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Illinois Country Living

Doug Rye, licensed architect and the popular host of the "Home Remedies" radio show

Energy Solutions

Geothermal Heat Pumps Have Best Payback
Fed tax credit recognizes renewable energy benefits of geothermal

We are postponing our discussion of the 10 Commandments of Energy Efficiency for a very important reminder. It’s almost time to do your taxes. Yikes!

In October, 2008 the $700 billion Emergency Economic Stabilization Act of 2008 (H.R. 1424) was signed into law. In addition to helping stabilize the nation’s financial markets, the law also extended and enhanced tax credits and financing relating to renewable energy and energy efficiency. And I am pleased to announce that included in the tax credits – can you believe it – are geothermal heat pumps!

For years, I have been teaching you about the advantages of geothermal heat pumps. And here is one of the bonus benefits many people don’t realize — it provides a good percentage of your domestic hot water practically free.

As I have said for years, 75 percent of the energy used in a geothermal heat pump is from the solar British thermal units (Btus) that have been stored in the earth or, in other words, geothermal is 75 percent renewable solar energy. And it appears the federal government now recognizes that geothermal heat pumps take advantage of this solar energy.

Let’s look at some popular renewable energy sources:

No. 1 – A typical solar voltaic system for a 2,000-square-foot house costs about $25,000. It would produce about two kilowatts for six hours per day (25 percent of the day) if the sun were shining. That means the system would produce enough electricity to power two 1,000-watt hair dryers. The estimated payback is around 50 years and the life expectancy of the system is 20 years. I personally don’t think you can find a much worse investment. There is a tax credit available for this system in the Emergency Economic Stabilization Act.

No. 2 – A typical wind generator for a 2,000-square-foot house costs between $10,000 and $20,000, depending on the size of the unit. It would typically produce four to six kilowatts of electricity if the wind is blowing sufficiently. In many parts of the United States residential wind generation is not a viable option. In fact, one of the most efficient wind farms in the U.S. only generated 30 percent of the time last year, with almost no generation during the hottest summer months. It is at best difficult to estimate the payback of a residential wind turbine because of such unknown factors as maintenance costs and the availability of wind. There is, however, a federal tax credit available in the new law.

No. 3. A typical geothermal heat pump for a 2,000-square-foot house should cost about $11,000 more than a conventional heating and cooling system. It does provide all of the heating and cooling required and it is available every single hour of every single day. The average payback for such a system will be seven to 10 years. The life expectancy of the geothermal unit is estimated to be 25 years, the loop in the ground is guaranteed for 50 years and no one actually knows how long it will last after that. And, yes, there is a federal tax credit available, at last!

Now, open your mind, think about it and you will probably be just as excited about this as I am. Geothermal has finally come of age! To learn more about the energy tax incentives, visit


More Information:

Doug Rye, the “Doctor of Energy Efficiency-the King of Caulk and Talk” can be heard on several different Illinois radio stations. Or you can go to his Web site at, e-mail him at, or call 888-Doug-Rye or 501-653-7931. You can also sign up for a free newsletter and order his “how to” videotapes.


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Association of Illinois Electric Cooperatives

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