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Air source heat pumps vs. geothermal heat pumps

Did you know that you can both heat your home in the dead of winter and cool things down during the hottest day of the summer using the same system? A heat pump is a highly efficient technology that serves the dual purpose of both heating and cooling spaces. But like other types of thermal technology, there are a variety of heat pumps to consider, and some may be better suited for you depending on your property, preferences, and heating and cooling needs. In this article, we’ll discuss the major differences between the two major types of heat pumps: air source heat pumps and ground source or geothermal heat pumps.

Key takeaways

  1. Air source heat pumps (ASHP) and ground source heat pumps (GSHP) also known as geothermal heat pumps both transfer heat from one space to another, but what sets them apart is where they source that heat from – GSHPs transfer heat from the ground, while ASHPs transfer heat from the air.

  2. Air source heat pumps are generally less expensive and require less space, whereas ground source heat pumps are more efficient and last longer.

  3. Air source heat pumps are more popular than ground source heat pumps due to their lower upfront costs and easier installation.

  4. Both ASHPs and GSHPs are often eligible for local, state, and federal rebates and incentive programs – make sure to ask your HVAC contractor to see if the equipment you’re installing qualifies.

  5. Heat pumps pair naturally with emission-free solar panel systems to help you save even more money on your energy bills. Sign up on the EnergySage Marketplace to compare quotes from pre-vetted installers in your area today!

What is a heat pump?

You can use heat pumps to both heat and cool your home. They run on electricity, but take advantage of naturally occurring temperature differences to transfer heat into or out of buildings. Heat pumps have higher efficiencies than traditional heating and cooling systems because they transfer natural heat energy from one place to another, rather than generating it from scratch.

The two primary types of heat pumps are ground source, or geothermal, heat pumps (GSHPs) and air source heat pumps (ASHPs). What sets them apart is their heat source: GSHPs transfer heat from the ground, while ASHPs transfer heat from the air.

Air source heat pumps vs. geothermal heat pumps: what to know

Both ASHPs and GSHPs are efficient and clean technologies, but there are a few factors to consider when deciding between using one or the other: TechnologyAir source heat pumpGround source heat pump Cost$3,500-$20,000$10,000-$30,000 EfficiencyMore efficientMost efficient Incentives availableYesYes Lifespan15-25 years25 years Space requirementsLess space requiredMore space required

We’ll dive deeper into these differences below.

Upfront cost

In most cases, you’ll spend more money upfront installing a GSHP compared to an ASHP. This is largely due to the additional outdoor components required and the installation itself: for GSHPs, contractors need to dig into your property to install a ground loop, which involves bringing heavy machinery onto your property for digging a trench and installing piping. Air source heat pump installations are less labor-intensive and therefore require less time. Most people installing a ground source heat pump can expect to pay between $10,000 and $30,000 for the system with costs sometimes reaching up to $50,000 depending on your property. Air source heat pumps, on the other hand, usually cost between $3,500 and $6,000 per indoor head for ductless systems and between $12,000 and $20,000 for central, ducted systems. You can learn more about the differences between ductless and ducted air source heat pumps in this article.


Efficiency is what classifies heat pumps as a “clean technology” – in comparison to traditional heating and cooling systems, heat pumps use less energy to heat the same amount of space. That said, in the comparison between ASHPs and GSHPs, geothermal wins on efficiency: air source heat pumps generally have heating efficiencies around 400 percent, meaning every 100 kilowatts of electricity consumed produces roughly 400 kW of thermal energy. Geothermal heat pumps, on the other hand, can reach efficiencies as high as 600 percent. As this relates to your own utility bills, you’ll pay more for electricity when using ASHPs to heat your home than you would pay to heat the same space with GSHPs.


If you install either ASHPs or GSHPs, you’re likely eligible for a number of tax credits or rebates that can help decrease your upfront costs. Thanks to the Inflation Reduction Act (IRA), you can receive a tax credit for 30 percent of your qualified heat pump’s system costs (up to $2,000) annually from 2023 until 2033 through the Energy Efficiency Home Improvement Credit. The IRA also includes state-administered rebates of up to $8,000 for heat pumps, which depend on your income and location. Other incentives can vary depending on your area: your local government or utility company may offer their own incentives, unique to their residents and/or customers.

Between the two technologies, you’re likely to claim higher incentive benefits with a GSHP installation. This is because homeowners who install geothermal heat pumps are eligible for the Investment Tax Credit (ITC), the same incentive available for homeowners installing a solar panel system. If you install a system from 2022 until 2032, you can claim 30 percent of your geothermal installation costs as a federal tax credit. There is no limit to this credit, and for applicable GSHP technologies, this means thousands of dollars in savings. ASHP installations, however, are not eligible for this incentive, but may be eligible for other energy efficiency incentive programs in your town or state.

If you’d like to learn about what incentives are available for heat pump investments in your area, the Database of State Incentives for Renewables and Efficiency (DSIRE) is a great place to start.


Most GSHPs have a longer lifespan than ASHPs because the main components of the system are located underground or inside your home, protected from the weather and other outdoor disturbances. Air source heat pumps, on the other hand, are more exposed and therefore degrade at a quicker rate. Many ASHPs last for up to 15 to 25 years. With GSHPs, indoor units last up to 25 years, while the ground loop located underground can last for more than 50 years.

Space requirements

GSHP installations require more space than ASHP installations because they have additional outdoor components and you need to dig into your land to install the ground loop components. The installation might require some alterations to the landscape on your property. In comparison, every component of an air source heat pump is above ground and fits right alongside your building. The installation process and space requirements often make air source heat pumps a more suitable heating and cooling solution for properties without large yards.

Which is the right solution for you?

You can save money on your long-term heating and cooling costs by transitioning to either ASHPs or GSHPs, but the right solution for you depends on your property, budget and preferences.

In general, ASHPs are a bit more popular because of their lower upfront cost and minimal space requirements. The installation process for ASHPs is also simpler and less time-intensive than that for GSHP. Additionally, if you’re worried about alterations to your yard or landscape, you can avoid excavation and trenching by opting for ASHPs over GSHPs. However, GSHPs are more efficient, so you’ll spend less money to operate a GSHP over time than you would an ASHP. If you have the budget and space to spend a bit more for a GSHP, you may end up saving more money long-term through electricity bill savings.

Because heat pump solutions are unique to each property, we recommend talking to certified contractors about your options before making a decision. After evaluating your property, energy needs, and current heating system, they’ll be able to advise on the most suitable technology for you.

Power heat pumps with solar energy

If you’re considering installing heat pumps, you can save even more money by pairing them with a solar panel system. Sign up on the EnergySage Marketplace to receive up to seven custom solar quotes to compare. You can add a note in your account to let solar installers know that you’d like to use solar electricity to power a future heat pump system so that they can size and design your solar panel system to meet these needs.

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