The three systems on the table
- Geothermal heat pump (GSHP) + forced air. Highest up-front, lowest operating cost, longest expected life (25+ years for the loop; 20-22 years for the heat pump).
- Cold-climate air-source heat pump (CCHP) + auxiliary backup. Mid-range up-front, mid-range operating cost, ~15-year typical life.
- 95-98% AFUE gas/propane furnace + 16-SEER2 AC. Lowest up-front; mid-range operating cost (highly dependent on fuel cost); ~12-15 year typical life.
Installed cost (before incentives) for a typical 2,400-3,400 sq ft home
Geothermal
[verify: vertical-loop installation in the $40,000-$65,000 range; horizontal loops on the lower end; pond loops mid-range; lot size and bore depth drive most of the variation]. We never quote a "geothermal price" without site engineering.
Cold-climate heat pump
[verify: $11,000-$18,000 installed depending on capacity and brand; dual-fuel hybrid (with a gas/propane furnace) adds $3,000-$5,000].
Furnace + AC
[verify: $9,000-$15,000 for a 95% furnace + 16 SEER2 AC, professionally installed].
Incentive stack (current, subject to change)
- Geothermal: federal 25D residential clean energy credit at 30% of installed cost (no cap under current schedule), Focus on Energy custom rebate (typically [verify: $750-$2,000+]), utility rebate. Stack can cover [verify: 35-45% of net cost].
- Heat pump: federal 25C credit up to [verify: $2,000/year], Focus on Energy tiered rebate [verify: $300-$650], utility rebate, and manufacturer seasonal rebates.
- Furnace + AC: federal 25C up to [verify: $600 for furnace, $600 for AC], small Focus on Energy rebate, manufacturer rebates.
Operating cost (per year, southeast Wisconsin, current utility rates)
Modeled for a typical 2,400 sq ft well-insulated home, full heating + cooling + DHW (where applicable):
- Geothermal: [verify: $900-$1,300/year all-in; varies with electric rate and house insulation level]. Desuperheater further reduces DHW cost.
- CCHP: [verify: $1,300-$1,900/year depending on auxiliary runtime in deep cold].
- Propane furnace + AC: [verify: $2,200-$3,200/year; highly dependent on propane spot price].
- Natural gas furnace + AC: [verify: $1,400-$2,100/year; lowest fuel cost of the fossil options].
15-year total cost of ownership (illustrative)
Combining install (after incentive stack) + 15 years of operating cost + expected mid-life service costs (compressor on the air-source heat pump; burner service on the furnace):
- Geothermal: [verify: ~$45,000-$60,000 lifetime, net of incentives, lowest annual cost, fewest mid-life replacements].
- CCHP: [verify: ~$30,000-$42,000 lifetime; one likely compressor replacement in years 10-13].
- Propane furnace + AC: [verify: ~$42,000-$55,000 lifetime; operating cost is the swing variable].
- Natural gas furnace + AC: [verify: ~$30,000-$40,000 lifetime; cheapest if you have city gas].
All four are within a few thousand dollars of each other over 15 years. Geothermal pulls ahead at 20+ years because the loop keeps running and the heat pump replaces at a fraction of the original cost.
When each wins
- Geothermal wins for long-term owners (10+ years) with land for the loop, propane currently, and the discipline to do the site engineering correctly. Cheapest 20-year ownership.
- CCHP wins for owners replacing AC + heat at the same time, with reasonable electric rates and tolerable backup runtime. Best ROI on incentive stack right now.
- Furnace + AC (natural gas) wins if you have city gas and want lowest up-front + good operating cost.
- Furnace + AC (propane) wins only when up-front capital is the binding constraint and the time horizon is short. Otherwise almost always loses to a heat pump.
Action
- Schedule an in-home modeling session. Well run your specific house, your specific utility rates, and your specific incentive stack and walk through all four numbers.
- Read the rebate primer for context on the incentive landscape.
