Geothermal heating and cooling systems are an efficient, reliable, and cost-saving alternative to traditional HVAC systems. While these systems typically come with a high upfront cost, tax incentives at both the state and federal levels substantially reduce the barrier to entry. For homeowners across Western New York, these credits go a long way toward making this sustainable heating solution, along with the dramatically reduced energy bills that follow, feasible.
However, nothing lasts forever. Unfortunately, the tax credits that help make geothermal heating and cooling affordable to area homeowners are subject to change. This is happening right now.
For those considering installing a geothermal system in their home, now is an ideal time to buy.
What is Geothermal Heating and Cooling?
Western New York is no stranger to fluctuating temperatures above ground. But below the surface, it’s a different story – the temperature stays at a consistent 52 ℉. In the summer, the temperature below ground is cooler than the outside air above ground. Conversely, in the winter, the temperature below ground is usually higher than it is above ground.
Geothermal heating and cooling harnesses the stable temperature below ground to control a home’s climate at all times of year. Instead of generating heat, geothermal heating and cooling systems transport dormant heat energy from the ground into your home, eliminating the need to burn fossil fuels or use other energy sources. This makes geothermal energy a highly efficient means of heating or cooling a space, regardless of the outside temperature.
Once installed, these systems use significantly less energy than traditional systems, such as furnaces or air conditioners, allowing homeowners to save money on their monthly utility bills.
New York State Geothermal Tax Credit Incentives
Geothermal heating and cooling systems come with a high upfront cost of installation; for some, this is a barrier to entry that restricts homeowners from enjoying the benefits of geothermal. However, numerous tax credits and other incentives exist at both the state and federal levels, which reward adopters by significantly reducing the initial cost of installation.
Currently, there are two tax credit incentives homeowners can be eligible for in New York; one is at the state level, while the other is federal:
State: For new geothermal heat pump installations, New York offers a rebate that reduces the overall cost by 25%. This caps out at $10,000, guaranteeing a sizable price reduction for heat pump installations, no matter their initial cost.
Federal: In addition to state incentives, a geothermal tax credit also exists at the federal level; for maximum savings, these credits can be stacked. This tax credit amounts to 30% off of geothermal heat pump installations, with no maximum limit. This means that the higher the initial installation cost, the greater the savings you’ll receive.
Pending regulatory changes, this credit could be disappearing soon, so it’s crucial to take advantage of the federal tax credit incentive while it lasts. As the law currently stands, it is only projected to diminish in value, lowering to 26% for systems installed in 2033 and 24% for geothermal heat pumps installed in 2034.
Click Here to Make Sure You’re Eligible.
How Does Geothermal Work?
To extract temperature-controlled air from underground, geothermal heating and cooling systems comprise two primary components: the heat pump and the ground loop.
Ground Loop:
Located underground, the ground loop is a series of high-density plastic tubing. A liquid solution (usually water) is circulated through this tubing. In winter, this fluid absorbs heat, and during the summer, it deposits heat energy into the ground depending on the home’s heating and cooling needs.
Heat Pump:
Installed indoors, the fluid from the ground loop passes through the heat pump. There, refrigerant coils within the heat pump convert the fluid into a gas. Afterwards, the resulting heated or cooled air is dispersed into the house using the existing ductwork. This process adds heat to your home during colder months and removes heat energy from the air in your home during warmer months.
5 Benefits of Geothermal Heating and Cooling
Before tax credits and other incentives, geothermal systems come with a high upfront cost. However, their energy efficiency means that before long, this efficient method of heating and cooling your home pays for itself. That’s not all; Geothermal presents numerous benefits over traditional heating and cooling systems, including:
- Energy Efficiency
- Low Operating Costs
- Environmentally Sustainable
- Consistent and Convenient
- Durable and Long Lasting
Energy Efficiency
Since geothermal systems don’t generate energy, they also don’t rely on burning fossil fuels to operate. According to the U.S. Department of Energy, geothermal heating and cooling systems can reduce energy consumption by up to 72% compared to traditional HVAC systems.
Low Operating Costs
High energy efficiency also means lower energy costs. With dramatically less energy used to heat or cool your home every year, geothermal systems can substantially reduce your monthly energy bills. Despite high upfront costs, it doesn’t take long for geothermal systems to start paying for themselves.
Environmentally Sustainable
Geothermal energy efficiency reduces its environmental impact. Considering the systems use less energy than standard HVAC systems, geothermal systems impose a much lesser environmental impact. Compared to traditional systems, geothermal heating and cooling can reduce carbon dioxide emissions by up to 85%.
Consistent and Convenient
Geothermal systems operate quietly and provide an all-in-one solution, delivering precise temperature control throughout the year. Whether your home needs to be heated or cooled, a geothermal system can efficiently do it all while lowering your energy bills.
Durable and Long-Lasting
When properly maintained, they can reliably manage your home’s temperature for decades. While the heat pump component lasts roughly two decades, a well-installed ground loop can continue to operate effectively for over 50 years.
When is the Best Time to Install Geothermal Heating and Cooling? As Soon as Possible
A new administration in our federal government means laws and incentives are always subject to change. This happens in one form or another every election cycle, and this time, it’s renewable energy incentives that are projected to diminish by 2026.
While those looking to install geothermal heating and cooling systems will still have the state tax credit to enjoy, the 30% tax credit will likely be gone sooner rather than later. That means any Western New York homeowner interested in the benefits of geothermal heat pumps should get theirs installed before it’s too late. Waiting too long could result in a 30% loss of savings if the federal geothermal tax credit is repealed.
Looking for Expert Geothermal Heat Pump Installation? Call Capital
If you’re looking to experience the convenience and energy savings of geothermal heating and cooling for yourself, look no further than Capital. Our expert installation services and partnerships with only the best brands make us the ideal choice for a seamless installation of a top-quality geothermal system, ensuring it’s always done right the first time. Contact us today to learn more.
