choosing between a 80% or 90% efficient furnace.?

Question

I'm looking to replace my old furnace. Based on the quotes I received it would cost me approx. $800 more to install a 90% over an 80% efficient furnace. Is it worth it? I plan to live in the house 5-10 years.
Does the state of NJ still offer tax credits on energy star rated furnaces?

Answer 1

The decision is an easy calculation. Simplifying the math, there is a 10% difference in efficiency (90-80%). So, what is 10% of your heating bill multiplied by the number of years you plan to stay in the house? If the answer is more than $800, buy the 90% with all confidence. If it’s less than $600, go for the lower efficiency. In between, look at adjusting for the increasing cost of gas (see below).

4 years ago, I put in the higher-efficiency furnace despite the fact that the salesperson recommended the 80% unit. Then the price of gas went though the roof and he said “How did you know?”

So, if the answer above is between $600 and $800, you need to factor in the increasing cost of gas. So multiply the number above by the factor below you think will best reflect the future (use your crystal ball):

5 years 3% increase per year multiply by 1.06
10 years 3% increase per year multiply by 1.15
5 years 4% increase per year multiply by 1.08
10 years 4% increase per year multiply by 1.20
5 years 5% increase per year multiply by 1.11
10 years 5% increase per year multiply by 1.26
5 years 10% increase per year multiply by 1.22
10 years 10% increase per year multiply by 1.60

Answer 2

That depends a great deal on your heating bills.

For example, say your heating bills ran an average of $100/month with the 80% efficient furnace, and you run your furnace 6 months out of the year. (Yeah, I know, that's just a wild guess. Bear with me.)

OK, so you're paying $600 a year to get $480 worth of heat, the rest is wasted by the furnace. To get $480 worth of heat from a 90% efficient furnace would cost $533 a year. So, you'd save $67 a year with the 90% furnace.

Now, over 10 years, that would save you $670. But you paid $800 more to get the better furnace, so in the long run, you'd lose $130.

BUT...say your heating bills ran an average of $200 a month. The yearly bill with the 80% furnace would be $1200 and the yearly bill with the 90% furnace would be $1066. You'd save $134 every year instead of $67. At that rate, after only 6 years, the payback from the more expensive furnace would be $804, and every year after that would be more and more savings for you.

So you see, it's a matter of just how high your heating bills are, and how long you're willing to wait for your extra investment to pay for itself.

Answer 3

If you are going to be there for a while yet, then yes it is worth it. What you will save on your gas bill will pay for itself in time.
Not sure about tax credits in NJ, but you can also contact your gas company and see if they give any rebates for upgrading to a higher efficiency!

Answer 4

I would not pay $800 more for the 90%

Answer 5

Remember it will also add to the resale value. Go for the most efficient. You will save on your heating bill and it will be another selling point for the house.