Higher efficiency comes with a price tag. Learn the things you need to know about first cost versus efficiency and how that relates to lifetime costs of owning a heating and cooling system.

Lower Heating and Cooling Operating Costs

Heating and Cooling Costs and Your Utility Bill
Let’s begin by determining what part of your total utility bill goes to heating and cooling your home. First, determine what fuels your system uses in heating and cooling your home. In common systems in use today, the following fuels are used: Cooling systems and heat pumps use electricity. Furnaces typically use natural gas, LP gas or fuel oil. For water source heat pumps, the water part of home utilities come into play. In some rare instances, natural gas is used to both cool and heat the home.

Next, add up the total utility bills that are affected by your home heating and cooling system. A good rule of thumb is that 50% of those utility costs go to heat and cool your home. Divide the total by two to come up with a good approximation of what it costs you to heat and cool your home.

Non-mechanical Means of Operating Cost Reduction

Before considering increasing the efficiency of your home heating and cooling system, consider what you could do in the way of energy consumption reduction through non-mechanical methods.

Adding insulation, weather stripping and caulking and installing storm windows and doors, all lower home energy consumption. These items are not mechanical and therefore consume no fuel and require very little in the way of maintenance over time. Once you get past the initial expense you will realize energy savings month after month.

Adding energy consumption improvements will often reduce equipment size. The initial cost of smaller equipment is lower and the smaller motors cost less when they fail and need replacement.

A word of caution: When you make energy improvement additions to your home you will very likely reduce the size of the equipment needed for heating and cooling. If you do not reduce the size of your cooling equipment your existing system may no longer remove an adequate amount of moisture from your home. The resulting higher humidity levels can cause damage to your home and health problems for it’s occupants. (See: Home Health and Comfort).

Higher Efficiency Heating and Cooling Equipment and First Cost

As you price higher efficiency heating and cooling equipment you will find that first cost goes up as efficiency increases. Higher efficiency equipment requires different components in order to achieve the efficiency gains. In cooling equipment for example, larger coils and more energy efficient motors are required. This is true for heat pumps as well. (See: Higher Efficiency) In fossil fuel heating additional components are added to keep more heat inside your home instead of venting it to the outside. Some efficiency increases are achieved through more sophisticated controls and this is true for heating and cooling equipment.

Balancing First Cost With Energy Savings

How efficiency of heating and cooling systems is rated is explained in the “Higher Efficiency” section. If you haven’t already visited that page you may want to do that now and come back to this later.

While it is true that energy consumption goes down as the efficiency of heating and cooling equipment goes up, the highest efficiency may not always be your best choice. The first cost of the highest efficiency heating and cooling equipment may not make sense from a return on energy savings. Let’s look at an example.

We will make the assumption that the total utility bill for a home averages $200 per month. Our rule of thumb that we talked about earlier says that half the total bill goes to heat and cool the home. In this case that number would be $100.

We will also make the assumption that the heating and cooling system is 12 years old and the cooling efficiency is estimated at 6 SEER and the heating efficiency is estimated at 65 AFUE.

The homeowner is considering two systems as possible replacements: One, a 12 SEER cooling unit with a 80% AFUE gas furnace; Two, a 14 SEER cooling unit with a 90% AFUE gas furnace.

In talking with the installing contractor the homeowner has been told that the first system will provide an estimated 40% energy savings and the second, higher efficiency system, will provide a 50% energy savings over the existing system. The higher efficiency system costs an additional $400.

The homeowner looks at the energy savings of the two systems in making her decision. She calculates that the first system will save her an average of $40 a month on her utility bill and the higher efficiency system will save her an average of $50 a month.

The more efficient system costs $400 more and will save her an average of $120 a year on her utility bill. She decides to spend the extra money on the more efficient system since she will save the cost difference in a little over three years.

Some of today’s ultra high efficiency equipment can cost much more than a few hundred dollars more. You should use the example above to determine if it makes sense for you to invest in the most efficient equipment available. In some cases you will find that the payback on the difference in cost is longer than the projected life of the equipment.

Pick a system that will provide you with the greatest possible energy savings at the most reasonable cost. Make sure the payback justifies the difference in cost. If money is not an object of consideration, buy the most energy efficient system available. The world will be a better place for your efforts.

Energy Efficiency and Lifetime Costs

Earlier we talked about the fact that manufacturers incorporated more efficient motors and controls as part of increased equipment efficiency. These items are mechanical and, as all things mechanical, will fail from time to time. There’s just no way to avoid that happening. These components can be very specialized and very costly. Some homeowners have been unhappily surprised to find that the gizmo that failed on their ultra-high efficiency heating and cooling system was going to cost $700 or more to replace.

One way to protect yourself against such a surprise is to ask the installing contractor the replacement cost of any specialized motors or electronics. Make sure you get this information prior to installation.

Another way (and the best way) to protect yourself against such an expense it to make sure the installing contractor includes a ten year parts and labor warranty with your system. These warranties are a bargain because they are low in cost and will generally pay for themselves with the savings from one or two repairs. (See: Longer Warranties)