Forget the days of separate furnaces and AC units hogging space and energy. Geothermal heating and cooling systems are transforming residential properties, commercial businesses, and communities across the country, delivering a one-stop solution for year-round comfort and environmental responsibility.
Understanding Geothermal
Geothermal systems are an eco-friendly, infinitely renewable energy source that taps into the Earth's constant ground temperature. They use a heat pump to extract warmth in winter and expel temperatures cooler than the air in summer. It does this all while dramatically reducing your carbon footprint.
Here's why geothermal energy is making waves:
- Performs double duty. Geothermal handles both heating and cooling needs, streamlining your home's climate control. "The geothermal system uses thermal energy (heat) from the ground to heat the home in the winter, and the system removes thermal energy from the home and diffuses it into the ground in the summer," expands Kathy Hannun, Founder & President, Dandelion Energy.
- Efficient heating = energy savings. Harnessing Earth's natural temperature reduces reliance on fossil fuels. Any energy efficient system will improve your energy bills.
- Environmentally-friendly. Say goodbye to greenhouse gas emissions. The environmental benefits set these systems apart. Geothermal technologies operate cleanly and sustainably, minimizing your impact on the planet while keeping your home cozy.
- Low-maintenance. Unlike furnace filters and AC coils, geothermal loops require minimal maintenance. "Because the ground loop of pipes are inert, long-lasting plastic, underground pipes are protected from the elements. They shouldn't require any maintenance," shares Hannun. "In fact, the ground loops in the systems we [Dandelion Geothermal] install are warrantied for 50 years. The geothermal heat pump system inside the house will require a similar amount of maintenance to a refrigerator."
- Long-term investment despite upfront costs. While the initial installation cost might be higher, geothermal systems offer a substantial lifespan, significantly longer than traditional units, making them a cost-effective choice in the long run.
Types of Geothermal Systems
Two main options exist for residential installations.
Closed loop systems circulate a mixture of water and antifreeze solution within a sealed underground pipe network. The underground loop systems prevent water contamination and creates minimal environmental impact. These systems are the most common for homes and offer reliable, consistent performance with minimal ongoing costs.
Open-loop systems use groundwater and offer slightly higher efficiency; however, they also require careful permitting and disposal due to potential mineral build-up. They work best in areas with adequate groundwater supply and appropriate water quality.
Current Incentives and Financing Options (January 2026)
The financial landscape for geothermal has changed significantly in the last year, but by many accounts, it has been spared by H.R.1 OBBBA.
The federal residential tax credit that supported geothermal installations (25D) was phased out at the end of 2025, but at the time of publishing, the U.S. Department of Energy's commercial Investment Tax Credit (ITC) for geothermal heating and cooling is still stated to remain available through 2034.
This legislation introduced new opportunities, particularly for leased systems, which can now qualify for up to a 30-50% commercial tax credit under third-party ownership models; Dandelion Energy was the first geothermal company to launch a leasing program, and the only energy company to do so before the end of 2025.
"Geothermal leasing is an exciting development that will make geothermal heating and cooling more affordable by further reducing upfront costs and enabling more people to adopt the technology," shared Maggie McCarey, vice president of policy and strategy at Dandelion Energy.
Under the leasing model, a third-party company finances, owns, and operates the system, charging homeowners through a long-term agreement. For Dandelion Energy, a partnership with Upstream Lease by CSG makes this business to consumer (B2C) opportunity possible.
McCarey explained to me that savings still exist when consumers lease equipment. The company who owns the equipment and receives the tax credit is essentially passing the tax credit on to the homeowner.
Like solar panel investments, upfront costs prohibit entry for many homeowners pursuing geothermal. With that in mind, leasing can help in a big way: "The lease option allows for low to no up front investment, significant ongoing operating cost savings from these energy efficient systems, and a predictable lease payment and term," McCarey explains.
State Programs Are Expanding
While federal incentives shift for consumers, states are stepping up with robust support programs because you can stack local utility rebates with the commercial leasing tax program.
New York State doubled its potential state geothermal tax incentive in July 2025, making it possible for homeowners to qualify for up to a $10,000 tax credit when they install a geothermal heating and cooling system. New Jersey also matched this $10,000 rebate.
Other states including Massachusetts, Connecticut, and Maryland are also expanding rebates and credits for renewable heating and cooling.
Colorado has invested millions in geothermal developments. More than $27 million specifically supports heating and cooling projects through grant and tax credit programs. Communities like Hayden, Colorado are leveraging these incentives along with federal tax credits to achieve up to 50% savings on project costs, with an additional 10% bonus credit available for communities with coal legacy.
How to Calculate Savings on Energy Bills
Many factors contribute to cost savings when you switch to this form of renewable energy. Take a close look based on your property, home, and system.
"Projected savings can be calculated by first understanding what's being spent on traditional heating and cooling today, including any heating fuels such as natural gas, propane or fuel oil, and any electricity used for air conditioning, and then estimating how much it would cost to run a geothermal system instead," advises Hannun. "A homeowner may need to consult with a geothermal professional to get a savings estimate accurate for their particular home. That said, using a geothermal system generally costs about half as much as an air conditioner and 30-60% less than a conventional heating system."
This calculation is based on a few factors:
- How much geothermal cooling and heating does the home require? This depends on the weather in the area, the size of the home, the desired air temperature, and how well-insulated it is.
- What is the price of electricity? Your geothermal heat pump will run on electricity, and pricing can vary by region.
- How efficient is the specific geothermal heat pump being installed? They typically run at approximately 400-percent efficiency. The efficiency rating is over 100% because they use electrical energy to move energy from the ground into the home. For every unit of electricity used, you typically get about 4 geothermal units of useful heat energy.
FAQ
How does geothermal leasing differ from financing with a loan?
With a traditional loan, you own the system outright. You're responsible for the entire cost, ongoing maintenance, and claiming available tax credits yourself.
With a lease, a third-party company owns and maintains the system while you pay a predictable monthly fee. The leasing company can utilize commercial tax incentives and pass those savings to you through lower payments. You eliminate the need for large upfront capital while still getting significant energy cost reductions.
Does geothermal add value to my home?
Yes, considerably. A geothermal heat pump signals to potential buyers that the home features a stable, long-term energy savings solution.
It helps that ground loops are warrantied for 50 years and indoor components last 20-25 years. This reduces the risk of major HVAC expenses down the line. Homes become more appealing in the resale market, especially as buyers increasingly prioritize sustainable and efficient features.
What happens to my geothermal system if I move?
If you own your system, it transfers with the home just like any other HVAC system, potentially increasing your home's value. If you lease your system, the lease typically transfers to the new homeowner, similar to solar panel leases. This can be an attractive selling point since the new owner inherits the lower energy costs without upfront investment. Check with your leasing company about their specific transfer policies.
Are geothermal systems suitable for all climates and property types?
Geothermal systems work effectively across all climate zones in the United States. They rely on stable underground temperatures, not outdoor air temperatures.
Installation requirements vary based on available land space, soil conditions, and local geology. Homes with adequate yard space work well for horizontal loop systems. Properties with limited space can use a vertical drilling rig. A geothermal professional can assess your property to determine the best configuration and whether your site is suitable for installation.
