Iba Drilling Co., Inc.

Calculating Costs

Ground source heating and cooling is a high-comfort, cost-effective, and environmentally friendly technology that takes advantage of the Earth's capacity to store energy in the form of heat. Geothermal heat pump systems use no fuel, but rather move heat from the earth into a building, or from a building back into the earth. We call this GeoExchange! A small amount of electricity is used to operate the pumps, fans, controls, and small refrigerator-like compressor, which along with the heat exchangers are the major components of the ground source heat pump.

The geothermal heat pump accomplishes its heating and cooling tasks by obtaining heat through a connection to the earth known as an earth loop or ground loop. The ground loop consists of a piping system circulating a water/antifreeze mixture from the earth to the geothermal heat pump and back. Because of the compressor in the heat pump the ground temperature need not be especially warm and these ground loop systems will perform efficiently virtually everywhere in the U.S.

Since only a very small amount of electricity is consumed by a geothermal heating and cooling system to move the heat from the earth to the building (or vice-versa) and no fuel is burned, it is possible to calculate a "pay out period" for the purchase of the GeoExchangeSM system. Gas, propane, oil and electric heating and cooling systems can never pay out because there is a constant and significant fuel cost.

Geothermal qualified for 30% TAX CREDIT on installation costs for homeowners and 10% for business. States and utilities have incentive programs or rebates as well as well. Database of State Incentives for Renewables & Efficiency

How does the cost of heating with a GeoExchange compare to other heating methods?

The answer to this depends on local rates for electricity and other fuels. The comparison involves the efficiency of the device, the type of fuel used and the cost of that fuel.

Commonly used heating fuels have the following approximate heating content:

  • Fuel oil - 138,000 Btu/gal
  • Propane - 90,000 Btu/gal
  • Natural gas - 100,000 Btu/therm(1,000 Btu/ft3)
  • Electricity - 3,413 Btu/kWh

A common index of the cost of heat is "dollars per 1,000,000 Btu of useful heat." In order to calculate useful heat (heat actually delivered to the house), it's necessary to adjust for the efficiency of the heating device and the cost of the fuel. The following equations can he used for this purpose:

Fuel oil Propane Natural gas Electric
Ground Source
Heat Pump (GSHP)
7.25 x $/gallon
11.1 x $/gallon
10.0 x $/therm
293 x $/kWh
293 x $ /kWh
Old - .65
New std. - .78
Moderate - .84
High - .92
Warm climate - 3.9
Cold climate - 3.4
Hydronic - 4.2

As an example, let's look at a location in a moderately cold climate where the fuel costs are as follows:

Electricity, $0.085/kWh (check your utility bill for rates) or some REAs offer heating rate at $.045; fuel oil, $2.35/gal; propane, $1.75/gal; and natural gas, $0.913/therm. This is using calculations assuming you have a moderately efficient (84%) furnace. This would result in the following useful heat costs:

Fuel oil Propane Natural gas Electric
Ground Source
Heat Pump (GSHP)
$20.36 $23.12 $10.87 $26.36 or $13.18
with REA rate $.045
$7.75 (3.4 COP) $.09kw
$3.88 ($.045 REA rate)

Compared to these fuel prices, ground source heating/cooling would cost 30-46% less than other fuels.

A recent study by the U.S. Environmental Protection Agency showed that GeoExchange systems generally have the lowest life-cycle cost of all systems available today. The study also shows that GeoExchange systems have the lowest impact on our environment. Consumers rank their comfort and satisfaction with GeoExchange systems higher than all others. While a higher initial investment is required, the investment is paid back through low energy bills (enhancing resale value), excellent family safety, and supreme comfort.

Iba Drilling Co., Inc.
PO Box 1041
Glendive, Montana 59330

406-687-3344 shop phone/fax
406-939-1153 - Chris Iba
406-939-6422 - Mike Iba

contact Iba Drilling by email