Monday, August 4, 2025

Choosing the Best Heat Pump: Air Source or Ground Source (Geothermal)?


Introduction 

A heat pump is a versatile system that can both heat and cool a home, a fact that remains unknown to many people. Unlike traditional heating or air conditioning units designed for a single purpose, heat pumps efficiently transfer heat in either direction, extracting it from the outside air to warm your home in winter or removing heat from your home to cool your space in summer. This dual functionality, combined with energy efficiency, makes heat pumps a great solution.

Choosing the Right Heat Pump for Your Home

With rising energy costs and growing environmental concerns, heat pumps have become a popular choice for efficient heating and cooling in homes across the US. These systems are a great alternative to traditional furnaces or air conditioners. However, choosing between an air-source heat pump (ASHP) and a geothermal* ground-source heat pump (GSHP) can be daunting. Each type has unique benefits, costs, and requirements, making the decision dependent on factors like budget, space, and climate. This guide compares ASHPs and GSHPs, exploring their costs, efficiency, installation needs, and suitability to help you determine which is best for your home as of 2025.

Key Points

  • Air source heat pumps (ASHPs) are generally more cost-effective and easier to install, while ground source heat pumps (GSHPs) offer higher efficiency, especially in colder climates.
  • ASHPs are generally better for urban and suburban areas due to lower installation costs and space requirements, but in cold climates, GSHPs may save more long-term.
  • There are two types of ASHPs: One, Mini-split (aka ductless) and; Two, Central air (aka ducted).

Space and Installation

  • ASHPs require less space and are easier to install, making them suitable for urban or smaller properties. The outdoor portion generally requires the same space as a modern central air conditioner.
  • GSHPs need significant land (600-1,200 square meters) for ground loops or boreholes, which can be disruptive and costly to install.
Year by year cost reductions

Cost Comparison

ASHPs typically cost between $3,500 and $20,000, depending on whether it’s a ductless mini-split system ($3,500-$6,000 per indoor head) or a central ducted system ($12,000-$20,000). GSHPs generally range from $10,000 to $50,000 or more, with higher costs for larger structures or those requiring boreholes. Historical trends show costs have decreased significantly since 2000, when ASHPs were around $19,000 and GSHPs exceeded $50,000. 

Tax Credits

Federal tax credits currently offer up to $2,000 for ASHPs and 30% of cost (with no cap) for GSHPs. These incentives were scheduled to be available through 2032. However, the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, impacted heat pump incentives by ending the $2,000 tax credit for ASHPs and 30% uncapped credit for GSHPs after December 31, 2025.

The Home Electrification and Appliance Rebates (HEAR) program, part of the Inflation Reduction Act, provides rebates for low- and moderate-income households for energy-efficient electric appliances and systems. This includes heat pumps, heat pump water heaters, electric stoves, ovens, dryers, and related electrical and home improvements. The program aims to make these upgrades more affordable, with potential rebates up to $14,000 per household. OBBBA also terminates the Home Electrification Rebate at the end of 2025.

Year by year performance improvements

Efficiency Comparison

As you can see in the graph above, heat pumps (which were already efficient) have continued to improve with each new generation of products. A standard air-sourced system in 2025 is more efficient than a typical ground-sourced system from 2 decades ago. This has made air-sourced systems practical in many more regions. 

Efficiency is measured by the coefficient of performance (COP). ASHPs have a COP of 3-4, while GSHPs reach 4-6. Since 2000, efficiencies have improved from COP 2-3 to 3-4 for ASHPs and 3-4 to 4-6 for GSHPs, driven by advancements in compressors, motor controllers, and heat exchangers.

Installation and Space Requirements

ASHPs are easier to install, requiring only an outdoor unit and minimal space, ideal for urban areas. GSHPs need significant land for ground loops or boreholes, making them suitable for larger properties but more disruptive to install.

Performance in Different Climates

ASHPs perform well in moderate climates but may lose efficiency below 32°F. There are cold-climate models of ASHPs designed to operate as low as 15°F, but they are generally more expensive. GSHPs provide consistent performance due to stable ground temperatures below the frostline (50-60°F), ideal for harsh winters. Hybrid heat pump systems combine a heat pump with a gas furnace or other backup heat source, switching between them based on outdoor conditions to optimize efficiency and comfort. They are ideal for regions with extreme temperature swings, offering up to 30% energy savings. This setup suits homes with existing furnaces, providing a cost-effective transition to greener heating while maintaining reliability during severe cold snaps.

Maintenance, Lifespan, and Noise

ASHPs require moderate maintenance and last 15-20 years. GSHPs have lower maintenance needs, with indoor components lasting 25+ years and ground loops 50+ years. ASHPs can be noisier due to outdoor units, while GSHPs are quieter. With variable speed motors, new models of ASHPs are quieter than their predecessors.

Pros and Cons

  • ASHP Pros: Lower cost ($3,500-$20,000), easier installation, less space needed, suitable for urban areas.
  • ASHP Cons: Lower efficiency below 32°F, higher operating costs, noisier outdoor unit. (Hybrid systems that use a furnace only on subfreezing can mitigate this)
  • GSHP Pros: Higher efficiency (COP 6), lower operating costs, longer lifespan, quieter operation.
  • GSHP Cons: Higher upfront cost ($10,000-$50,000+), significant land needed, complex installation.

Mini-Split or Central Air?

There are two primary types of ASHPs: ductless mini-split systems and ducted central systems, each offering distinct advantages depending on home layout and heating needs.

A mini-split ASHP is a ductless system with one outdoor unit connected to one or more indoor units. It's ideal for zone heating/cooling for homes without ductwork or to add more temperature control to an area that's poorly serviced by the current ducting.

A central air ASHP uses ductwork to distribute cooled or heated air throughout the home. It's suitable for whole-house climate control. Central ASHPs are a better fit for larger homes with existing ductwork.

Hybrid Heat Pump System

A hybrid heat pump system combines a heat pump with a traditional heating source, such as a gas furnace, to optimize energy efficiency and comfort. The heat pump handles heating and cooling during mild weather, while the secondary system activates in extreme temperatures. This setup is a good option for homes in regions with variable climates, like the US Northeast, where winters can be harsh, or for those seeking to lower utility bills while transitioning from fossil fuels. It suits properties with existing furnace infrastructure, offering flexibility and potential savings of up to 30% on heating costs, depending on usage and local energy prices.

Technological Improvements (2000-2025)

Since Y2K, heat pump efficiencies have improved due to variable-speed compressors, enhanced heat exchangers, and smart controls. Cold-climate ASHPs and better GSHP ground loop designs emerged by 2010. By 2025, integration with solar panels and advanced controls further boosted performance.

Summary Table

Aspect Air Source Heat Pump (ASHP) Ground Source Heat Pump (GSHP)
Cost (2025) $3,500-$20,000 $10,000-$50,000
Efficiency COP: 3-4 COP: 4-6
Installation Easier, less disruptive Complex, requires groundwork
Space Needed Less, wall-mounted Significant, needs land
Performance in Cold Decreases below 32°F Consistent
Lifespan 15-20 years 25+ years (indoor), 50+ (loops)
Federal Incentive Up to $2,000 30% of cost (no cap)

Which is Best for You?

The best choice depends on your budget, available space, and climate:

  • If you prioritize long-term savings and have ample land, a GSHP might be more beneficial due to higher efficiency and lower operating costs.
  • If you have limited space and a tighter budget, an ASHP is likely better due to lower upfront costs and easier installation.
  • If you already have a home with ducting, a central ASHP can tap into these conditioned air highways.
  • If you don't have existing ducting, ductless mini-split ASHP can give you the cool or warm air directly into the space you need it. Multiple heads may be needed for larger areas, but this allows for zone control, meaning you don't have to condition the spaces you are not using.

Consider your budget, space, climate, and incentives when deciding.

Citations:

* Geothermal & Ground-source Terms

The terms geothermal heat pump and ground-source heat pump (GSHP) are often used interchangeably, but there are subtle distinctions:
  • Geothermal Heat Pump: A broad term that refers to any system using the Earth's thermal energy for heating or cooling. This includes GSHPs but can also encompass systems tapping into deeper geothermal resources (e.g., hot springs or volcanic heat) for direct heating or power generation. In residential contexts, it typically means a GSHP.

  • Ground-Source Heat Pump: Specifically refers to a heat pump system that uses the stable temperature of the ground (or groundwater) at shallow depths below the frostline to transfer heat to or from a building. It involves ground loops (or sometimes wells, lakes, or ponds) to exchange heat with the soil or water.
Key Difference: GSHP is a type of geothermal system focused on shallow ground heat exchange for residential or commercial use, while "geothermal" can include broader applications like deep geothermal energy for electricity. In practice, for residential applications, they usually refer to the same GSHP technology.
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