Calculate 'paybacks' before buying furnace

First, consider home's energy efficiency

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Dec. 8, 2011

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First, consider home's energy efficiency

Paul Bianchina
Inman News™

Cold weather's upon us again, and you may be looking at changing or upgrading your old heating system to better deal with winter's chill. But what type of furnace should you get? There's actually quite a bit that will go into making that all important decision, and here are some things worth considering.

Understanding paybacks

Throughout the process of selecting a new heating system, and even when considering energy upgrades as discussed below, you'll be faced with the concept of "paybacks." It's an important thing to understand, especially if you're feeling pressured by a salesperson to choose a particular product.

Let's say you currently pay an average of $200 a month to heat your home for an average of seven months of the year, or $1,400 per year. Now let's say that a new, high-efficiency furnace, along with some upgraded insulation, will heat your home for $90 a month, or $630 a year.

That's a savings of $770 annually. If the new furnace and insulation cost $5,000, it would take you about 6 1/2 years for the savings to pay back the investment.

Paybacks aren't difficult to understand, as long as you're able to get the necessary numbers. This is something that your heating contractor and utility company should be able to help you with.

Deal with your home's energy efficiency first

How efficient any heating system is going to be at keeping your home warm is dictated by how energy efficient the home is in the first place. You can have a small home, but if it's drafty and poorly insulated, you'll need a much larger furnace than might otherwise be required in order to keep it heated. That means more upfront cost and higher operating costs.

So before you consider your new heating system, if possible you should complete any required energy upgrades your home needs. Your best bet is to have an energy audit done. The auditor will make a thorough inspection of the house, and will make specific recommendations for upgrades to insulation, windows, weatherstripping, and other components that will make it more energy efficient. Your utility company or heating contractor can often arrange for or recommend energy auditors in your area.

Fuel considerations

Next, you'll want to consider what type of fuel to use for the new heating system. Common choices include electricity, natural gas, propane and heating oil. Quite often, you'll opt for what the house currently has, but that's not always the best choice.

For example, you may currently have an electric furnace, but if natural gas is available in your area, you may find that to be more efficient. However, in your payback calculations you'll need to take into consideration the cost of having the gas line brought to your house, which may or may not be covered by the gas company.

Or you may be considering replacing an oil-burning furnace with propane, but in your payback calculations remember to weigh in the costs of having the oil tank removed and the new propane tank installed. With buried propane tanks, you also have the costs of excavating to consider.

Rating furnace fuel efficiencies

All electric furnaces work on electric resistance, so 100 percent of the energy they consume goes towards heating the house; the inefficiencies with electricity would occur in the power generation process itself, and in losses that occur as the power moves through the transmission lines.

The efficiency of oil furnaces has improved quite a bit in recent years. Changes in burner designs have resulted in efficiencies going from around 60 percent to something more like 80 percent today. However, these higher efficiencies often require upgrades to the chimney if you're planning to reuse the old one, so that's something that needs to be taken into consideration as well.

Most of today's natural gas and propane furnaces achieve efficiency ratings of 85 percent to 95 percent or more. So little heat is wasted with these units that they can actually be vented with plastic vent pipes. As you'd expect, with each step up in efficiency you also step up in initial cost, so that's something to take into consideration with your payback calculations.

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