What a 163 Ton Geothermal System Pencils Out To on a 57,000 Square Foot Oklahoma Building

I am Dave Hartzell, owner of Hartzell’s Heat & Air in Kingfisher, 47 years in HVAC. This spring a developer sent me drawings for a 57,000 square foot assisted living and memory care facility in southeastern Oklahoma. Sixty units, 24/7 operation, five acres, new construction. He asked what geothermal would do for him, so I ran it through my distributor’s economics calculator.

The modeled money stack

The developer’s preliminary load estimate was 150 to 175 tons. The model was run at 163 tons, and the word modeled belongs on every line.

Here is the line that makes a developer sit up. The modeled federal tax credits total $1.27 million against an $854,000 premium. The credit total is larger than the entire premium.

Read those as two figures the calculator produced, not as a subtraction. I am not going to hand you an equals sign. The year one figure is positive $407,000, and it carries timing the model handles internally, so my rows on a napkin will land you elsewhere. The direction is the point: the federal tax treatment can pay for the whole premium of going geothermal, and the utility savings are what the owner keeps every year after.

Where the credit comes from: Section 48

Commercial geothermal runs on Section 48, the investment tax credit, not residential tax rules. Base rate 6%, or 30% when prevailing wage and apprenticeship rules are met or the system is under 1 MW. Then +10 percentage points for domestic content and +10 for an energy community, with a 50% ceiling. Geothermal holds 30% through 2032, 26% in 2033, 22% in 2034, and zero for construction beginning after December 31, 2034.

None of that is automatic. Each adder is worth 10 points only if the project meets prevailing wage and apprenticeship, is under 1 MW, or began construction before January 29, 2023. Otherwise it is 2 points. Energy community status is location based and gets checked on the IRS and DOE map for that exact address. The model assumed domestic content was met, and that gets confirmed, never presumed.

It is a tax credit, not a rebate: it comes off tax liability, not the invoice. Section 48E is a different credit, for zero emissions electricity generation, not this one.

Depreciation is the second mechanism, and it is not the credit

• A tax credit reduces tax owed. It comes off the liability line.
• Depreciation reduces taxable income. It lowers the number the tax is calculated on.

Two different mechanisms working on the same purchase, which is why the combined stack runs larger than people expect. A homeowner gets neither one, which is exactly why commercial geothermal economics look nothing like residential.

The model assumed 100% depreciation available at project completion, an assumption about this owner, not a rule for every building. It also assumed a 27% owner tax bracket, which matters more than it looks: the value of reducing taxable income depends entirely on the rate that income would otherwise be taxed at. It is worth different money to different owners.

There is also a real interaction between the investment tax credit and the depreciable basis of the equipment. It affects the final number. I am not going to compute a depreciation figure, a schedule or a recovery period for you. I size and install the system. Your CPA tells you what your return does with it.

The $34,000 is the meter, not the tax return

Everything above this heading is the tax return. This section is the electric meter, and I keep them apart.

The modeled operating savings are $34,000 per year, and my distributor called that conservative. It is what the building stops spending because the equipment trades heat with the ground instead of fighting 105 degree July air.

$34,000 a year is not $407,000, and I want to be blunt about that. The big first year number is driven by tax credits and depreciation. The $34,000 is driven by the meter. One is a tax event tied to the year the project goes in. The other repeats every year for the life of the building.

Geothermal cuts roughly 50% of HVAC energy use. Not half the utility bill, because the building also carries lighting, laundry, kitchen and plug load no heat pump touches. At a COP of 4.5 the heating side delivers about $4.50 of heat for every $1 of electricity.

Why a 24/7 senior living building fits geothermal

• Constant occupancy. The building never coasts, so hourly savings accumulate around the clock.
• Simultaneous heating and cooling. Units, memory care, kitchen and common areas call for different things at once, and a water source loop moves rejected heat to the zone that wants it.
• Heavy domestic hot water. Resident bathing, laundry, kitchen. A desuperheater puts heat that is already being rejected into the water heater.
• An owner who holds the building. Geothermal pays back over decades, which suits an owner still holding in year 15.

Vertical boreholes or a horizontal field

He asked for an estimated number and depth of vertical boreholes. The site has five acres and his own excavation capability, so a horizontal field is open too.

I am not going to put a borehole count or a drilling depth on a public page for a site I have not tested. Those come out of a formation conductivity test on the actual ground plus the final block load.

Acreage is the fork. A horizontal field costs less per ton when you genuinely have open ground and equipment to move dirt. Vertical boreholes buy the same capacity in a fraction of the footprint, which matters when parking, drives and a future phase want the same five acres. Full comparison: horizontal vs vertical vs pond loop in Oklahoma.

USDA REAP

He also asked about a USDA REAP energy grant, fair to ask on a rural Oklahoma commercial project. REAP is a possible funding path for energy work on rural commercial properties, and that is as far as I will go here. I am not publishing a percentage, a cap, a deadline or an eligibility rule, because eligibility is decided against a specific project at a specific address. What I will do is help assemble the energy analysis a grant application needs.

Questions developers ask me

How much does commercial geothermal cost per ton in Oklahoma?

On this modeled project the calculator used $12,239 per ton for 163 tons, about $1.99 million installed, against $1.10 million for a conventional system of the same tonnage. That is a modeled assumption for one building, not a price list.

Does commercial geothermal still get a federal tax credit in 2026?

Yes. Commercial geothermal runs on Section 48, which holds at 30% through 2032, then 26% in 2033 and 22% in 2034, with a 6% base rate and zero for construction beginning after December 31, 2034. The residential credit is a different section and it expired at the end of 2025. Your CPA confirms what your return can use.

How much does a commercial HVAC diagnostic cost in Kingfisher Oklahoma?

A commercial diagnostic is $389 flat, day or night, up to 15 tons, no after hours uplift. Larger systems get sized on site. An estimate on a new system is free.

Bring me the building early

This is aimed at developers, architects and facility owners. Bring me the building while the mechanical design is still open, not after the site plan is frozen. Loop decisions get expensive once that plan is set.

I am IGSHPA accredited and Master HVAC licensed. Send me the load numbers, the site plan and the utility, and I will replace every assumption on this page with your real data. Background: commercial geothermal in Oklahoma and how I install geothermal.