Inputs
Example data table
These scenarios show how incentives and savings rates can change outcomes.
| Scenario | Installed cost | Rebates + credits | Year‑1 savings | Notes |
|---|---|---|---|---|
| Starter retrofit | $19,000.00 | $5,200.00 | $1,050.00 | Moderate savings assumptions, minimal ductwork changes. |
| Balanced upgrade | $24,000.00 | $7,300.00 | $1,500.00 | Typical incentives plus improved comfort and efficiency. |
| High‑performance build | $32,000.00 | $9,800.00 | $2,100.00 | Higher savings potential with envelope upgrades. |
Formula used
1) Net installed cost
2) Yearly baseline and geothermal costs
3) Gross savings
4) Net cashflow and NPV
5) ROI and IRR
How to use this calculator
- Enter your annual heating and cooling costs from recent bills.
- Choose reasonable savings percentages for geothermal performance.
- Add your project cost, rebates, and an estimated tax credit rate.
- Adjust escalation and discount rates to match your assumptions.
- Optional: enable financing to subtract annual loan payments.
- Press Calculate to view results above the form.
Inputs that drive savings projections
The calculator starts with your annual heating and cooling spend, then applies separate savings rates. Many projects target 25–60% HVAC energy reduction, but results vary by climate, insulation, duct losses, and thermostat behavior. Example: a home spending $1,600 on heating and $900 on cooling with 55% and 35% savings produces roughly $1,195 in Year‑1 energy savings before maintenance. If maintenance drops, gross savings improve each year noticeably.
Year‑1 baseline and escalation assumptions
Energy prices rarely stay flat, so the model escalates baseline costs each year. A 3% escalation makes year‑10 costs about 1.34× year‑1 (1.039). If your baseline HVAC plus maintenance is $2,720 in year‑1, the same basket becomes about $3,645 by year‑10 before savings. This is why long‑life systems can look better over longer horizons. A 0.25% degradation trims Year‑10 savings by about 2% versus constant performance assumptions.
Incentives and net installed cost math
Upfront rebates reduce the eligible cost used for a percentage tax credit in this model. With a $24,000 project, a $2,500 rebate, and a 20% credit, the credit is $4,300 on $21,500 eligible cost, yielding a $17,200 net installed cost. Net cost is the main driver of payback and influences the Year‑0 cashflow shown in results.
Financing effects on yearly net cashflow
When financing is enabled, the calculator subtracts annual loan payments from yearly savings. A $17,200 principal at 7.5% over 10 years is about $2,506 per year. If Year‑1 gross savings are $1,500, net cashflow becomes negative until savings grow or the loan ends. The cumulative line helps you see when early shortfalls are recovered.
Discounted metrics for investment decisions
NPV discounts future net cashflows, so later dollars count less. At a 6% discount rate, the year‑10 present‑value factor is about 0.558 (1/1.0610). Positive NPV suggests the project beats the discount rate, while IRR estimates the break‑even rate where NPV equals zero. Use sensitivity runs by nudging savings, escalation, and installed cost to test robustness.
FAQs
1) What savings percentages should I use?
Start with conservative assumptions from your bills. Many households model 35–55% heating savings and 20–40% cooling savings. If you are uncertain, reduce both rates and rerun the calculator to see how payback and NPV shift.
2) How are rebates and tax credits applied here?
The model subtracts the rebate first, then applies the tax credit rate to the remaining eligible cost. The net installed cost becomes the Year‑0 outflow (or the financed amount if you enable a loan).
3) Does the calculator include maintenance differences?
Yes. It adds annual maintenance to both baseline and geothermal scenarios and escalates both by the maintenance escalation rate. Your savings can increase if geothermal maintenance is lower than the current system.
4) Why can payback look good but IRR stay modest?
Simple payback ignores discounting and timing detail. IRR and NPV consider when cashflows occur and discount future savings. Large late‑stage savings can shorten payback while still producing a moderate IRR.
5) How does financing change the results?
Financing shifts costs from Year‑0 into annual payments. Net cashflow becomes gross savings minus loan payment during the loan term, which can delay the cumulative break‑even year even if long‑term savings remain strong.
6) What if energy prices fall instead of rise?
Set energy escalation to 0% or a small value and compare outputs. Lower escalation reduces future savings growth, which typically lowers NPV and can extend payback. Sensitivity runs help you understand downside risk.