depends if the registers are opened in the small finished area). Hot water heater electric is 50 gal, also 8 years old.

    So we get some savings by considering the cost of an A/C compressor and installation. The furnace isn’t that old, so it’s not a slam dunk in terms of needing to change it out soon.

    Looking at the pricing of systems, I don’t see how it would be lower than 20K installed after rebates (or am I mistaken?). I am on an acre plot, so I assume a horizontal loop could be used, which helps the price?

    Based in the study I referenced, besides the breaking even point being closer to the 15yr mark, with financing assuming a 10 yr loan, average monthly cost will be higher than if I keep the current system. If we were around the 8yr payoff point, then the total cost would be less than the current utilities, and that would be more of a slam dunk.

    I understand marketing and all that, but it just makes it not as much a sure thing in my mind looking at the numbers, compared to the ”5-7 years” I often see claimed.

    For sure, it would still be worth it if I end up living in the house for a long time, but one never knows how that will work out in the future. I’d like to be here for the long term, but with jobs, you never know.
    waterpirate likes this.
  6. gsmith22

    gsmith22 Active Member Forum Leader

    the problem with the payback/years to system payoff is that it isn't a straight forward calculation and the calculation doesn't yield a singular number. There are lots of variables and those variables themselves can vary! Done correctly, a payback calculation is really a time range and not a specific date/month/year in the future. As an example, you don't know what the future weather will be. The best you can do is to use historical weather bin data for the average year. But the immediate future could be warmer or colder-weather tends to be trendy. And you need to know the weather to be able to discern how often your equipment is going to run/burn fuel. On top of that, you don't know future fuel costs (elec, nat gas, propane, etc.). You could apply historical rates of increase but that could backfire too as they can be quite variable over short runs. Another issue is that if you current equipment isn't near its end of life, you are effectively throwing away money replacing a functional system. That would probably only be recommended if your current equipment isn't all that efficient and gains in efficiency can offset the cost of new equipment. I would also suggest that geo shouldn't be looked at in isolation and that payback for all types of heating/cooling equipment (elec, nat gas, propane, etc.) be investigated to be able to make a real decision.

    For what it is worth, I did this exact series of calculations following the procedure laid out in the IGSHPA's Residential and Light Commercial Design and Installation Manual. Its a huge spreadsheet that took hours to create and is specific for my house/location. I had 30 year old propane furnaces and air conditioners with terrible efficiency (65% AFUE; 9 SEER) to replace. I have no access to natural gas so wood, propane, fuel oil, and electricity were my only fuel choices for equipment. By switching from propane heat, propane hot water, and air conditioning to a geo system for heat, a/c, desuperheaters+heat pump hot water heater for hot water, I estimated savings of just under $6000/year (assuming historical average weather and current constant fuel costs over that timeframe). Because of the 30% federal tax credit when I installed, need for new equipment anyway (it was worth $0 to keep it), and the extreme savings of getting off propane (don't even get me started on the propane industry), my payoff calculation came to 5.6 years. Make the weather colder, propane and oil more expensive and payback time drops even more. Warmer weather and cheaper fuel and payback time grows. So far its been a warm winter likely lengthening my payback time. (Should I root for a cold future :)) If you have newer more efficient equipment, have access to natural gas, or wait too long to get the highest tax credit, this could easily become 10 or 15 years. I would suggest that if you have access to natural gas, geo is probably never going to make much sense unless you are "super green" and want to just stop burning all fossil fuels (no judgement, different strokes for different folks).

    On top of all of this, there are non-calculable benefits to the geo that I have found that may swing you in its direction. Because I am not burning fuel any more for heat, there is a lot less air infiltration due to the elimination of "make-up" air for the combustion. Which in turn has now regulated the indoor humidity much better (its been 45 to 50% all winter with no humidifier) because my equipment isn't sucking cold, dry air in from outside to burn fuel. I have also found the variable speed units I have keep the temperature far more constant than the furnaces we had prior (likely helped by the reduced air infiltration). Finally, I plan to also install solar panels so that I can make my own "fuel". I guess you could assume this can be done with wood burning equipment but certainly not natural gas, propane, or fuel oil based equipment. Hope some of this helps with your decision making.
    Last edited: Feb 1, 2020
  7. Timothy Fossa

    Timothy Fossa New Member

    I concur that solar is a great match with a geothermal system. I have it with my system and they work well together. Yes it’s a lot of capital investment, but given the present low money market returns it’s a great alternative. Particularly when utility bills are paid with after tax earnings while solar net metering is pretax .
  8. Noobie

    Noobie Member

    I’m not an economist, but I believe that they refer to some of the benefits as “externalities.” I’m not sure when a spreadsheet would calculate my break even point, but spreadsheets don’t assign a value to how pleased I am to no longer have fossil fuels in my house, enjoy the smooth and effortless heating and cooling, appreciate the quiet when the AC is running, the synergy with my solar and batteries, etc.

    I’m a happy camper.
  9. docjenser

    docjenser Well-Known Member Industry Professional Forum Leader

    The issue is that you rip out your existing infrastructure and replace it with a new one just for the savings. Yes, about $20K, upfront after incentives.

    But now imagine that you are replacing your infrastructure anyway, since your hot water tank, your heating system, your oil tank and your A/C is at the end of your lifespan. Now the difference between new oil system and geo is only $7K. Or you build a new house, and the difference between geo and a conventional oil system is $5K, but it saves you $3000 in oil every year.

    Or you build a new house and the difference is only $5K.

    We were part of that NYSERDA study, and most building were relative new energy efficient buildings, which means that the consumption was less, which also meant that the savings were less. Also, I think they assumed a 90% efficient furnace for comparison, when in real life the furnaces are not that efficient.

    The issue is cash flow for most people. We bundled the tax credits and the NYSERDA rebates, and arrange a bridge loan until customers get their tax credits back, and the rest we finance them for 20 years. So last year that came down to $128/month. For that you got a 7 series water furnace system, which is the highest end, and a dedicated hot water heat pump making all your hot water via the geo system, plus a 85 gallon tank. Turn key it came out to be #128/month, no money down.

    I think this year it is $156/month, since the tax credits went down.

    But you are still savings money compared to your $3,000 oil bill every year. Plus you have a brand new system with a 10 year warranty.

    Here is the website.

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