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Residential Building: Geothermal Energy for New Home Construction

James Todd
March 2003

Home Construction

Beginning with the April 2002 edition, newsletters are now archived
online at:


1. Geothermal Energy Systems: Is there one in your future
Courtesy of Franklin Energy Systems

2. The 10 most common mistakes in the building of a new home
Guest article, by Chris McMinn, Professional Cost Analyst and Consultant

3. Useful Links

4. Thought for the Day

5. Subscription Information

Please forward this newsletter to anyone whom you think may be interested!

1. Geothermal Energy Systems


With oil prices approaching $40 per barrel, gasoline $2/gallons, and heating
oil well over $1.50 it is prudent to examine alternatives that could possible save you significant dollars over the long haul of owning and living in your house. Geothermal energy is one such alternative.


Americans usually rely on two familiar systems to heat homes or buildings: fuel-powered furnaces or boilers (which burn gas, oil, or propane) and electric-powered air-source heat pumps or baseboard radiant heat. However, these traditional systems present two drawbacks. First, even highly efficient models pollute the environment because fuel must be burned to produce heat. Second, energy prices are rising. Accordingly, people want cost-effective long-term heating and cooling options. Geothermal systems are one such option: they are being installed in homes, businesses, and schools across the country.

Geothermal 101

What is a "geothermal" system? It takes advantage of the Earth’s ability to store vast amounts of heat in the soil ("geo" means earth and "thermal" refers to heat). This heat energy is maintained at a constant temperature (50°F to 70°F depending on latitude) in the soil and near-surface rocks. In Wisconsin, the soil maintains a 50°F temperature beginning approximately four feet down, well past the winter frost line.

Geothermal heating systems, also called ground-source heat pumps, "capture" this steady supply of heat energy and "move" it from the Earth and through a home or building. Basically, once installed, a home or building owner will use much less energy, save money each month, and reduce the amount of pollution produced by fossil fuel systems. In Wisconsin, for example, two school districts recently began installing geothermal systems at area high schools. In both Fond du Lac and Evansville, district administrators were "sold" on this technology’s energy efficiency and its ability to yield long-term cost savings. Schools across Wisconsin and the country have faced skyrocketing energy bills and they are searching for cost-effective alternatives. Geothermal systems represent a proven option. In addition, they utilize a renewable energy source—the Earth’s naturally-occuring heat energy.

How Ground Source Heat Pumps Work

A heat pump is a mechanical device that transfers heat from one source to another. Ground-source units pull heat from the earth and transfer it to homes or buildings. Heat pumps (despite their name) can provide both heating and cooling. The cooling process is simply the reverse of the heating process: heat is taken out of a building and returned to the Earth.

Typical ground-source heat pumps transfer heat using a network of tubes, called "closed loops." Basically, the loops are filled with either water, refrigerant or an anti-freeze solution. They run through the ground in the vicinity of a building and the liquid absorbs the Earth’s heat energy. Then, this warmed liquid is pumped back through the system into the building. This process provides heat to the building space. Once the fluid passes through the building and transfers its energy, it flows through the loop system back to the Earth and the process repeats itself.

In the summertime, these systems "reverse" into cooling mode. Technically, the system does not "run backwards." Instead, a series of valves enables the system to switch the "hot" side and the "cold" side. The heat from the building is transferred to the liquid in the loop and this liquid is pumped back into the ground. When the ground source heat pump is in cooling mode, it usually has an excess of warmed liquid in the system. This liquid can heat water for the building and basically eliminate the use of the hot water heater during the summer months.

Saving Energy

Ground-source heat pumps can use 25%-70% less electricity than conventional electric heating and cooling systems. First, in winter heating mode, a ground-source heat pump uses energy from the Earth to provide heat, whereas air-source heat pump try to extract the last bits of heat energy out of cold winter air. Because of the long, cold Wisconsin winters, air-source heat pumps are not effective or efficient.

Second, ground-source heat pumps are more energy efficient than conventional electric heaters because they maximize the thermodynamic advantage of a heat transfer fluid. This benefit enables the ground source heat pump to produce more heat energy output than electric energy input. Conventional electric heaters on the other hand don’t quite produce as much heat output as electric input. (Under some conditions, a ground source heat pump cannot meet the required heating needs. In these cases, supplemental heat must be provided from another source–usually conventional electric units.)

Third, during the summer, the ground source heat pump "reverses" into cooling mode. This fact makes the ground-source heat pump more energy efficient for cooling than a traditional air conditioner.

Finally, when a desuperheater is installed, energy from the ground source heat pump can be transferred to the hot water tank. As a result, building occupants receive "free" hot water in the summer and very low-cost hot water in the winter.

Saving Money

A ground source heat pump system, including the underground loops, costs about $2,500 per ton of capacity, or roughly $7,500 for a 3-ton unit (typical size for new home construction). Approximately half of this cost is related to the geothermal loop configuration. It can be expected to last from 20 to 30 years with minimal maintenance. A conventional heating and cooling system costs up to $4,000.

At first glance, this price difference of $3,500 may seem impractical and too costly. However, buyers must carefully consider monthly energy costs over the life of the equipment when making a decision. As the school administrators in Fond du Lac and Evansville learned this past year, rising energy prices can destroy annual budgets and geothermal systems are a good way to minimize future price shocks.

Since these systems use from 25% to 50% less energy than conventional systems, users will spend less on their monthly energy bills. In fact, many homeowners could spend from $35 to $70 less per month, meaning that most ground source systems will "pay for themselves" in 2 to 10 years. The additional cost of $3,500 will be recovered from the monthly energy savings. After the "payback" period, the owner will simply pay much-reduced utility bills.

Ground-source heat pumps can be retrofitted in existing homes that have traditional forced-air systems. In most cases, the heat pump can be connected to the existing ductwork while the loop system is installed outside in the ground adjacent to the home.


In addition to the energy and cost savings associated with geothermal energy systems, there may be special programs (rebates or low interest loans) available through your local electric utility to offset the initial installation costs.

To get some idea of the potential energy cost savings for your new home construction project click the above link. (

Related websites include:

2. The 10 Most Common Mistakes in Building Your New Home

This is the first in a series from Mr. Chris McMinn. His firm, McMinn & Associates are professional cost analysts and consultants. They review and analyze a large range of residential and commercial construction projects, applying the same methods and techniques of cost engineering to residential construction projects as they do for their commercial customers.

If you are looking for a professional cost consultant, we encourage you to contact Chris. If you are looking for written Guide to many of the same issues Chris points out, we encourage you to take a look at the House-N-Home Building Guide.

The Fifth Pitfall...

Copyright © 2002 C. S. McMinn

Wait a moment, didn't we just read a previous article about this very topic? You did. But as they say in real estate, the three biggies are: location, location, location...  In construction it's the same, only now it's: contractor, contractor, contractor... So this is also part 2 of the fourth Pitfall: the process of finding the right contractor for your project.

If you've been following these articles, you will reach a point where you have (laboriously) acquired a list of contractors. This is something you've been developing since day one. Your list should include at least ten contractors– preferably more. You know about character, integrity and references. Now you've reached the point where you need to get out there and look at their current and recently completed projects.

You're also looking for contractors who tend to specialize in what you hope to build. Aside from great references, if you're project is a new deck in your back yard, or a bedroom addition, you need a small contractor. Someone who actually works on the project themselves.  Why?  Because ideally, you want to match the contractor to the task. Larger organizations, with an office, secretary and estimator, will be (typically) less flexible and inclined to charge a higher percentage for overhead. For a new home, you need a contractor with plenty of prior experience in whole house construction.

But... here you are. Each of your prospective contractors has given you a list of names and numbers. These are the owners of completed homes (or remodels).  No matter what it takes, you must now call each of them and ask for a guided tour!


How big of a house are you going to build?? Find out what size of mortgage for which you qualify. IndyMac Bank is your best online source for home mortgages. Online applications, quick approvals.

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Considering a Hot Tub in your new Home?? Look no further. ThermoSpas Hot Tubs are offering up to $900.00 in cost savings discounts for House-N-Home-Building visitors.

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Most homeowners are only too willing to share their construction experiences. Even so, be discreet. New homes and remodels usually expose our own ignorance. Many homeowners will still be bruised from cost overruns and mistakes they feel were at least partially their fault. Some may be reluctant to invite you over. In that case offer to take them out to lunch. It is essential you have sufficient time to make friends, discuss their project, examine their plans and– especially, see their contract! You want to know how their original bid worked out.  Was the contractor fair and honest? Did he charge for extras? What were they? How much did they cost? What was the final cost compared to the original bid? Why the increase?

Although these questions can be embarrassing to ask, you will learn invaluable insights regarding contractors and the construction process. You will see first hand what each contractor delivers– and how they interpreted their own contract.

Unless you have a lot of prior construction experience, there is no substitute for this process.  Take notes, pictures... and listen.  Ask if there were problems. How were they resolved?  Three interviews like this for each contractor, and the lights will turn on. You will begin to recognize attitudes and behavior patterns, because... behavior never lies.

We do this all the time. What sounds really tedious eventually becomes familiar– even easy.  You are looking for a great report on that contractor.  Ask each homeowner to rate their experience on a scale of one to ten. Don't settle for anything less than an eight.  Seriously, I was speaking with a homeowner last year, listening to their complaints about a contractor they'd hired. On asking this question, they rated him a "4". "But on the next project", they said, "he was worse!"

Good contractors are out there. If you work with them–  and use our preparation guidelines– you can also achieve competitive pricing.  We'll look at that in the next article.

4. Useful Links

The following are useful links relating to the modular housing industry may be of interest. is a good home building products information site.

Another good website with a list of manufacturers for virtually all of your building supply needs. Also contains an informative page on construction basics.

5. Thought For The Day - Reasoning

Most of our so-called reasoning consists in finding arguments for what we already believe in.

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