Comparing the Cost of a New Furnace to How Much You'll Save
How Much Money Will I Save On My Gas Bill With a New Furnace?
If you're thinking of buying a new furnace for your home, you're likely hearing a lot about efficiency. You may also be wondering what you're actually going to save on your gas bill. What I'm going to show you is the equation that you can use to figure this out quite accurately. Don't let the word equation scare you. There are a few steps but it's really not rocket science.
How much money is going out your chimney?
What Is Efficiency?
It's important to know what efficiency is, or better yet, what it describes. Efficiency is about decreasing waste. You want all of the effort you "Input" into something to be productive, or "Output". In this case, it's fuel and you want all of what you burn to be used to heat your home. If your furnace is 80% efficient, then out of 100% of the fuel "Input", 20% is wasted and 80% is "Output" and heats your home. Most of the waste is lost through the chimney. The higher the efficiency of your furnace, the less you waste.
Note that efficiency does decrease over time and that it is important to maintain your furnace to maximize it's efficiency over that time.
Efficiency = Output divided by Input
In this equation, I am going to be referring to a natural gas-burning furnace. The math, however, is applicable to anything as long as you have the needed factors. For us to get these factors, we're going to need a few things.
Things You Need...
- Recent gas bill
- Pen / Pencil
- Straight Edge (just something straight, no tools required)
Things You Need To Know...
- How efficient is your furnace now?
- How much of your gas bill is for heating?
- How much gas do you waste?
Don't worry, I'll show you how to figure these out simply. (See below)
Did you know there are tax credits for some high efficiency furnace installations?
How efficient would you say your furnace is?
How Efficient Is My Furnace Now?
We need to know what the current efficiency of your furnace is so that we can figure out what your new one will save you. It can be difficult to figure this exactly so we will make some assumptions that will bring us quite close. These assumptions will only leave us off a little and be figured in a way that the difference will be in our favor. A sort of worst-case scenario.
We'll assume that yours is similar to that in the photo above and is 80% efficient or less. We're also going to assume that your furnace is about 20 years old and been at least somewhat maintained. The furnace in the photo will be our representative and factor in at 70% efficient.
If yours is much older and resembling a small car with a standing pilot, you may want to go with 55%. Somewhere in the middle, go with 63%. Again, a percent or 2 will not greatly impact our findings and you can work this with a couple of different percentages to see the variation if you'd like.
I suggest that you assume your furnace is more efficient than it is so that you save more than you expect and not the other way around.
Gas Bill Usage Chart
How Much of Your Gas Bill is for Heating?
We need to know how much we spend on heating so we can figure out how much we waste and what we'll save with our new furnace.
On your gas bill there is a chart like that in the photo shown here. You should find below the chart the total MCF used over the past year. In this case it is 91.6. To find how much of that 91.6 went to your furnace we will need to eliminate the amount of gas being used throughout the year on the stove, dryer, hot water tank etc... The summer months on the chart are representative of those items since we aren't using the furnace.
Here we will use our straight edge to create our base usage line. Line up your straight edge with the month of lowest use. (See photo. I'm using June/July) Now slide slightly above that and read where your straight edge lines up with the numbers on the left. (Sliding slightly above is giving us a little room for that worst case we talked about. Again, you can figure this with a different line if you want to see the potential differences.) My base is going to be 3.5 MCF per month. Now, multiply that by the number of months on the bill. Mine is 13 months.
(3.5 x 13 = 45.5 MCF)
45.5 MCF is what we use during the year that is not for heating. Subtract the 45.5 from the 91.6 MCF for the total year and this is what is used for heat.
(91.6 - 45.5 = 46.1)
I'm using 46.1 MCF a year to heat my home. This is our "Input". We now have 2 factors for our equation. Efficiency, 70% (or .70) and Input, 46.1 MCF. With this we can see how much per year we spend on heating.
My total fee per MCF (including carrying fees) is $7.39. Multiply this by the amount of MCF used for heat this year and that's what we spend on heating.
($7.39 x 46.1 = $340.68 plus tax)
Again, if we're actually spending more than $340.68 per year, then we'll save more than we expect with our new furnace. (Remember: We slid up our base to be on the safe side like we did with efficiency.)
How Much Gas Do I Waste?
Once we figure out how much gas we currently waste (money we waste) we can compare it to our new furnace and see what we'll save. The difference between our "Input" and our "Output" is our waste. We don't know our "Output" yet so we will find it by mulitpying Efficiency and Input.
(.70 x 46.1 = 32.27)
32.27 MCF is our "Output". The difference between "Input" and "Output" is 13.83 MCF.
(46.1 - 32.27 = 13.83)
We waste 13.83 MCF per year. That's $102.20 wasted. ($7.39/MCF x 13.83 MCF = $102.20)
Now we have to keep in mind that 32.27 MCF is needed by the home to heat it the way we have been. This will not change with your new furnace. You can only change this number by improving things like new windows, doors, insulation, etc... A new furnace will only decrease what we waste.
What Will My New Furnace Save Me?
Now that we have all 3 factors in our equation and have figured out what our current furnace is costing us, we can see what we'll save with our new furnace. We're simply going to change the number we used for efficiency to that of the new furnace. We are going to use 95% for our new furnace efficiency. We know our "Output" (32.27 MCF) cannot change because this what the house needs however, we will not need to "Input" as much because we will have less waste. Therefore, 32.27 divided by .95 will tell us what our new "Input" will have to be.
(32.27 / .95 = 33.97)
33.97 MCF is our new "Input". That's 7.63 MCF less than what we were buying before.
In this example, a new 95% efficient furnace will save us at least $56.39 on our gas bill this year and well over $1,000.00 in it's lifetime. This is the worst case scenario and only gets better when considering other ways you'll be saving money with your new furnace.
Your New Furnace Will Save On More Than Just Gas Costs
If you're thinking about buying a new furnace, there is more than just gas savings to consider. A new furnace will also save on electric costs by using a more efficient fan motor that will run less since you will heat more efficiently. You also want to think about costs that you may incur in heating repairs keeping your old furnace running.
A new furnace will have a warranty and high-efficiency units will qualify for federal tax credits next year. Lastly, if you install a new furnace, you should consider replacing your old thermostat with one that is digital or digital programmable. It will be much more accurate than the old mercury style controls.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2012 Dan Reed