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Q&A Spotlight

Air-Source or Ground-Source Heat Pump?

The type of equipment is a key consideration, but so is the system's capacity: Err on the side of small


It’s been a great 31 years, but the single-zone HVAC system has finally reached the end of the road, and gtmsmith has narrowed the search for a replacement to two possibilities. Neither involves fossil fuels.

Gtmsmith describes his options in this Q&A post:

  • A 4-ton ground-source heat pump made by ClimateMaster that will require two 320-foot-deep wells. The full package, including a humidifier and air-purification equipment, will cost $21,500 after a tax credit, including the $11,680 charge for digging two heat-exchange wells.
  • A Daikin 4-ton air-source heat pump, with the same extras, for $18,000.

Gtmsmith says the 2700-square-foot house is well insulated for a building of its age. It has new doors and will be getting new windows and is located in southeast Pennsylvania on the border between Climate Zones 4A and 5A.

“We are easy going and happy with 66-68ºF in the winter and 74-76°F in the summer on the T-stat,” gtmsmith writes. “We have been happy with single stage heat pump heat in previous winter winters in a much tighter and smaller home prior to this.”

He plans to add a small wood stove for supplemental heat, although not for the entire house.

Gtmsmith is leaning toward the air-source heat pump option for a number of reasons, including lower cost and better financial terms, a longer warranty and less disruptive installation.

“Did I just make up my mind?” he asks. “Help!”

That’s where we start this Q&A Spotlight.

Air-source is a better bet

Josh Durston thinks the air-source option is, on balance, the better route for gtmsmith. First, the air-source system uses “inverter technology,” a means of varying DC power to ramp output up and down so it matches heating and cooling loads more precisely than a one- or two-stage system powered by AC…

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  1. Jon_R | | #1

    This may not be easy, but the right approach is to calculate the operating cost difference and compare to the $/year for equipment cost. Then put some value on any differences in comfort (based on data, not hand waving about overly maligned cycling). Plus warranty, terms, how much you like the installer, etc.

    A guess - with your small cost difference, the GSHP will have lower $/year cost to purchase (because it will last longer) and lower operating cost. And based on being happy with a previous single stage unit, it needs no adjustment for comfort. No idea on other adjustments.

    1. this_page_left_blank | | #2

      Why do you say the GSHP will last longer?

      I think the GSHP comes with some risk. It is more reliant on quality of design and install. I know two people who have/had GSHP and neither one worked correctly. Both had heating bills that looked like they were heating with direct electric. Neither one got any help from the installing companies to sort it out either.

      1. Jon_R | | #3

        Based on estimates and the fact that a GSHP is inside.

        I agree that a GSHP has more to get wrong and a warranty should account for this.

        1. Expert Member
          Dana Dorsett | | #4

          The Rocky Mountain Institute's numbers point toward the full lifecycle cost of GSHP to be higher than cold climate ASHPs, since the difference in seasonal efficiency (rather than peak load efficiency) is quite small unless the GSHP system is FULLY optimized, which usually means a bump in upfront cost, negating most of the benefit if the modestly higher efficiency.

          See Figure 2:

          In-situ testing of real w0rld GSHP show higher power use than advertised, often due to over-pumping or other system design (rather than heat pump design) deficiencies. While theoretically your GSHP contractor could be one of the Einsteins or Michelangelos of GSHP system design, in practice most are not.

          In my area with net-metering the difference in capital cost between ASHP and GSHP makes rooftop PV solar a much more attractive investment. This was starting to be true about 8-10 years ago, but is now pretty much a no-brainer. The price & efficiency of GSHP hasn't really changed much in the past decade, whereas the price of solar has fallen precipitously, and while it's efficiency improved by a double-digit percentage.

  2. lance_p | | #5

    Regardless of type, until the cost of heat pumps comes WAY down there's no way either will become a mainstream heating/cooling option. With forced air gas furnaces and AC costing less than half as much installed, the "green" community will be waiting forever for large scale adoption.

    Conventional furnaces, air conditioners and minisplits easily expose GSHPs and multi-zone ASHPs for what they really are; grossly marked up equipment that's not worth the price of admission. Why anyone would pay $18-20k for a single outdoor ASHP with four zones and questionable efficiency is beyond me when they could have four or five small top-notch hyper-heat minisplits for the same money? That's a complete high efficiency unit per zone, with guaranteed efficiency.

    And Peter Y. makes excellent points about the incentives on GSHPs. My family built a house in '85 that had a GSHP, and though my Dad doesn't remember all the details he does remember that the savings never met the promises. It cost a significant amount more than a gas furnace and AC to install.

    Compressors, valves, fans, heat exchangers and electronics are all cheap commodity items and have been for a long time. I don't see why this equipment should cost half as much as it does.

    1. cldlhd | | #13

      I have 4 indoor Mitsubishi wall units and 2 outdoor hyperheat units. My main living area head is a mini split setup with it's own outdoor unit but my 3 bedroom heads are tied into a multi head outdoor unit. I didn't realize the efficiency hit at the time (instead of 30 to 33 SEER it's more like 19) and I didn't want 4 outside condensers. If I had to do it over again I'd keep my msz-fh15na for the main living area and instead of a MXZ-3C24NAHZ2 connected to 2 msz- fh09na's and a msz- fh06na for the 3 bedrooms I'd have 3 msz-fh06na's each with their own outside compressor for better efficiency and humidity control.
      My entire installation cost $12,000 and I received a $1000 rebate from Mitsubishi. I previously had an oil boiler for heat. I haven't calculated the payback time, oil price fluctuations make it difficult, but I'm happy to be done with the boiler.

  3. Expert Member
    Dana Dorsett | | #6

    >"Compressors, valves, fans, heat exchangers and electronics are all cheap commodity items and have been for a long time. I don't see why this equipment should cost half as much as it does."

    Drilling wells &/or or digging large trenches doesn't come for free.

    While those on the gas-grid in low energy cost states aren't able to make the numbers work, air source heat pumps usually "pay back" their upcharge in lower operational cost against propane or oil burners WELL within the equipment lifecycle in most US markets, though maybe not as quickly now that crude oil pricing has taken a pandemic price hit. It's arguable that modulating right-sized equipment has "payback" in comfort fairly immediately, if not in dollar terms.

    1. lance_p | | #8

      Yes, the excavation/drilling isn't cheap especially on retrofits, but I was talking more of adoption into new low/medium density mass-market housing. If the cost of these systems is double that of a conventional gas furnace and AC the payback is so far out that people just won't go for it.

      Absolutely, converting from resistance electric or propane the payback is much quicker, but the reality is most urban areas have gas available. As long as gas is an option these are going to continue to be a tough sell in heating dominated climates.

      I think it's a real shame. I would have liked to go with a heat pump, but even if I was in a more heat pump friendly zone (I'm in 6A), the cost of the installation would keep me from doing it. $20k for a home HVAC system just seems absolutely, certifiably NUTS when you consider how much mechanical and electronic technology and Engineering you get when you buy a new $20k car. Judged on that basis, the most complicated residential ASHP should cost no more than $5k installed!

      1. JC72 | | #9

        {As long as gas is an option these are going to continue to be a tough sell in heating dominated climates.}

        - Which is why the "outlaw NatGas" train has been chugging from city to city as of late.

        1. lance_p | | #10

          Outlawing natural gas would be a much simpler task if the alternative proposal (heat pumps) were competitively priced. They’re far more expensive, and this continent is insistent on getting things as cheap as possible.

          No political party will outlaw gas if it forces people to spend big money upgrading equipment or raises new house prices. Not good for the votes...

          1. Expert Member
            Dana Dorsett | | #12

            >"No political party will outlaw gas if it forces people to spend big money upgrading equipment or raises new house prices."

            In my area cold climate heat pumps run ~$3.5-4K/ ton, fully installed, and most normal sized houses with fluff in the stud bays and glass in the windows can be adequately heated with 3-4 tons of heat pump. Under the larger utility service areas in my state there is 7 year, 0% interest money available for complete retrofit HVAC replacements that meet minimum high-efficiency standards, and cash rebates that make it a lot easier to get off the fossil fuel teat.

            In the unlikely event that the existing gas distribution grid is "outlawed", expanding those programs would not be difficult. A more likely turn of events than condemning existing gas infrastructure is that fossil fuels will be assessed a carbon tax, raising the operation cost. Alternatively, the regional & local gas grids were upgraded to meet new demand or extended to reach those heating with #2 oil or propane, with the additional cost of the grid upgrade going into the delivery charge portion of the bill heat pumps would already be cost-competitive in retrofit situations. (On my home's gas bill the delivery charges already exceed the energy charge by a substantial amount, at over 60% of the total.)

            For new construction it's already pretty easy to make heat pumps + rooftop solar cost competitive with the local gas grid, with a bit of forethought and planning. Banning gas in new construction in this area isn't really much of a cost adder for the end user/customer.

            [edited to add]

            There are already substantial rebate incentives in my area for retrofitting whole-house heat pump solutions in my state, even in towns that don't ban natural gas for new construction. Those incentives are available even to high-income folks, but increases at lower income break points:


          2. AlexD2022 | | #14

            My city already is halfway to outlawing natural gas. San Jose California only allows electric appliances in new construction.

            I think this is a natural evolution with the way technology is going - solar is getting cheaper and also mandatory here, at that point it makes less and less sense to use natural gas. Combine that with the extra concerns from running gas appliances (CO, gas leaks, etc) I don't see why people want to fight for natural gas when they can go all electric and generate a large portion of their own energy.

            I just bought a mini split and prices on that seemed fair to me - the real challenge is it was nearly impossible to find contractors that would work on my mini split and the ones that I found charge pretty high rates to do a straightforward job.

      2. Expert Member
        Dana Dorsett | | #11

        >"$20k for a home HVAC system just seems absolutely, certifiably NUTS when you consider how much mechanical and electronic technology and Engineering you get when you buy a new $20k car. Judged on that basis, the most complicated residential ASHP should cost no more than $5k installed!"

        Comparing cars to HVAC systems is like comparing night and oranges- they're not on a similar axis. A large chunk of the cost of the HVAC system is the installation and system design. The heat pump equipment itself is usually a bit less than half the installed price. How much work, equipment, and risk is involved to install your car, and make it fit with the existing garage & driveway?

        Calling BS on the price numbers, unless my watch is off and it's actually 1980 rather than 2020.
        (Have we just taken another road trip in a modified deLorean? :-) )

        In my area even a dumb single speed 3 ton split AC system (not a heat pump) costs more than $5K fully installed, even with only minimal changes to pre-existing ductwork. If an all new duct system is involved it's quite a bit more.

        >"... the reality is most urban areas have gas available. As long as gas is an option these are going to continue to be a tough sell in heating dominated climates."

        I live in one of those urban areas with an aging leaky gas grid, inadequate regional pipeline capacity to serve both power generators and home heating, with some of the most expensive gas & electrical rates in the lower 48. If the pipelines and distribution grids get upgraded it will only add to the delivery cost portion of the residential billing, for effectively zero benefit to the residential ratepayer. F0r new construction heat pump solutions are often directly cost-competitive with gas furnace + spit AC, foregoing the connection cost of hooking up to the gas grid.

        At my current local 22 cents/kwh grid prices a heat pump with an HSPF of 10 costs $22/MMBTU to heat with. Gas is currently running $1.35/therm (but it's been over $1.50 in living memory), which burned at 82% in a cheap gas furnace works out to about $16.50/MMBTU of heat delivered to the house (not counting the air handler power costs.) Yes, it's a difference, but even RENTED solar (no lease, no installation or maintenance cost) from Tesla runs about 13-14 cents/kwh (and can net-metered in my state), more than wiping out any operational cost advantage to going with gas, if you have favorable unshaded roof area. Purchased rather than rented PV is even cheaper. If it's going to cost $5K to install the gas, it's a far better investment to apply that money to the PV array and heat pump system.

        I live in zone 5A, and have seen several "normal" houses in the 1800- 3000 square foot range completely retrofitted with modulating ductless heat pumps for less than $15K in competitive bidding, but have yet to see a quote for any GSHP (any size) come in much under $30K. YMMV. In most of those cases there was even sufficient capacity at zone 6 type design temps to not lose ground during cold snaps (no resistance-heat backup required.)

        In New York's Hudson Valley the Google spinout company Dandelion Energy is installing 2-3 ton GSHP systems for under $30 as retrofits to oversized oil & propane fired hot air systems. The are using big data crunches on public records to determine areas where there is a critical mass of those systems in use, off the gas grid, focusing the installations in clusters to keep the bidding and transportation costs low, and keeping the drilling rigs busy at a high duty cycle to control cost. They have access to lower cost capital than the mom & pop local installers, and are using drilling techniques pioneered by the oil & gas industry that save time & money compared to the traditional potable well drilling & well casing approach. (Those same drilling techniques have been used in the solar industry to rapidly install foundations for large commercial PV arrays.) Even with all of that going for them it's not clear if Dandelion Energy would be making any money at $20K per system.

  4. norm_farwell | | #7

    GSHP incentives are certainly hard to defend from the standpoint of rational public policy.

    But they make political sense if you look with a certain cynicism at who generally benefits and how. This set-up is a win-win for well-connected folks with wealth and income and fancy houses who want to signal their virtue and be compensated for it by the rest of us. (Grrrrrr....)

  5. charlie_sullivan | | #15

    I agree that it's hard to justify ground source right now. In the past, it made sense because cold-climate air-source wasn't all that good yet. But in the future, I expect it will make sense again.

    1. Modulating GSHP equipment is now available: For example, the Water Furnace 7-series has a nearly 3:1 turndown ratio with a true variable-speed compressor, and the controls can coordinate with a variable speed loop pump to reduce the pumping energy compared even a good traditional installation, while also protecting against the hazards of excess pumping energy in a bad installation. In other words, the improvements that came to air source heat pumps 15 years ago are finally coming to GSHPs, both in terms of performance and reduced reliance on the skill of the designer/installer. (The skill of the designer/installer is still a big issue though!)

    2. As we decarbonize the grid, consistently supplying enough electricity on cold January nights will be an important system design consideration, and anything that contributes to reducing that pain point has value. There are lots of things that can contribute, so we don't need to use GSHPs to make it work, but when the electricity pricing structure allows the homeowner to see the value of the GSHP over an ASHP in that way, it will become a more attractive option. Even if the seasonal average COP is the same for both, the GSHP will have a much better COP on the coldest January night.

  6. DGrothe | | #16

    There are considerations other than cost (operation and capitol) and performance. Servicing a complex ASHP or GSHP could be an issue in some areas. The common A/C furnace systems can be fixed with parts on most any service truck and there are numerus professionals that know those systems.
    One thing I like about GSHP is the units are delivered from the factory sealed, no need to mess with the freon and they use much less freon. Some people also like the fact that there is no noisy external unit. But the new minisplits are so quiet that is not as big of a factor. Of course, there is the problem of people stealing the outside units when you are on vacation…

  7. daDIY | | #17

    Any comments on where water source heat pumps might fall in this conversation? I’m planning on installing a 10,000 gallon underground fire water tank and it seems like a good opportunity to throw in some geothermal slinky tubing. This is in the Los Angeles area so cooling is more important than heating.

    1. charlie_sullivan | | #18

      Are you talking about burying the slinky loops or putting them in your tank? I'd just circulate the water through your heat pump directly. 10,000 gallons is a lot, but it's more like a week's worth of cooling capacity than a season's worth, just considering the heat capacity of the water. So you would need to rely on the heat conducting from the tank into the soil, which might be slow, especially in dry soil. In theory, the best use of it would be to use that as your heat sink when the air temperature is high in the mid afternoon, but then use a conventional A/C system other times of the day. The problem with that is that you have to buy the water source heat pump and the conventional A/C. I guess you could run the ground/water source heat pump until the tank got hotter then the night temperatures, and then use a fan coil to dissipate heat from the tank into the air overnight, or even use radiant sky cooling of the water in the tank. But now we are talking about a fancy custom engineered system...

      How I estimate a week: if you are running 2 tons of cooling, and you let the water in the tank rise 15 F, that's 50 hours of run time--if you have a 30% duty cycle of running the 2 tons of cooling, that's a week of cooling, without considering the tank dissipating heat into the soil.

      1. daDIY | | #19

        Thanks, that’s excellent feedback. I might still toss the slinky tube in the tank during installation but leave it capped off. Seems like by mid-century there may be some days here when any air cooled system will be struggling. 50 hours of run time might be looking pretty good then. The tubing leaves open the option of circulating something other than water without cross contaminating the whole tank. It’s not intended for potable use but it could be run through filters and UV if it comes down to that.

  8. ecological_culture | | #20

    GSHP quieter and not an eyesore - after you deal with the dug-up ground. A good excavator will put the ground back level, then just wait for groundcover to self-populate, or take the opportunity to plant something.

  9. daDIY | | #21

    Has anyone considered whether it adds value to have the heat exchange fluid for an ASHP run through a limited ground heat exchanger before it hits the air cooled heat exchanger? In my case, I’m planning on putting 10,000 gallons of water storage under my urban lawn using a buried modular tank approach, so the incremental cost of burying slinky loops under it is small. The incremental heat exchange capacity is also small but might be cost effective. I haven’t found any research publications on a hybrid approach like this. Using propylene glycol mixture it appears it could be a single closed loop for both, taking the additional friction into account. My area in So Cal primarily has cooling needs and has about 200+ feet of dry alluvial sand so accumulating heat pollution plus poor heat transfer suggests a pure GSHP isn’t a good fit (and well permitting is very complicated - it’s a major aquifer although the groundwater level is very deep).

    1. paul_wiedefeld | | #22

      There are much simpler ways to capture waste heat from AC for water heating than ground loops (Google hot spot energy), but in your case how much cooling will you actually do? Enjoy your nearly perfect climate :).

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