Builders Can Earn Federal Energy Tax Credits With Highly Efficient Geothermal Heating/Cooling Systems

January 11, 2006


ORLANDO, FL— Thanks to the new federal energy act, homebuilders now have an economic incentive to build energy-efficient homes that not only help homeowners save money on their utility bills, but also are also much better for the environment.

Effective in 2006, the Energy Policy Act of 2005 will provide builders with up to $2,000 in tax credits for homes that reduce energy use for heating and cooling by 50 percent compared to levels identified in the 2004 International Energy Conservation Code Supplement.

At least one-fifth of the energy savings must come from the construction of a more energy-efficient building envelope, but there are no restrictions on how the rest of the savings can be achieved.

A new generation of geothermal central heating and cooling systems can provide homebuilders with energy savings up to the maximum outlined in the new energy law. The U.S. Department of Energy reports on its Energy Efficiency and Renewable Energy website that geothermal heat pumps are the most efficient heating and cooling systems available, even more so than high-efficiency gas furnaces and air conditioners.

Unlike combustion-based central heating systems that burn fossil fuels to produce heat, geothermal heating removes heat from the ground and transfers it indoors. This is possible because just a few feet underground the temperature remains at a relatively constant 50-60 degrees Fahrenheit year-round.

Not only is the supply of geothermal heat practically unlimited, harvesting it requires very little energy and produces no fossil fuel emissions. Geothermal central heating systems (also known as ground-source heat pumps or geoexchange systems) use electrically driven compressors and heat exchangers to concentrate the Earth's energy and release it inside the home at a higher temperature. The process can be reversed in summer to provide low-cost air conditioning.

Not all geothermal systems are alike, however. The most efficient geothermal technology is known as direct geoexchange (DX). This method transfers energy directly to and from the earth using highly conductive copper piping. Geothermal systems that rely on plastic piping to harvest heat must use an intermediate, less efficient heat-exchange loop and water pump (a process that requires additional equipment and electricity).

Builders seeking additional information on DX geothermal systems can visit the Plumbing section on the CDA website,


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