Geothermal systems are quiet, long lasting and fashionably green. The 150-year-old technology is being rediscovered, inspiring more urbanites and suburbanites to tap into the power supply under their feet. But if you dig, avoid a few pitfalls.

Geothermal systems gather energy present beneath the earth’s surface, where the temperature averages 55 degrees (higher in Texas, lower in North Dakota), and concentrate it to provide space heating. In a big suburban back yard you might have the pipes installed horizontally, at a depth of 5 feet or so. On Yerke’s tiny lot they went in vertically, to a depth of 75 feet. The pipes are filled with a water-antifreeze mix. A water pump brings the fluid indoors. It passes by a heat pump, which is in effect an air conditioner run in reverse. By sucking 55-degree heat out of the ground and concentrating it, the heat pump is able to deliver 110-degree heat into the warm air ducts of a central heating system. In summer the reverse process takes place: The (comparatively) cool earth becomes a waste dump for
unwanted heat that accumulates inside the house.

The heat in the earth is not exactly a free lunch. The process of concentrating it consumes energy, in the form of electricity. But the energy consumed is much less than the energy delivered into the ductwork. A typical home geothermal system consumes, every month on average, 750 to 1,000 kilowatt-hours of juice per 1,000
square feet.

Philip Jeffers, founder of Energy Design Systems, a software design and consulting firm for the air-conditioning and gas-appliance industries, calculates the cost of replacing the conventional heating system in his 2,352-square-foot home in Exton, Pa. with a geothermal one at $17,700. But a state-of-the-art conventional replacement (which he installed four months ago) cost $12,500.

Jeffers paid $371 a month for heating, cooling and hot water. With the new conventional system, his bills dropped to $172, but with a new geothermal system, his bills would have been $83 a month. The incremental $5,200 cost of a ground-assisted heat pump would yield a dividend of $89 a month, or $1,068 a year.

If the geothermal system is, conservatively, destined to last ten years, a $520 depreciation charge should be taken off the annual heating bill benefit, for a net benefit of $548 a year. That’s still a pretty good return on a $5,200 chunk of capital, certainly better than the yield you can get in the stock market. The heat pump dividend is tax free.

There are a few catches. Heat pumps sometimes break, and they can have a hard time quickly boosting the temperature when you raise the thermostat. Before buying any expensive equipment, patch up your home. David Dwyer, the contractor who built the Yerke family’s home and installed their geothermal system, says that if you have an
old and drafty house you should, before putting in a fancy heating system, put in new windows, seal leaks and add insulation. Steven Baden, the executive director of Residential Energy Services Network, which writes guidelines for home energy audits, says most homes can reduce heating and cooling bills by 30% that way.

Be wary of inexperienced contractors attracted to the high price tags associated with geothermal. Ask potential contractors what training they’ve had and how many geothermal installations they’ve done. Manufacturers such as Waterfurnace provide lists of trained installers. Call references. Make sure the contractor is accredited by associations such as the International Ground Source Heat Pump Association. To
come up with a quote, a good contractor will do a heat-load calculation to determine what size unit and how much piping to install.

Get a few bids and run the numbers. “I know they’re being overpriced because everybody thinks they’re magic, and they’re selling it as magic,” says James Bose, a professor at Oklahoma State University and executive director of the International Ground Source Heat Pump Association. But value experience. Florida contractor Mark Barrett put in geothermal to power his own home, pool and whirlpool. He chose an
installer based on the advice of a trusted mechanical engineer.

Thirty years ago some contractors used brittle PVC pipes that burst when they froze. These days you should be getting high-density polyethylene pipes. Craig Funke, chief executive and part owner of Equiguard, which provides warranties to the heating and cooling industries, says geothermal units’ failure rates, including both equipment failure and bungled installs, are equal to those of conventional equipment. You might pay 10% more for a warranty. Parts and repairs are pricier.

A geothermal system should work anywhere regardless of the weather and provide a quicker return on investment than solar panels do, but it gets only a $300 federal tax credit (solar panels get you up to $2,000). The most recent federal energy bill allowed for a $3,000 tax rebate for geothermal, but that remains unfunded.

Some utilities offer rebates and discounted electric rates. Those can come and go. Yerke has been paying a discounted rate to Exelon (nyse: EXC – news – people )-owned ComEd, but that rate is being phased out. “I didn’t expect to get the lower rate,” Yerke says. “It was kind of a bonus.” Even without the discount, he figures, he would get back the $16,000 incremental cost of his heat pump in eight years.

First, with most all systems there are parts of the installation that require a qualified technician. In many cases the equipment can be set in place, the wiring placed for both supply and thermostat, and the refrigeration lines (if needed) can be placed. HOWEVER, the brazing of refrigeration lines, and evacuation of the system requires equipment and expertise that normally only a qualified tech will have. Since this is a VERY IMPORTANT part of the installation, it is not advisable to take the chance of not getting it done properly. Doing what you can by placing equipment and materials will still enable you to save money over a complete turn key installation.

Secondly, the control wiring (thermostat) must be correct and the initial start up of an HVAC system requires a knowledgeable technician to check pressures, temperatures and electrical draw to determine what adjustments need to be made to operate at it’s peak.

Third, warranty registration must be submitted including the name and phone number for the installer. Also, no manufacturer will warrant parts failures resulting from improper installation, no matter who does the installation.

MOST importantly, keep in mind that all manufacturers indicate that well over half of all system problems result from improper installation, even with most being installed by professional technicians. Getting a reputable and well trained technician to install your system can provide great benefits in not having future problems, as well as having a system that delivers all the performance it was designed to provide.

With regard to warranty you also need to keep in mind that all HVAC manufacturers warranty PARTS ONLY. If there is a problem, the warranty will cover the part alone. The shipping of the part (including return shipping of the defective part) as well as all labor charges for diagnosis and replacement of parts is NOT COVERED by warranty. Also, the cost of refrigerant is not covered by warranty. Some installers may be able to offer a labor warranty separate from the manufacturers warranty. In most cases even if you purchase a labor warranty, it may not cover the total costs of repair.

The important thing to remember is that once installed, the geothermal system requires minimal maintenance and offers superior savings for the life of the system.

Low Operating and Maintenance Costs
Geothermal systems have one of the lowest relative operating and maintenance costs of any HVAC system available. Annual operating costs are often lower than conventional systems such as built-up air handlers, rooftop units or VAV applications. Maintenance and service are easy and do not require specialized training, giving the owner more options for maintaining and servicing their equipment.

High Efficiency
Geothermal systems are one of the most efficient systems available for heating and cooling. For every 1 btu of electricity used to heat or cool your building, the geothermal heat pump unit produces 3-5 btu’s. That’s 300-500% more efficient than using electric resistance heat and 20-30% more efficient than typical boiler/tower systems. The constant temperature of the ground and colder design loop temperature mean that the geothermal heat pump units don’t have to work as hard, and are therefore more efficient than most other systems.

Geothermal heat pump units can also be provided with a load shedding device on the control board to further reduce energy requirements. The device creates a greater deadband, which enables the unit to “idle” for an extended period of time while maintaining a relative constant temperature setting. This feature allows the building’s peak to be shaved without compromising overall comfort.

Decentralized Design
Each water source heat pump resides in close proximity to the zone it serves. This avoids the large duct runs associated with central air systems. In addition, an equipment failure only affects the zone where the failed unit is located. Central system equipment failures can drastically affect large portions of the building.

Equipment can be changed to meet the specific needs of the occupant. For instance, in a retail environment, the unit can be sized to meet the load of a new tenant. In addition, individual power metering is possible, allowing the occupant to control and pay their own energy costs. As the building is constructed, only a minimum amount of equipment needs to be provided until an occupant is found and the tenant design complete.

Freeze Protection
In Northern climates, a typical water loop may contain a small amount of antifreeze (10%-30% by volume) to prevent the water in the ground loop from freezing up. The majority of the antifreeze products available pose no threat of polluting, even if there is a leak into the ground. The chances of an antifreeze leak into the ground is significantly reduced due to the strength and flexibility of the pipe used in today’s ground loops. If the pipe is pulled hard enough, it will actually be squeezed shut at its weakest point before a break would occur, thus sealing the system off to the surrounding ground.

Change your air filter regularly
Check your filter every month, especially during heavy use months (winter and summer). If the filter looks dirty after a month, change it. At a minimum, change the filter every 3 months. A dirty filter will slow down air flow and make the system work harder to keep you warm or cool — wasting energy. A clean filter will also prevent dust and dirt from building up in the system — leading to expensive maintenance and/or early system failure.

Tune up your HVAC equipment yearly
Just as a tune-up for your car can improve your gas mileage, a yearly tune-up of your heating and cooling system can improve efficiency and comfort.

Learn more:

Maintain your Equipment: A Checklist
Finding the right contractor: 10 tips
Install a programmable thermostat
A programmable thermostat is ideal for people who are away from home during set periods of time throughout the week. Through proper use of pre-programmed settings, a programmable thermostat can save you about $180 every year in energy costs.

Seal your heating and cooling ducts
Ducts that move air to-and-from a forced air furnace, central air conditioner, or heat pump are often big energy wasters. Sealing and insulating ducts can improve the efficiency of your heating and cooling system by as much as 20 percent — and sometimes much more.

Focus first on sealing ducts that run through the attic, crawlspace, unheated basement, or garage. Use duct sealant (mastic) or metal-backed (foil) tape to seal the seams and connections of ducts. After sealing the ducts in those spaces, wrap the ducts in insulation to keep them from getting hot in the summer or cold in the winter. Next, seal ducts that you can access in the heated or cooled part of the house.

See our Duct Sealing brochure (1.13MB) for more information.

Consider installing ENERGY STAR qualified heating and cooling equipment
If your HVAC equipment is more than 10 years old or not keeping your house comfortable, you should have it looked at by a professional HVAC contractor. If it is not performing efficiently or needs upgrading, consider replacing it with a unit that has earned the ENERGY STAR. Depending on where you live, replacing your old heating and cooling equipment with ENERGY STAR qualified equipment can cut your annual energy bill by nearly $200. But before you invest in a new HVAC system, make sure that you have addressed the big air leaks in your house and the duct system. Sometimes, these are the real sources of problems rather than your HVAC equipment.

Remember that getting the proper size and a quality installation is essential to getting the most from your new equipment. When replacing HVAC equipment, bigger doesn’t always mean better. If the unit is too large for your home, you will be less comfortable and might actually have higher utility bills. Oversized equipment will operate in short run cycles, not allowing the unit to reach efficient operation and remove humidity from the air — resulting in an uncomfortable home. Your contractor should determine the right size for your HVAC equipment by using ACCA/ANSI Manual J or an equivalent sizing calculation tool that takes into account specific information about your home.