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How to finance a geothermal system

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Prevch
Prevch Member Posts: 106
We are now looking at installing a geothermal system. We live in Northern, WI. The upfront cost is very high. I was just wondering if any of you have any resources related to financing geothermal at a reasonable interest rate. We have excellent credit if it matters. Any ideas?

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  • pecmsg
    pecmsg Member Posts: 4,881
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    What do you consider a reasonable rate?
  • ethicalpaul
    ethicalpaul Member Posts: 5,723
    edited October 2023
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    Call Dandelion (they advertise on Facebook a lot).

    They are a national geothermal installer and they get you any incentives that you would qualify for and have financing. They are pretty expensive, but based on a quote I got from them, they know what they are doing and have the ability to do good engineering and back it up with all the documents that your local authority will need.

    They will show you a 20 year cost breakdown of your current system vs ground source heating/cooling and I found it accurate (and I'm skeptical as hell).
    NJ Steam Homeowner. See my sight glass boiler videos: https://bit.ly/3sZW1el
    dko
  • Hot_water_fan
    Hot_water_fan Member Posts: 1,881
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    Northern WI might be a favorable spot for this. Is a Home equity loan an option?
  • ethicalpaul
    ethicalpaul Member Posts: 5,723
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    Almost anywhere is favorable TBH :sweat_smile:
    NJ Steam Homeowner. See my sight glass boiler videos: https://bit.ly/3sZW1el
  • Hot_water_fan
    Hot_water_fan Member Posts: 1,881
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    Cost effectiveness is the issue :smile:
  • ethicalpaul
    ethicalpaul Member Posts: 5,723
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    Absolutely, but with the long, maintenance-free lifetimes these things have, it's hard not to find it
    NJ Steam Homeowner. See my sight glass boiler videos: https://bit.ly/3sZW1el
  • Hot_water_fan
    Hot_water_fan Member Posts: 1,881
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    I agree they can last a long time, but if you're financing it at 7%, savings in year 20 are discounted heavily (75%). And you have to stay for 20 years in the house - if you move early, no savings.
  • Jamie Hall
    Jamie Hall Member Posts: 23,419
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    Your best financing, assuming you have an equity stake in your house built up, is going to be a home equity loan. You might find that around 7%. Anything else is going to be more, and for a shorter term. It's just the way the markets are now.
    Br. Jamie, osb
    Building superintendent/caretaker, 7200 sq. ft. historic house museum with dependencies in New England
  • Prevch
    Prevch Member Posts: 106
    edited October 2023
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    Call Dandelion (they advertise on Facebook a lot).

    They are a national geothermal installer and they get you any incentives that you would qualify for and have financing. They are pretty expensive, but based on a quote I got from them, they know what they are doing and have the ability to do good engineering and back it up with all the documents that your local authority will need.

    They will show you a 20 year cost breakdown of your current system vs ground source heating/cooling and I found it accurate (and I'm skeptical as hell).

    Thank you very much! Unfortunately, they do not work in my area.
  • Prevch
    Prevch Member Posts: 106
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    Northern WI might be a favorable spot for this. Is a Home equity loan an option?

    Thanks for the comment. Yes it is definitely an option, but I prefer not to put my house up as collateral if at all possible. We could have a good down payment and have excellent credit so I am hoping that we can find either an unsecured loan or a loan secured by the equipment itself.
  • Prevch
    Prevch Member Posts: 106
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    Your best financing, assuming you have an equity stake in your house built up, is going to be a home equity loan. You might find that around 7%. Anything else is going to be more, and for a shorter term. It's just the way the markets are now.

    Thank you, yeah we are trying to avoid that, but we might not have a chance.
  • Prevch
    Prevch Member Posts: 106
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    I agree they can last a long time, but if you're financing it at 7%, savings in year 20 are discounted heavily (75%). And you have to stay for 20 years in the house - if you move early, no savings.

    Our plan is to not move from this house. Granted, anything could happen I suppose, but we would preferably like to stay here.
    Hot_water_fan
  • Prevch
    Prevch Member Posts: 106
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    I did find this website: cleanenergycu.org they are a credit union that does green energy loans secured by the equipment itself, but I would be interested to see what other options are out there
  • Hot_water_fan
    Hot_water_fan Member Posts: 1,881
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    Is this system forced water or forced air? 
  • hot_rod
    hot_rod Member Posts: 22,246
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    Look around at www.dsireusa.org
    It will lead you to all the incentive programs
    Bob "hot rod" Rohr
    trainer for Caleffi NA
    Living the hydronic dream
  • SlamDunk
    SlamDunk Member Posts: 1,590
    edited October 2023
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    I know what myneighbor paid to fit his 100 yr old home with geothermal. If I tookout a 30 yr loan, I would be paying $290/mo. That is about my monthly utility bill but there are no savings. I think @Jamie Hall said it best on another tread, this should be done with all new construction. There is no excuse not to and your new house would be built tight.

    Edit. Fixed math error.
  • Hot_water_fan
    Hot_water_fan Member Posts: 1,881
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    @SlamDunk $290/month is the issue! That’s too much when you can fit a furnace + heat pump for much less and get the same (or close enough) savings. 
  • Prevch
    Prevch Member Posts: 106
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    Is this system forced water or forced air? 

    Water
  • Prevch
    Prevch Member Posts: 106
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    @SlamDunk $290/month is the issue! That’s too much when you can fit a furnace + heat pump for much less and get the same (or close enough) savings. 

    I guess that's one of my questions. If I was to just do an air to water heat pump with a back up electric boiler, how much would I actually be saving with a geothermal system? I mean, where I live in Northern Wisconsin, it gets pretty cold and stays cold for awhile, so maybe the savings from the geothermal would be worth it? Not sure.
    Hot_water_fan
  • ethicalpaul
    ethicalpaul Member Posts: 5,723
    edited October 2023
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    An hvac engineer/designer should be able to show you your current fuel costs vs the costs of a heat pump system both on day one and then over time. Try to find an independent one who is not going to make money on what your final choice is.

    inputs: the amount of heating and cooling your home needs per year, upfront cost of each system, cost of fuel over time for each system, maintenance costs of each system, lifetime of each system

    output: $$ over time
    NJ Steam Homeowner. See my sight glass boiler videos: https://bit.ly/3sZW1el
  • Hot_water_fan
    Hot_water_fan Member Posts: 1,881
    edited October 2023
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    I guess that's one of my questions. If I was to just do an air to water heat pump with a back up electric boiler, how much would I actually be saving with a geothermal system? I mean, where I live in Northern Wisconsin, it gets pretty cold and stays cold for awhile, so maybe the savings from the geothermal would be worth it? Not sure.
    Air to water is pretty uncommon, like geothermal, so the premium probably won’t be as large as air-to-air vs ground source forced air. I think still, that geothermal probably never pays for itself. Those loops are just huge costs and sometimes aren’t even more efficient than air source seasonally. You live in a cold climate, that’s a point in geothermal’s favor. Is the heat loss high? Is electricity $.25+/kWh? 
  • Prevch
    Prevch Member Posts: 106
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    An hvac engineer/designer should be able to show you your current fuel costs vs the costs of a heat pump system both on day one and then over time. Try to find an independent one who is not going to make money on what your final choice is.

    inputs: the amount of heating and cooling your home needs per year, upfront cost of each system, cost of fuel over time for each system, maintenance costs of each system, lifetime of each system

    output: $$ over time

    Yup thanks for that. I am working on gathering that info.
  • Prevch
    Prevch Member Posts: 106
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    I guess that's one of my questions. If I was to just do an air to water heat pump with a back up electric boiler, how much would I actually be saving with a geothermal system? I mean, where I live in Northern Wisconsin, it gets pretty cold and stays cold for awhile, so maybe the savings from the geothermal would be worth it? Not sure.
    Air to water is pretty uncommon, like geothermal, so the premium probably won’t be as large as air-to-air vs ground source forced air. I think still, that geothermal probably never pays for itself. Those loops are just huge costs and sometimes aren’t even more efficient than air source seasonally. You live in a cold climate, that’s a point in geothermal’s favor. Is the heat loss high? Is electricity $.25+/kWh? 
    Electricity is .136 kWh. I am not sure what constitutes a high heat loss, but the house is about 3800 sqft and we average about 1300 gallons of propane per calendar year over the last three years. We are no longer on propane and we are only considering electric options at this time.
  • Hot_water_fan
    Hot_water_fan Member Posts: 1,881
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    @Prevch Wow! That's an efficient house, nicely done!

    1300 gallons / year x 91,452 btu/ gallon * 95% efficiency (if you have a high efficiency boiler, if not use 82%)= 113 MMBtu annually going into the house. That's about 33,000kwh OUTPUT, which a heat pump with a COP of 2.5 can provide with ~13,250 kwh INPUT. That would cost $1800/year. With that annual spend, a geothermal heat pump makes little sense. Even if a geothermal heat pump could get 3.5 COP, which is not guaranteed, you'd save $500/year. That's unlikely to cover the loan payment on the additional cost of the geothermal.
    ethicalpaul
  • ethicalpaul
    ethicalpaul Member Posts: 5,723
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    You'd also be missing out on the excellent cooling that a ground source heat pump provides, if I understood your situation correctly.
    NJ Steam Homeowner. See my sight glass boiler videos: https://bit.ly/3sZW1el
  • SlamDunk
    SlamDunk Member Posts: 1,590
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    All this would be a waste if your house isn't well sealed and insulated.

    I know my neighbor gutted his house when he bought it, sealed and insulated it.

    That wasn't included in the cost for his geothermal. My gut tells me he had cash burning a hole in his pocket. His house is comfy year-round but I don't know if it would be a good fiscal decision if you had to take out a loan.
  • Hot_water_fan
    Hot_water_fan Member Posts: 1,881
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    All this would be a waste if your house isn't well sealed and insulated.


    Not true! You need not air seal or insulate an existing house. Especially if that house only uses 1300 propane gallons a year in Northern Wisconsin
    ethicalpaul
  • ethicalpaul
    ethicalpaul Member Posts: 5,723
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    > All this would be a waste if your house isn't well sealed and insulated.

    The same isn't true for other fuels that cost more per BTU??
    NJ Steam Homeowner. See my sight glass boiler videos: https://bit.ly/3sZW1el
    Hot_water_fan
  • Jamie Hall
    Jamie Hall Member Posts: 23,419
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    Obviously a well sealed and insulated house is desirable. So is a vacation in Spain, or a nice Ferrari. It's not always possible, however, on a reasonable budget -- if it's possible at all. On a new build, yes, of course. On a house which is over a century old, most folks are going to want to balance the cost of sealing and insulation against the cost of energy ;-- and the answer isn't always that sealing and insulation is worth the money. The same thing applies to upgrades to the heating system or many other expenditures (we just completed an analysis of the cost/benefit of a large solar PV array, for instance. The overall cost was greater than the overall benefit over the expected life of the system, so no sale... just as an example).

    The calculations aren't hard, but one needs to use reasonably accurate assumptions which can be difficult, and one must also use reasonably accurate estimates of the lost opportunity cost associated with the capital expenditure -- and that's where many people have real trouble.
    Br. Jamie, osb
    Building superintendent/caretaker, 7200 sq. ft. historic house museum with dependencies in New England
  • Prevch
    Prevch Member Posts: 106
    Options

    @Prevch Wow! That's an efficient house, nicely done!

    1300 gallons / year x 91,452 btu/ gallon * 95% efficiency (if you have a high efficiency boiler, if not use 82%)= 113 MMBtu annually going into the house. That's about 33,000kwh OUTPUT, which a heat pump with a COP of 2.5 can provide with ~13,250 kwh INPUT. That would cost $1800/year. With that annual spend, a geothermal heat pump makes little sense. Even if a geothermal heat pump could get 3.5 COP, which is not guaranteed, you'd save $500/year. That's unlikely to cover the loan payment on the additional cost of the geothermal.

    That's good info thank you
  • Prevch
    Prevch Member Posts: 106
    Options

    @Prevch Wow! That's an efficient house, nicely done!

    1300 gallons / year x 91,452 btu/ gallon * 95% efficiency (if you have a high efficiency boiler, if not use 82%)= 113 MMBtu annually going into the house. That's about 33,000kwh OUTPUT, which a heat pump with a COP of 2.5 can provide with ~13,250 kwh INPUT. That would cost $1800/year. With that annual spend, a geothermal heat pump makes little sense. Even if a geothermal heat pump could get 3.5 COP, which is not guaranteed, you'd save $500/year. That's unlikely to cover the loan payment on the additional cost of the geothermal.

    That's good info thank you

    @Prevch Wow! That's an efficient house, nicely done!

    1300 gallons / year x 91,452 btu/ gallon * 95% efficiency (if you have a high efficiency boiler, if not use 82%)= 113 MMBtu annually going into the house. That's about 33,000kwh OUTPUT, which a heat pump with a COP of 2.5 can provide with ~13,250 kwh INPUT. That would cost $1800/year. With that annual spend, a geothermal heat pump makes little sense. Even if a geothermal heat pump could get 3.5 COP, which is not guaranteed, you'd save $500/year. That's unlikely to cover the loan payment on the additional cost of the geothermal.

    @Hot_water_fan Can you talk to me a little bit about your assumptions here in the comparison between the air source and ground source heat pump? In your scenario is the idea that the average COP for the air source heat pump for tyhe heating season will be 2.5? If so, do you think that is realistic in my climate? Same question for the 3.5 COP on the geothermal, how did you come to that figure?

    Thanks so much for your insights