In recent years, geothermal heat pumps have gained popularity. However, the cost of installation for geothermal heating is still more expensive than other forms of heating and cooling. Don’t let this initial cost scare you, though, as the cost to run the systems over time will result in savings that pay for the system in full. Most families see savings of equivalent or greater value to the cost of the installation within 5-7 years.
The savings aren’t the only assistance available out there. The government is pushing for renewable energy sources in residential and commercial establishments. For many families, the only way they could install the system is with financial assistance. Fortunately, there are a lot of tax incentives for you to take advantage of out there, including federal and state tax incentives.
Federal Tax Incentive
Currently, there is only one federal tax incentive for geothermal systems. It is a tax credit of 30% of the installation cost. So, if your system costs about $25,000 to install, the tax credit is available for $7,500, bringing the end result of the system down to $17,500. You can claim this on your next tax form; however, there are other incentives available for each state that you should also be aware of.
Pennsylvania Funding Options
Pennsylvania has a variety of incentives and forms of funding available to help you get the system installed. We’re going to list a number of grants, loans, and tax incentives available for you to use in your home. Note that there are also business grants and loans available for commercial installations, but we will not be listing those below. Here are some residential funding options:
High-Performance Building Program (HPB):
The HPB program is a lesser-known program, but it can provide a grant of up to 10% of your construction costs. Using the previous example of a $25,000 installation project, you would receive the $7,500 federal tax credit, as well as this 10% grant of $2,500. Now you would owe $15,000 instead of the initial $25,000. Although these program guidelines are from 2013, the 2015 guidelines have not changed. Take a look at this PDF for more information.
The Keystone HELP program is an option available for Pennsylvania residents to receive low-interest loans for their energy conservation projects, including geothermal heat pump installations. They provide you with up to 7 years to repay your loan, with fixed monthly rates (and interest rates). Interest rates range from 2.99% – 8.99%. Learn more at energyloan.net
After taking advantage of all of these options, a $25,000 installation project could fall down to about $15,000. Using the Keystone HELP loan program, you could take out a 7-year loan of $14,500 for a monthly payment of about $241, a fairly reasonable amount considering the savings of heating and cooling per month.
Unfortunately, there are no state-level tax incentives for Pennsylvania.
If your home is completely renovated to be energy efficient, including a geothermal heat pump, you could be eligible for a PGW rebate. PGW provides a $150 home energy assessment to see if your home is saving energy. If you meet their requirements, they will pay you a $3,000 cash rebate in return. Replacing an old gas boiler/furnace with a geothermal unit is a big step towards saving our natural resources.
Do You Have Questions?
If you have any questions, feel free to contact us online or by phone and we’ll be happy to talk over your options. If you’re ready to install a geothermal unit within PA, we’d be happy to provide you with a free quote so you can accurately estimate your savings.