Geothermal Energy Profitability: Economic Analysis and Payback Period

Geothermal energy has positioned itself as one of the most efficient and sustainable solutions for residential and tertiary air conditioning in Spain and southern Europe. However, the decision to invest in a geothermal system is often conditioned by an analysis of its profitability: how much does it cost to install? What savings does it provide compared to other technologies? How many years does it take to recoup the investment?

This article provides a detailed and up-to-date overview of the initial costs, maintenance, energy savings and comparison with systems such as gas, conventional electricity and biomass, to answer the most frequently asked questions about the profitability of geothermal energy in 2025.

Initial costs of geothermal energy: investment and determining factors

The price of a geothermal installation depends on several factors: the size of the home, the type of collection (vertical or horizontal), the power of the heat pump, the inclusion of underfloor heating and the geological characteristics of the land. For a single-family home of 120 to 200 m², prices in 2025 will range from £17,000 to £45,000, with the following approximate breakdown:

For a 120 m² home, the cost of a geothermal installation without underfloor heating starts at £17,000, while with underfloor heating it ranges from £21,400 to £22,400. In 150 m² homes, the investment varies between €18,500 and €26,750, and for 200 m² it can rise to €31,000 or even €33,000 if underfloor heating is included. Larger homes, such as those with 300 m², may require investments of up to €45,000.

The type of collection is a determining factor in the budget. Vertical collection, which involves deep drilling of between 50 and 200 metres, is more expensive but guarantees greater efficiency and less dependence on surface weather conditions. Horizontal collection, which requires shallow trenches (1-2 metres), is cheaper but requires more land and its performance can be affected by seasonal variations.

In terms of price per square metre, geothermal energy costs between €142/m² and €178/m² for 120 m² homes, and between €155/m² and €165/m² for larger areas, depending on whether underfloor heating is included or not.

Geothermal Energy Maintenance Costs

One of the great attractions of geothermal energy is its low maintenance cost compared to conventional systems. Maintenance plans for residential systems range from £145 to £280 per year, depending on the services included, such as heat pump servicing, checking the exchange wells, cleaning filters and emergency technical assistance.

Spanish regulations (RD 1027/2007) establish mandatory inspections every 4 years for equipment under 12 kW and every 2 years for higher-powered equipment. However, most manufacturers and installation companies recommend an annual inspection to ensure maximum efficiency and extend the system’s useful life, which can exceed 25 years under optimal conditions.

Compared to gas or biomass systems, which require more frequent servicing and periodic replacement of components such as burners, valves or fuel tanks, geothermal energy stands out for its operational simplicity and lower incidence of faults.

Energy Savings: Consumption and Efficiency

The key to the profitability of geothermal energy lies in its high coefficient of performance (COP). A typical geothermal heat pump in the UK achieves an average COP of 5, which means that for every kWh of electricity consumed, the system generates 5 kWh of heat for heating, cooling or domestic hot water. In comparison, an air source heat pump typically offers a COP of 3, and a gas or biomass boiler barely exceeds 0.9-1.1.

The actual cost of thermal energy produced by geothermal energy depends on the price of electricity. In 2025, the price of electricity in Spain is around 0.133 €/kWh, which means that the cost of obtaining 1 kWh of heat with geothermal energy is just 0.026 € (0.133 €/5), well below the cost of natural gas (0.0575 €/kWh) or pellets (0.07 €/kWh).

For example, for a 150 m² home with an annual demand of 12,000 kWh of heat, the annual energy expenditure would be:

• Geothermal energy (COP 5): 2,400 kWh of electricity x £0.133/kWh = £319
• Aerothermal energy (COP 3): 4,000 kWh of electricity x £0.133/kWh = £532
• Natural gas: 12,000 kWh x £0.0575/kWh = £690
• Pellets: 12,000 kWh x £0.07/kWh = £840
• Direct electricity: 12,000 kWh x £0.133/kWh = £1,596

These figures confirm that geothermal energy is by far the most efficient and economical option in the long term, even taking into account the volatility of energy prices.

Comparison with other energy systems

The initial investment in geothermal energy is higher than for other systems, but the annual savings quickly offset this difference. Below is a comparison of installation and operating costs for a 150 m² home:

Although biomass requires a lower initial investment, it requires more storage space, regular cleaning and a constant supply of fuel, as well as being subject to price fluctuations in pellets or firewood. Natural gas, on the other hand, involves dependence on fossil fuels and CO₂ emissions, as well as being subject to the volatility of the international market. Direct electricity is the least efficient and most expensive option in terms of annual consumption.

Payback period for geothermal energy

The payback period for a geothermal installation depends on the difference in investment compared to other systems and the annual savings generated. In 2025, for a 150 m² home, the cost difference between geothermal energy and natural gas is approximately £14,500 (£25,100 compared to £10,600), while the annual savings are around £1,442. This means that the payback period is around 10 years:

In comparison, aerothermal energy pays for itself in just 2.7 years compared to natural gas, but its annual savings are lower and its useful life is also usually shorter.

Geothermal energy pays for itself more quickly if public subsidies are taken advantage of, which in 2025 can reduce the investment by between €2,250 and €13,500 depending on the autonomous community and the type of project. In addition, the savings are greater in larger homes or buildings with high energy demand, where the efficiency of the geothermal system is maximised.

Long-term profitability analysis

The useful life of a geothermal installation exceeds 25 years, and the collection wells can last more than 50 years with proper maintenance. This means that, after the payback period, the user enjoys virtually free heating and cooling for decades, with minimal energy and maintenance costs.

In a scenario of rising energy prices, such as that predicted for electricity and gas in the coming years, the profitability of geothermal energy increases even further. Furthermore, integration with other renewables, such as photovoltaics, allows self-consumption levels of over 80% to be achieved, further reducing dependence on the electricity grid and associated costs.

Conclusion: Is geothermal energy profitable in 2025?

In 2025, geothermal energy will be the most profitable option for the comprehensive climate control of homes and buildings in Spain and southern Europe, especially in new construction or energy renovation projects. Although the initial investment is high, energy savings, cost stability and low maintenance requirements guarantee a return on investment in 7-10 years, well below the system’s useful life.

A comparison with aerothermal energy, natural gas, biomass and direct electricity shows that geothermal energy offers the lowest annual energy cost and the highest thermal comfort, as well as contributing to decarbonisation and energy independence. Taking advantage of subsidies and planning the installation with specialised professionals are key to maximising profitability and ensuring the success of the project.

In a context of volatile energy prices and growing demands for sustainability, geothermal energy is establishing itself as the smart investment for those seeking efficiency, savings and a future.