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Geothermal vs. Air Source Heat Pumps – What’s the Difference?

Heating and cooling systems play a crucial role in maintaining comfortable indoor temperatures in homes across different regions. With advancements in technology, homeowners have various options for energy-efficient heating and cooling systems. Two popular choices are geothermal heating systems and air source heat pumps (ASHP). This comprehensive guide will help you decide whether to install a geothermal heating system or an air source air-to-air heat pump in residential applications in Canada and the United States. We will discuss different types of geothermal systems, including ground loop systems, borehole systems, lake loop systems, and cold-climate air source heat pump systems, as well as the subsidies and tax incentives that each option may be eligible for.

Different Types of Geothermal Heating Systems
Geothermal heating systems utilize the Earth’s constant temperature to heat and cool buildings. These systems consist of three main components: the ground loop, the heat pump, and the distribution system. Geothermal systems come in various forms, including ground loop systems, borehole systems, and lake loop systems – learn all about geothermal heating here.

Ground Loop Systems
Ground loop systems use a series of buried pipes to extract heat from the Earth. These pipes contain a mixture of water and antifreeze that circulates in the loop and absorbs heat from the ground.

Borehole Systems
Borehole systems involve drilling deep holes into the ground and inserting pipes vertically. Such systems are suitable for areas where horizontal ground loop space is limited.

Lake Loop Systems
Lake loop systems utilize bodies of water, such as ponds or lakes, as a heat source. Pipes are submerged in the water, where heat is extracted and transferred to the building.

Air Source Heat Pump (ASHP)
Air source heat pumps extract heat from outdoor air and transfer it to the building. They can also operate in reverse, extracting heat from indoor air and moving it outdoors to cool the building. Cold-climate ASHPs are designed to handle lower temperatures without the need for auxiliary heating.

Comparison of Geothermal Heating Systems and ASHP
When choosing between a geothermal heating system and an ASHP, consider the following factors:


Geothermal systems are more efficient in colder climates, while air source heat pumps perform better in milder climates. Cold-climate ASHPs can handle lower temperatures but may experience reduced efficiency as temperatures drop.
Available Space

Geothermal systems require more installation space, especially ground loop systems. If space is limited, borehole or lake loop systems may be more suitable. ASHPs require less space and can be installed on the side of a building.
Installation Costs

Geothermal systems typically have higher upfront costs due to the installation of ground loops or boreholes. However, their operating costs are lower and can result in significant savings over time. ASHPs have lower installation costs, but operating costs may be higher, especially in cold climates.
Energy Efficiency

Geothermal systems are generally more energy-efficient than air source heat pump systems, especially in cold climates. They can save up to 70% on heating costs compared to oil and natural gas systems. ASHPs can also provide significant energy cost savings, up to 60%, but their efficiency decreases as outdoor temperatures drop.
Retrofit vs. New Construction

Geothermal systems are easier to integrate into new construction and can be installed during construction by adding ground loops or boreholes. Retrofitting a geothermal system into an existing home may require more extensive renovations and higher costs. ASHPs can be more easily retrofitted into existing homes without major renovations, and ductless mini-split systems can offer a cost-effective way to add heating to older homes while providing air conditioning.
Incentives and Tax Credits for Geothermal and Heat Pumps

Both geothermal systems and ASHPs may be eligible for incentives and tax credits in Canada and the United States, helping offset the initial installation costs. In Canada, homeowners can access grants through programs like the Canada Greener Homes Grant, providing up to $5,000 for energy upgrades, including geothermal systems and ASHPs, but provincial incentives can raise the cost of heat pumps to $17,000 and geothermal heating systems to $56,250 (if you need a large unit of 75,000 Btu). In the United States, geothermal systems are eligible for federal tax credits, covering 26% of installation costs through 2022, decreasing to 22% by 2023. ASHPs may also qualify for federal tax credits as well as state and local incentives, depending on the location – we recommend checking with your local government for the latest grant information.
So, Is Geothermal Better Than Air Source Heat Pumps?
In conclusion, the choice between installing a geothermal heating system or an air source heat pump depends on many factors, such as climate, available space, installation and operating costs, energy efficiency, and whether you are renovating an existing home or building a new one. By carefully considering these factors and following the logical process outlined above, you can make the best decision for your specific situation and enjoy the benefits of an energy-efficient heating and cooling system. Remember to explore available incentives and tax credits to help offset initial costs, making your choice more cost-effective and contributing to cost savings and a reduced carbon footprint. We’d also like to point out that the best return on investment for home renovation and upgrades often comes from the simplest and most cost-effective measures, such as selecting the best sealing materials, ensuring good air sealing in the home, installing heat recovery or energy recovery ventilation systems (HRV or ERV), and ensuring good attic and wall insulation in the home. Look into which home improvement measures can achieve the maximum improvement and energy savings at the lowest cost.

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