Are High Efficiency Furnaces Worth The Extra Money?

In my blog about window replacements, I made it quite clear that you'll never get a return on your investment by replacing windows.   So what about furnaces?  If you're replacing your furnace, is it worth installing a high efficiency furnace?  We'll see.  

 I've already compiled the data from my gas bills going back to 2004 on my Minneapolis home, so this should be pretty simple to figure out.

• I use an average of 520 therms per year to heat my house.
• The average cost of gas in my area has been $0.90 / therm, making my average annual heating cost $468.
• The average life expectancy of a furnace is about 15 – 20 years.  
• My current furnace is 80% efficient, meaning that 80% of the fuel that gets burned is turned in to heat.  The other 20% disappears up the vent.
• For this example, I'll use a 95% efficient furnace, which also qualifies for a tax rebate.  This should give me a 15% savings per year, as compared to an 80% efficient furnace.

Saving 15% per year on my heating costs equals out to $70/year.  If the furnace only lasted 15 years, I would end up saving $1,050 over the life of the furnace.  Because I qualified for the tax credit, I would also get 30% back from Uncle Sam.  

I'll assume that the 95% efficient furnace costs about $4000, including installation, but I'll get 30% back, making the total investment $2800.  The 80% efficient furnace would cost about $2000.   This means I would end up paying about $800 more for the high efficiency furnace, but I would easily recoup those costs over the life of the furnace.    

That seals the deal – my next furnace will be a high efficiency furnace.   If my next furnace lasts longer than 15 years or if gas prices go up in the future, I'll save even more money.  The more you spend per year on heating costs, the faster the payback period.  Besides saving money, using a high efficiency furnace is a green thing to do.

Reuben Saltzman, Structure Tech Home Inspections - Email - Minneapolis Home Inspections