Geothermal Heating and Cooling in 80M US Homes by 2050

A report from the U.S. Department of Energy, titled “Pathways to Commercial Liftoff: Geothermal Heating and Cooling,” published in January 2025, indicates that a novel renewable energy source has the potential to heat and cool up to 80 million homes, including both residential and commercial buildings, across the United States by 2050.

The report discusses geothermal heat pumps, which utilise geothermal energy—heat energy derived from the earth (geo) and thermal (heat). This energy source can tap into naturally occurring underground reservoirs of hot water or leverage the stable temperature found in the subsurface to heat effectively and cool buildings.

Geothermal heat pumps offer an effective way to provide heating and cooling by utilising the ground as a heat source or sink. They absorb excess heat from the ground when aboveground temperatures are warmer and release heat into the ground when it’s cooler (Geothermal Basics, n.d.).

On the other hand, air-source heat pumps are more commonly used and recognised. About 86.1% of homes in the United States—approximately 106.3 million—do not have heat pumps. Meanwhile, 13% of homes (around 15.9 million) are equipped with air-source heat pumps, and only 1% (about 1.3 million homes) use geothermal heat pumps.

Air-source heat pumps are praised in the clean energy sector because they are highly efficient, all-electric devices that enable users to move away from fossil fuels. However, they have a significant drawback: their efficiency decreases in frigid outdoor temperatures, leading to higher electric bills as the pumps’ compressors and fans work harder to extract any remaining warm air outside.

Geothermal heat pumps efficiently exchange heat by utilising the consistent temperatures found underground. In the winter, they provide warmth to homes, while in the summer, they offer cooling. Temperatures about 30 feet below the surface remain relatively stable throughout the year, generally ranging from 50°F (10°C) to 59°F (15°C). In most areas of the United States, the soil temperatures are typically warmer than winter air and cooler than summer (geothermal heat pumps, n.d.).

Air-source and geothermal heat pumps share the same thermodynamic principles. Still, because the ground provides a more constant temperature for heat exchange than outdoor air, it gives a more stable source of heat, increasing the efficiency of GHPs.

Widespread adoption of GHPs could significantly reduce peak demand on the national electric grid. A report indicates that if fully implemented, GHPs could lower peak demand by hundreds of gigawatts (GW) during both summer and winter months.

This peak-demand reduction can lead to substantial energy cost savings, amounting to tens of billions nationwide. Homeowners and renters could see average annual savings in the hundreds of dollars while also helping to keep many coal or gas-fired power plants offline during high-demand periods.

Leveraging GHPs through thermal energy networks

Using thermal energy networks (TENs) can enhance the benefits of geothermal heat pumps (GHPs).

TENs connect buildings through shared heat exchangers within a network of piped fluid and geothermal boreholes. GHPs adjust the temperature of the working fluid to the operational level required at each building for heating or cooling purposes. Additionally, TENs can integrate heat sources, such as waste heat from sewer water, data centres, industrial processes, or power generation, to provide efficient heating solutions.

The construction of a TEN typically involves multiple buildings and systems, which allows for project-level financing and rate-basing investments that can benefit many customers who may not be able to implement a standalone system.

Gas utilities aiming for decarbonisation may consider TENs as a low-carbon alternative for new infrastructure, providing heating and cooling as a service to support their decarbonisation goals. This could also serve as a more cost-effective option compared to constructing new or replacing ageing gas pipelines.

GHP installation has a higher upfront cost than other heating and cooling solutions. Most of the price is from drilling the ground and laying the underground pipes. Retrofitting existing buildings costs more because it is more complicated than integrating GHPs into new construction.

However, the report notes that the device’s high efficiency, extremely low electricity use even at maximum power, and long lifespan will pay off over time. For a typical U.S. home, installing a GHP can cost around $19,000 after tax incentives. Currently, federal tax credits cover approximately 30% of installation costs; if this incentive continues, it could significantly reduce the cost of GHPs and facilitate their widespread adoption in the U.S.

The U.S. Department of Energy’s Geothermal Technologies Office has published 19 case studies on geothermal heat pump (GHP) systems. Among these examples is the University of Florida Institute of Food and Agricultural Sciences Leon County Extension building in Tallahassee, which adopted a geothermal heat pump to support its net-zero energy objectives.

Seattle Public Schools has implemented GHP systems in 15 existing schools and four under construction. At the same time, Montana State University’s GHP system has achieved a 25% reduction in energy use intensity across its campus from 2007 to 2023. These studies demonstrate a variety of installations across different U.S. climate zones, highlighting various system types, sizes, and benefits, helping individuals better understand GHP technology.

According to GTO, the outcomes of these case studies provide real-life examples of GHP systems implemented in diverse regions of the country, making it easier for people to envision how such systems could work for them.