Is it Time for a High Efficiency Furnace? – Part 2

If money grew on trees, we’d all want to be farmers. But getting money takes hard work. Spending money always seems to be easier, doesn’t it? That’s why making changes where possible to spend less is always worth investigating. That’s why we’re talking about installing a High Efficiency Furnace. In Part 1 GAMA Air started the discussion to help our friends and neighbors in the Beverly Hills, Culver City, Mar Vista, Miracle Mile, Hollywood, West Hollywood, Los Angeles, West Los Angeles, Santa Monica, Marina Del Rey, Pacific Palisades, Brentwood, Bel Air, Westwood, Downtown Los Angeles, Vernon, Huntington Park, Sherman Oaks, Encino area understand the topic better. Now we’re going to help with the aspect of how to decide if it is worth it for you and your situation.

The key to any price shopping comparison is to consider how you’ll use the furnace and on your priorities. For example, is this going to be in a second home like a vacation home, or maybe a rental home? If this is not for your primary residence then that will affect your decision. Regarding personal priorities, some may choose higher efficiency equipment because of their sense of responsibility to the environment. Reducing our carbon footprint is a priority for some families. In that case the decision to replace a standard efficiency furnace with a high-efficiency furnace will not be influenced so much by the amount of savings it will provide, although that will definitely be a nice reward for being environmentally conscious.

But what about the savings aspect? To understand that better, let’s consider how furnaces are rated in the U.S. Since 1987 the U.S. Department of Energy has been setting the Annual Fuel Utilization Efficiency ratings, or AFUE. The most common low-end efficiency of gas furnace that is being installed is rated at 80% AFUE. For a furnace to be considered in the “High-efficiency” category, it must be 90% AFUE. But what exactly does that mean? Simply put, the AFUE rating is how much of the energy that you pay for is heating your home. A furnace rated at 80% AFUE uses 80% of the fuel source to heat your home, and 20% is lost through the exhaust vent. Clearly, the higher the AFUE rating the less energy is lost to the outside. That’s how you can spend less on your heating utility bills.

But there is another aspect to newer high-efficiency furnaces. Besides burning fuel to heat your home, a furnace must also blow that warm air around the house. Modern furnaces are equipped with fan blower motors that are much more efficient than those of years gone by. So, you would also see a savings on your electric bill. That savings in electricity is harder to calculate, but what about the heating fuel?

First you need to know the following three things:

  • How much do you pay per year for heating fuel costs?
  • What is the AFUE rating of your existing furnace?
  • What is the AFUE rating of the new furnace you are considering?

Let’s consider an example of the Wise family. They pay $1,800 per year in fuel costs with their 80% efficient furnace. Mr. and Mrs. Wise want to install a 96% AFUE furnace.

Step 1: What’s the improvement in efficiency? Subtract the old furnace efficiency from the new furnace efficiency.   
(96 – 80 = 16)

Step 2: What’s the percentage of savings? Divide the increase of efficiency by the new furnace efficiency.    
(16 ÷ 96 = 0.167)

Step 3:  What’s the savings in dollars? Multiply the percentage of savings by the fuel costs.           
($1,800 x 0.167 = $300)

So, the Wise family will save $300 dollars per year in heating fuel costs. What about the payback period? You need the following two figures:

  • How much will it cost to change out your furnace with another 80% AFUE furnace?
  • How much will it cost to install a high-efficiency furnace system instead?

In the case of the Wise family’s home, they have quotes of $3,000 for a new 80% efficiency furnace, and $4,700 for a 96% AFUE furnace.

Step 4: What is the difference in installation costs? Subtract the cost of the standard furnace installation from the cost of the high-efficiency furnace installation.      
($4,700 – $3,000 = $1,700)

Step 5: How many years to save that amount of money? Divide the extra cost of a high-efficiency furnace by the annual savings.       
($1,700 ÷ $300 = 5.67)

So, the Wise family will break even after 5 years and 8 months. After that they are saving money. Keep in mind that is only considering heating fuel costs, and not the additional savings of having a blower motor that reduces your electrical costs. The payback period can get even more attractive if your local utility company is offering rebates to install high-efficiency systems. For example, if the Wise family qualifies for a $1,000 rebate, then their payback period would drop to only 2 years and 4 months. You will definitely want to check into possible rebates as part of your decision.

If you’re ready to get prices on the installation of a high-efficiency gas furnace system, either by itself, or along with an air conditioner, then give GAMA Air a call at (310) 651-6936. You can also use our online form to schedule a visit at a time convenient to you for a no-obligation quote. We guarantee your satisfaction 100%.

Need help with a question you have? Visit our Ask an Expert page and get a quick answer from the resident expert here at GAMA Air.

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