This is a consumer page on heating. For more resources on realted to heating, visit the HVAC topic page.

Heating is the largest energy expense in most homes, accounting for 35-50% of annual energy bills in colder parts of the country. Reducing your heating energy use is the single most effective way to save money and reduce your home’s contribution to global environmental problems.

Step 1. Decide Whether to Replace Your Existing System
Step 2. Find a Good Contractor
Step 3. Calculate Your Return on Investment
Step 4. Select a New System
Step 5. Improve the Performance of Your System, Old or New

PLEASE NOTE: ACEEE does not rate or make recommendations regarding specific manufacturers or trade names. To get a better sense of the manufacturers that make the most efficient equipment, see STEP 4 for links to regularly updated product listings.


Decide Whether to Replace Your Existing System


If your furnace or boiler is older than 20 years, chances are it is a good investment to replace it with a high-efficiency model with the guidance of a good contractor. Also consider a replacement now if your system is one of the following:

  • Old coal burner that was previously switched over to oil or gas
  • Old gas furnace without electronic ignition. If it has a pilot light, it was probably installed prior to 1992 and has an efficiency of about 65% (the least efficient systems today are 80%)
  • Old gas furnace without vent dampers or an induced draft fan (which limit the flow of heated air up the chimney when the heating system is off).

If your furnace or boiler is 10–20 years old, and you are experiencing discomfort or high utility bills, hire a highly-qualified home performance or heating contractor who can help you evaluate your existing system. Often it will be more cost-effective to improve house insulation and air-tightness, repair or insulate ductwork, or tune up your system before purchasing a new one.

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Find a Good Contractor


Because no two houses are alike, it is very difficult to advise what kind of new system will be the most appropriate, efficient and cost-effective for your house without actually visiting your home. That is why the first step in replacing your system is finding a contractor who has experience in high-efficiency systems.

  • Read our list of tips on choosing a contractor. Skilled heating system technicians should always perform a home evaluation and heat loss calculation to determine proper sizing before making a recommendation.
  • If you do not already have a relationship with a contractor you can trust, find a contractor that employs technicians with North American Technician Excellence (NATE) training or ENERGY STAR experience. Listings are found at www.natex.org ((877) 420-NATE) or www.acca.org.

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Calculate Your Return on Investment

AFUE of New System
AFUE of existing System
$38 $41 $44 $47
$31 $35 $39 $42
$25 $29 $33 $37
$19 $24 $28 $32
$13 $18 $22 $26
$6 $12 $17 $21
  $6 $11 $16
    $6 $11

If you have an idea of how much it will cost to install a new system, use the chart below to calculate how much money you are likely to save each year with a more efficient system, and what your return on investment is likely to be. Remember, when fuel prices go up, your savings will go up.

1. Calculate Dollar Savings per $100 of Annual Fuel Cost

To determine savings from the table to the right, find the horizontal row corresponding to the old system's AFUE, then choose the number from that row that is in the vertical column corresponding to the new system's AFUE. That number is the projected dollar savings per hundred dollars of existing fuel bills. For example, if your present AFUE is 65% and you plan to install a high-efficiency natural gas system with an AFUE of 90%, then the projected saving is $27 per $100. If, say, your annual fuel bill is $1,300, then the total yearly savings should be about $27 x 13 = $351.

2. Calculate Return on Investment

ROI = first year savings ÷ installed cost

ROI = $351 ÷ $2,500 = 0.14 = 14%

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Select a New System


ACEEE does not make recommendations on specific manufacturers or trade names. There are numerous manufacturers producing high-efficiency heating and cooling equipment. The table below shows what efficiency levels ACEEE recommends for new central equipment and how to find a listing of qualifying systems.

Target Heating System Efficiency Requirements
Click for other purchasing tips

Gas Furnace (AFUE)

Oil Furnace (AFUE)

Gas Boiler (AFUE)

Oil Boiler (AFUE)

Market Range Available
80% - 98%
80% - 87%
80% - 98%
82% - 95%
7.7 - 14
2.5 - 5.6

Split System:

Single Package Unit:

Open Loop:

Closed Loop:


CEE Tier 2
CEE Tier 3
  • If you live in a relatively mild climate for heating, purchase products at the ENERGY STAR level (Click here for a listing of furnaces or boilers that qualify, look under "For Consumers" on the right-hand side of each page). In the mildest climates, with very low heating cost, it may be hard to justify the higher cost of ENERGY STAR equipment. The extra dollars may be better spent reducing other energy loads.
  • If you are looking to buy a gas furnace or heat pump and live in a cold climate, purchase the highest "CEE Tier" that is economically feasible. These tiers are determined by the Consortium for Energy Efficiency (CEE). In many cases, CEE-member utilities offer rebates for this equipment. Click on the above link to view a listing of qualified furnaces.


The efficiency of new furnaces is measured by the annual fuel utilization efficiency (AFUE), a measure of seasonal performance. Furnaces today are between 80% AFUE and 98% AFUE. Traditional "power combustion" furnaces are 80-82% AFUE. Above 90% AFUE, a furnace is "condensing," which means it recaptures some of the heat wasted in traditional systems by condensing escaping water vapor. Consider the following when selecting a new furnace:

  • Condensing Models
    ACEEE strongly recommends a condensing furnace (AFUE 90% or higher), unless you live in a warm climate (in this case, you may want to consider retrofitting your system with a heat pump instead)
  • High Electrical Efficiency.
    A furnace can use a significant amount of electricity—over 1200 kWh per year for some models—mostly to power the fan motor. Variable speed fan motors are generally more efficient than standard (“PSC”) motors and may save you hundreds of dollars per year. Electrically efficient furnaces can be found on the Gas Appliance Manufacturers Association's website (www.gamanet.org).
  • Proper Sizing
    Make sure the heating capacity of the furnace is not too high for your home. Most furnaces are substantially oversized. Insist that your contractor do an "ACCA Manual J" (www.acca.org) or better heat loss analysis.

Boilers (Hot Water and Steam)

The efficiency of new boilers is given as the annual fuel utilization efficiency (AFUE), a measure of overall performance. Boilers manufactured since 1992 must have an AFUE of at least 80%. In comparison, many old boilers have AFUE ratings of only 55-65%. To get the most out of your new boiler, consider the following:

  • Buy ENERGY STAR (AFUE of 85% or higher)
    If you want to know which manufacturers produce high-efficiency boilers, check the ENERGY STAR list. Ask your contractor about condensing boilers that are available and consider the added investment if you live in a cold climate.
  • Control Options
    Ask your contractor about different controls that reduce the amount of heat lost through the pipes during off-cycle periods or off-peak (warmer) days. Today there are many technologies available. Controls that modulate the boiler water temperature to reduce off-peak losses work better with condensing boilers. Ask about the cost of purchasing a boiler that has integrated controls compared to the cost of purchasing the controls as an add-on.
  • Low electricity usage
    Tell your contractor that you would like a boiler that has low power usage. The Gas Appliance Manufacturers' Association website includes information on AFUE and annual electricity use in its product database. The actual amount of electricity used in your home will vary with your local weather and home characteristics.
  • Indirect Water Heater
    Modern boilers with low thermal mass and good insulation can actually make very efficient water heaters, because they don't both heat and store water at the same time. When installing a replacement boiler, consider replacing your existing storage water heater with a well insulated indirect tank that connects to the boiler with an external loop. Even in the summer you are likely to save energy because heat losses through the water heater flue will be eliminated.

Air Source Heat Pumps

Central heat pumps operate much like a central air conditioner except that they can reverse the cycle in the winter to deliver heat to the house. They are much more energy-efficient than electric furnaces; however, conventional air-source heat pumps are more appropriate for mild or warm climates. Because heat pumps provide both heating and cooling, they have two efficiency ratings: seasonal energy efficiency ratio (SEER), and heating system performance factor (HSPF). When selecting a new heat pump, look for the following:

  • High Seasonal Efficiency
    ACEEE recommends SEER at least 14.5 and HSPF in the range of 9.0. Heat pumps meeting these performance criteria can be found by running a search in the ARI/CEE HVAC Directory.
  • Compatibility
    Depending on the indoor unit installed, SEER and HSPF can vary significantly within the ranges of efficiency provided for the outdoor condensing units. Make sure all of the components of the system are designed to work together. Check with your contractor or visit the Air-Conditioning and Refrigeration Institute to see the specific SEER and HSPF values for the combination you are considering.

Ground Source Heat Pumps

Because temperatures underground are nearly constant year-round — warmer than the outside air during the winter and cooler than the outside air during the summer — a ground-source heat pump can be much more efficient than an air-source heat pump and appropriate for both warm and cold climates. However, they are less common and more expensive to install.

Despite the high cost, your energy bills might be lowered enough with a ground-source heat pump to justify installing one, especially if you need to replace your water heater as well. Most ground-source heat pumps are installed with a “desuperheater” that uses waste heat to heat water for no added cost during both heating and cooling modes. ACEEE would strongly recommend this option.

Several utilities have begun marketing ground-source systems as a superior alternative to air-source heat pumps. Visit the Geothermal Heat Pump Consortium for more information or to find a contractor who can help you.

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Improve the Performance of Your Existing System


Proper maintenance can have a big effect on fuel bills and should be performed on a routine basis.

  • Clean or replace air filters regularly.
  • Clean registers. Warm-air supply and return registers should be kept clean and should not be blocked by furniture, carpets, or drapes.
  • Keep baseboards and radiators clean and unrestricted by furniture, carpets, or drapes.
  • Bleed trapped air from hot water radiators. Follow prescribed maintenance for steam heat systems, such as maintaining water level, removing sediment, and making sure air vents are working. Check with your heating system technician for specifics on these measures and use caution: steam boilers produce high-temperature steam under pressure.
  • Tune up your system. Oil-fired systems should be tuned up and cleaned every year, gas-fired systems every two years, and heat pumps every two or three years. Regular tune-ups not only cut heating costs, but they also increase the lifetime of the system, reduce breakdowns and repair costs, and cut the amount of carbon monoxide, smoke, and other pollutants pumped into the atmosphere by fossil-fueled systems.
  • Seal your ducts. In homes heated with warm-air heating, ducts should be inspected and sealed to ensure adequate airflow and eliminate loss of heated air. It is not uncommon for ducts to leak as much as 15-20% of the air passing through them. And leaky ducts can bring additional dust and humidity into living spaces. Thorough duct sealing costs several hundred dollars but can cut heating and cooling costs in many homes by 20%.
  • Check for wasted fan energy. If your furnace is improperly sized or if the fan thermostat is improperly set, the fan may operate longer than it needs to. If you're getting a lot of cold air out of the warm-air registers after the furnace turns off, have a service technician check the fan delay setting.

PLEASE NOTE: ACEEE strongly recommends against modification of any gas-fired appliances, including furnaces, boilers, room heaters, water heaters, and clothes dryers. These appliances are tested and certified to operate safely only as designed and manufactured by the original equipment manufacturer. Any unauthorized alterations may jeopardize your safety by leading to fire, explosion, shock, or carbon monoxide poisoning. Be wary of contractors selling modifications to gas-fired heating appliances and consult with the original manufacturer or manufacturer's local representative before making any alterations.

While you're at it, NEVER use or store flammable liquids like gasoline in the same room as a gas appliance.

Also consider the following tips for operating your system for maximum efficiency:

  • Thermostats. Turn down the thermostat at night and when you're away from home. In most homes, you can save about 2% of your heating bill for each degree that you lower the thermostat for at least 8 hours each day. Contrary to some common myths, it won't take more energy to bring your home back to the desired temperature than it would to leave it at your optimum temperature all day. Turning down the thermostat from 70°F to 65°F, for example, saves about 10% ($100 saved per $1,000 of heating cost).

    Of course, you can use a good programmable thermostat to automate this process. IF it is programmed properly you can expect to recover the cost of the thermostat in the first year or so. If you have a heat pump, be aware that you need a special "adaptive" thermostat that will bring the temperature up from the setback point in winter without calling for the inefficient "emergency" electric resistance heat.

  • Aquastats. The thermostat that regulates the temperature of a hot water boiler is called an aquastat. Normally, the aquastat keeps water in the boiler around 160-180ºF. In milder weather, however, you don't need to keep the boiler that hot. The aquastat can be set manually to 140ºF (120ºF with condensing boilers), reducing fuel consumption by 5-10%. The aquastat control is usually located in a metal box connected to the boiler. If you can't locate it, ask your service technician for assistance. Your technician can also provide information on modulating aquastats (or outdoor resets) that automatically adjust water temperature depending on the outdoor temperature.

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Last updated December 2012