Thursday, February 22, 2007

Damn $@%$*! Furnace

Well much to my wishing otherwise I have to replace my furnace. It's not serious at least right now. I have some hair line cracks in a few pipes, so at least I can shop around a bit before getting it replaced.

We have a few quotes in and I'm now just trying to decide if the extra money to upgrade to a two stage high efficiency furnace is worth it. The price difference between a 80% efficiency two stage and 92% efficiency two stage is $850.

I'm not sure my exact spending on gas for a full year, but I'm estimating around $120/month. So over a year that's $1440. Therefore a 12% difference between the options would mean a savings of $172.80/year or a payback period of (850/172.80) 4.9 years. Not a bad payback for a capital expenditure and since I'm planning on being in this house for around 10 years I should do alright over the longer term.

While researching my options I did come across some other good ideas on saving heat. Did you know for example that you can often improve the distribution efficiency of your heating system by around 20% by just buying some foil tape and going around your heating system in the basement and fixing all those little air leaks between duct sections? Another good one is installing weatherstripping around your doors. For those with a bit more time on their hands you can enter your attic and plug all those little holes around your light fixtures and wiring as they make your ceiling like an over sized piece of swiss cheese for heat loss. While your up there you might want to consider upgrading your insulation. Just a few ideas for you.


S. B. said...

I would be careful not to use a simple payback period without discounting. Nonetheless, your intuition seems correct that the more efficient furnace is worth the money for you. Assuming an initial outflow of $850, and then 10 years of yearly inflows of $172.80, I get an IRR of over 15%. You're not likely to get that return for 10 years anywhere else.

But do you have other gas appliances? If your furnace only accounts for part of your gas bill, your savings will not be as great.

Canadian Dream said...


I should make it clear that the outflow of $850 is just the price difference over the two models. The total cost is near $3500 for the high efficiency model.

The only other gas appliance is the water heater which is already a new one, but you have a point that would reduce the savings.

Thanks for the analysis.


S. B. said...

Understood on the total cost. IRR of the extra money incurred to go with the higher efficiency option should be calculated based on the differentials of the two options (higher efficiency vs lower efficiency option) -- both the outflow differential ($850) and the inflow differentials ($172.80/yr).

I sure wish there was a way to meter gas appliances separately. I've got 4 gas appliances and it is very hard to tell which ones are the hogs.