Geothermal energy pays off, fossil heating systems lose out

17.04.2026

Source: E & M powernews

A study commissioned by the associations for geothermal energy and heat pumps has compared the economic efficiency of geothermal heat pumps with a gas boiler - with a clear result.

At the start of an online event, Gregor Dilger, Managing Director of the German Geothermal Energy Association (BVG), made it clear: "The heat transition is one of the greatest challenges facing our society. But it doesn't come for free." However, a brief analysis by Prognos shows that green solutions for the building sector can also be cost-effective.

This brief study by the consulting firm Prognos examined the cost-effectiveness of heat pump systems in the building sector. The focus was on single-family homes and apartment buildings. The study was commissioned by the German Geothermal Energy Association (BVG), the Bavarian Geothermal Energy Association and the German Heat Pump Association (BWP).

The study looked in particular at heat pumps that use the ground as a heat source. One key finding: geothermal heat pumps are "clearly the cheapest heating option", explained Domimik Rau from Prognos, who presented the results at the online conference on April 17.

Although the initial investment was high, this would more than pay for itself in the long term, said BVG Managing Director Dilger. The latest geopolitical developments had also once again highlighted the existing dependence on fossil fuel world markets.

Against this backdrop, the independence offered by a domestic, renewable heat supply is a strong argument for the decarbonization of the building sector, in addition to its cost-effectiveness. Geothermal energy should play a decisive role here in the future.

In this context, Martin Sabel, Managing Director of the German Heat Pump Association BWP, also urged that subsidies should not be restricted. This is because geothermal systems have high initial investments due to the drilling costs. According to figures from the study presented, the proportion of capital costs for geothermal heat pumps is more than twice as high as for gas boilers.

"You first have to be able to cope with these high initial investments," said Sabel. This is why subsidies are important to prevent owners from falling into a "cost trap" and opting for a fossil fuel system due to the lower procurement costs for a gas boiler.

The Prognos short study shows that in the long term, the costs for a gas boiler diverge significantly compared to a heat pump that uses the ground as a heat source. The brief analysis compares the long-term total costs of a gas boiler in detached houses and apartment buildings with those of an air heat pump and a brine heat pump.

Service life of geothermal probes up to 60 years

The brief report also takes into account the fact that the service life of geothermal probes is significantly longer than that of the actual heating appliances. While gas and heat pump heating appliances have a service life of 18 to 20 years, the service life of geothermal probes is estimated at 60 years. Experts estimate that this could be 100 years or more.

This shows that while the gas boiler is sometimes on a par with the two types of heat pump in the first few years, the differences are growing rapidly due to rising gas prices, a growing proportion of biomethane and an increase in the price of CO2. The total costs of fossil systems are therefore rising faster than those of the electrical alternatives, the study found.

The heat source makes a difference in terms of cost-effectiveness right from the start: geothermal heat pumps score points here compared to air-to-water heat pumps with lower annuitized costs per year; over a period of 20 years, they are even eight percent cheaper from this perspective.

According to the study, the total costs over 20 years for a gas boiler (new) in an exemplary apartment building are EUR 380,903, with air-to-water heat pumps costing EUR 258,224 and ground source heat pumps EUR 227,200. "Particularly for owners of detached houses and apartment buildings with a long-term usage perspective, it is therefore worth taking a close look when choosing a heat pump system," said BWP boss Sabel.

From the perspective of the Geothermal Energy Association of Bavaria, the brief analysis provides additional arguments in favor of the energy source, which the association has been campaigning for since it was founded in 2015. "In addition to their environmental friendliness and long service life of several decades, the fact that geothermal heat pumps are cost-effective is another reason to rely on this technology," says Christoph Knepel, Chairman of the Geothermal Association of Bavaria.

Author: Heidi Roider