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How our household is saving $2,400 a year on heating costs (with asterisk)

Our 1970s bungalow, with about 1,800 square of feet of heated space, was being heated by an oil-fuelled furnace that was original to the house. The annual cost of heating oil was about $3,000.

Our 1970s bungalow, with about 1,800 square of feet of heated space, was being heated by an oil-fuelled furnace that was original to the house. The annual cost of heating oil was about $3,000. When we had an energy audit done in preparation for upgrades, we were told that $3,000 was not unusual for an old, inefficient oil furnace in an under-insulated house.

The auditor said that an air source heat pump would be the most cost-effective upgrade over the long run, even though it would be one of the most expensive options. Combine a heat pump (powered by electricity) with more insulation, he said.

We took his advice.

After two winter seasons, and well into a third, the cost of heating is down dramatically. 

In 2012, it was around $600.

In 2013, it was around $500.

That’s a big drop from $3,000. 

There’s no meter to measure the cost of heating at our house, so I calculated those costs by looking at July-August electric bills, when there is no heating. It was $106.98 in 2012 and $87.96 in 2013. To make the math easy, I subtracted $100 from each of the non-summer two-month bills in each year and totalled them.

Here’s the asterisk part. It cost a lot more to install the heat pump system than a new, more efficient oil furnace that would have also knocked down our heating costs by a lot. A natural gas furnace, another cheaper route, wasn’t an option because natural gas isn’t available in our neighbourhood. 

The heat pump system project cost around $10,000, which included backup electric heat coils, adjustments to heating ducts, removal of the old furnace, and removal of a hefty oil tank from our basement. We also had to upgrade our electrical system, which cost around $5,500; that price included work not related to the heat pump. The heat pump cost was trimmed a little by a federal energy efficiency program grant of $500 and a provincial one of $1,500. Those grants are no longer available.

(As they say on the home improvement TV shows, your costs may differ because your situation is different, or you have a friend in the business who will give you a discount.)

Payback for the heat pump system is working out to just under four years. After that, the savings will be real. Unless I include the electrical upgrade cost, which would stretch payback to nearly six years.

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A heat pump works by taking heat from outdoor air and pumping it inside. There’s heat in the air even when it’s below freezing. 

B.C. Hydro’s website has a section on heat pumps. 

There’s lots of detail at the Natural Resources Canada website.

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Heat pumps work best when outdoor temperatures are above freezing, making them ideal for a moderate climate such as Vancouver Island’s. At our house, the heat pump  system keeps up fine down to about -5° C; when it’s colder than that, the electric backup might be needed. Some newer systems claim to be effective down to -30° C without backup.

Straight electric heat usually costs more. One rule of thumb: when a heat pump is running under ideal conditions, one unit of electricity produces three units of heat. The heat pump transfers heat, it doesn't create heat. It becomes less efficient when it is below freezing because it has to work harder to scavenge heat from the outdoor air. At some point, as it gets colder, electric heat becomes more economical than a heat pump.

More about this in a future post. Plus reflections on thermostats.

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Update: Around the same time we had the heat pump installed, we had the attic draftproofed and added blown-in insulation. I will dig up the documents on the R-value change. ---> The attic insulation went from R12 to R50.

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Reflecting on the lessons from our heat pump adventure: 

— a heat pump is not necessarily the best way to go for everyone; the economics of oil, natural gas, propane, wood, etc. are worth exploring

— the future is darn hard to predict (duh); if electricity prices keep going up, and heating oil prices don’t, a more efficient oil furnace would have been a better financial choice

— be aware of what heat is costing you; we paid for each heating oil fill-up and winced a little, but didn’t do the simple math of adding everything up for quite a while

— upgrading is probably worth it over the long run if your heating equipment is really inefficient, as ours was

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My previous posts are here.


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