The Urban Shipleys were prompted (by an Enbridge Gas bill insert) to look
at converting their existing 6-year-old, inefficient oil furnace to a high-efficiency
gas furnace. The calculation presented below shows the financial analysis
we used to make our decision. You can play with the numbers to see how your
situation would work out, as long as your basic scenario is the same. Because
the replacement of an old gas furnace with a new one is a pretty common decision,
I made another analysis page to look at the
financial picture for that scenario.
Financial Data
|
Comments: |
| Oil rate |
$ |
|
/litre |
Get from fuel bills |
| Gas rate |
$ |
|
/m3 |
Get from fuel bills |
| Electricity rate |
$ |
|
/kWh |
Get from power bills |
| Minimum Acceptable Rate of Return (MARR) |
|
|
% |
This is the rate of return you insist on for your money
(in our household, it's our mortgage rate, since any "extra" money we
have gets plopped in our open mortgage) |
| Time horizon |
|
|
years |
How long do you expect to be in the house? |
| Minimum difference to make a decision |
|
|
% |
Within this percentage, you would consider the decision
a wash financially (which is different from taking a bath financially). |
Data on Current Furnace
|
| Annual cost of oil |
$ |
|
/year |
From oil bills for the year. |
| Annual oil consumption |
|
|
litres/year |
From billed oil cost divided by rate |
| Percentage of oil used for heat |
|
|
% |
If you use oil only for heat, enter 100%. If you also use oil for heating water, it will be closer to 75%. |
| Annual oil consumption for heat |
|
|
litres/year |
From previous calculation and oil heat percentage |
| Annual heating energy consumption |
|
|
MJ/year |
From oil consumption times 38.2 MJ/litre |
| Annual furnace fan electricity consumption |
|
|
kWh/year |
Estimated from Dave's experience. |
| Annual GHG Emissions |
|
|
kg CO2e/year |
Based on 0.07311 kg CO2e/MJ energy from oil and 0.236 kg CO2e/kWh energy from electricity |
| Annual operating cost |
$ |
|
/year |
Calculated from above inputs |
| Assumed efficiency |
|
|
% |
Estimated based on furnace type and energy auditor opinion. |
| Assumed life expectancy |
|
|
years |
Estimated based on Dave's experience. |
| Current age of furnace |
|
|
years |
Name plate data. |
| Remaining furnace life |
|
|
years |
Calculated from above inputs |
| Original cost of furnace |
$ |
|
|
Estimated based on furnace type. |
| Depreciated value of furnace now |
$ |
|
|
Based on straight line depreciation. |
Data on New Furnace
|
| Assumed efficiency |
|
|
% |
Based on quotes. |
| Annual heating energy consumption |
|
|
MJ/year |
From old heat consumption and the two efficiencies |
| Annual natural gas consumption |
|
|
m3/year |
Based on 37.5 MJ/m3 of gas |
| Annual furnace fan electricity consumption |
|
|
kWh/year |
Estimated from quotes. |
| Annual GHG Emissions |
|
|
kg CO2e/year |
Based on 0.04968 kg CO2e/MJ energy from gas and 0.236 kg CO2e/kWh energy from electricity |
| Annual operating cost |
$ |
|
/year |
Calculated from above inputs |
| Purchase price for new furnace (installed) |
$ |
|
|
From quotes. |
| Sales tax rate |
|
|
% |
In Ontario, GST applies, but not PST. |
| Sales tax |
$ |
|
|
Based on sales tax rate above |
| Total capital cost |
$ |
|
|
Adding the figures above |
| Energy audit cost |
$ |
|
|
Cost reduced by a $150 rebate available for energy audits. |
| Manufacturer rebate |
$ |
|
|
From quote. |
| OPA rebate |
$ |
|
|
For variable speed ECM motor and programmable thermostat. |
| Utility rebate |
$ |
|
|
From Enbridge, for switching to high efficiency gas and
for the thermostat. |
| Federal rebate |
$ |
|
|
From NRCan, for high efficiency gas, based on the energy
audit. |
| Provincial rebate |
$ |
|
|
Matches the NRCan grant based on the audit. |
| Total rebates |
$ |
|
|
Adding the figures above |
| Total cost to the consumer |
$ |
|
|
Add capital cost and audit cost and subtract rebates |
| Expected recovery of furnace improvement in house sale |
$ |
|
|
Realtor association estimates 50-80% of the heating system
improvement can be recovered in a subsequent house sale. This calculation
assumes 50% recovery. |
|
Results
|
| Payback without rebates |
|
|
years |
Calculated from the capital cost and the annual energy savings. |
| Payback with rebates |
|
|
years |
Calculated from the total cost to the consumer and the annual
energy savings. |
| Life cycle cost of old furnace |
$ |
|
|
Total cost of owning and operating the old furnace, assuming
that if its expected life is shorter than our time horizon we would replace
it with the gas furnace when it dies. |
| Life cycle cost of new furnace |
$ |
|
|
Total cost of owning and operating the new furnace, assuming
we sell the house at the end of the time horizon and recover 50% of the
added value. |
| GHG Emissions Savings |
|
|
kg CO2e/year |
Based on above calculations. |
Home