What's The Most Efficient Heating System For Your Home? (2023)

Not that we need to remind you, but heating a home is expensive. According to the U.S. Department of Energy, heating costs are responsible for around 30% of the typical home utility bill—more than any other “system” in the home.

While there are many ways to cut these costs (like using a programmable thermostat or simply wearing a sweater in lieu of cranking up the heat), one very practical step you can take is to outfit your home with an efficient heating system. Even if it requires an upfront investment, you’ll save money over time because the more efficient a heating system is, the less energy it needs to operate, and this can translate into lower heating bills.

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What Makes a Heating System Efficient?

It helps, of course, to know what defines “efficient” so that when you go in search of one—or when you are trying to determine whether your existing system is efficient—you’ll know what to look for.

A heat pump’s effectiveness is directly affected by weather conditions. In moderate climates, heat pumps are far more efficient than a furnace. In very cold climates the furnace is more efficient (although heat pumps are becoming contenders quickly).

In general, the most important piece of information is the system’s annual fuel utilization efficiency rating, or AFUE for short. This measurement, which is a percentage rate, tells you how much of the energy (usually, in the form of electricity or natural gas) that the system consumes is going directly toward heating your home versus how much is going to waste. In other words, it lets you know how much energy the system is converting into usable heat.

An AFUE of 90%, for example, indicates a high rate of efficiency—a system with this rating is putting all but 10% of its energy to good use. Currently, the DOE requires a minimum AFUE of 80%, but a lot of modern heating systems exceed the minimum (some rate as high as 98.5%).

The least efficient system? Basically, anything manufactured before 1992, before there were any AFUE standards. This means that if you live in a 30-plus year-old home and haven’t upgraded the heating system since then (or ever), you are probably wasting a lot of energy and money.

How much energy? That depends on so many individual factors, but to give you an idea of the difference between old furnaces and newer ones, the DOE reports that “upgrading your furnace or boiler from 56% to 90% efficiency in an average cold-climate house will save 1.5 tons of carbon dioxide emissions each year if you heat with natural gas.”

That’s a lot of CO2.

It can also reduce your heating bill by as much as 50%, says the DOE.

How to Choose an Efficient Heating System

Practically speaking, though, finding a heating system with a high AFUE rating is only one part of finding the most efficient heating system for your home. You also have to find one that is compatible with your home’s energy source. Some homes are outfitted for electric heating systems only; others are set up for natural gas.

Natural gas, by definition, is more efficient overall than electricity, so if that is what you are going for—and your home isn’t already natural-gas compatible—check with your local gas company to find out whether conversion to natural gas is possible. If it is, or if you are already set up with your energy source of choice, the next step is to decide which of the three main types of heating systems is best for your home.

Types of Heating Systems

Furnace

In general, furnaces are the most efficient of the heating systems, especially if you have natural gas. They work by heating air with a component called a heat exchanger and pushing it into the home through a duct system, using a fan (often referred to as a blower). Along with the fact that they have high-efficiency ratings, one of the biggest advantages of furnaces is the relative affordability.

Most folks can expect to pay between $2,000 and $7,000 for a new furnace (natural gas furnaces, as opposed to ones that run on electricity, are on the higher side). The downside of this choice? Thanks to the fan, furnaces are often loud.

Heat Pump

A heat pump is an air conditioning and heating unit all in one (the fact that it is dual purpose makes it efficient in its own way). When it is hot outside, the unit grabs air from inside your home, removes theheat from it with a refrigerant and pumps it back into the home as cool air. During winter, it takes air from inside and adds heat to it before sending it back indoors to warm up your space. Outdoor air is never brought in through the heat pump.

Benefits include excellent air filtration and lack of noise (unlike furnaces, they are quiet). On average, heat pumps cost around $5,600, with some costing as much as $20,000 depending on the type you get (heat pumps come in three varieties—air-source, split-duct and geothermal). Will a heat pump reduce your energy expenses? Maybe, or maybe not. They may actually raise your electric bill just as much as they lower your gas bill, so it could be a toss-up.

In terms of measuring efficiency, heat pumps don’t go by the AFUE. Instead, their efficiency is based on the Heating Seasonal Performance Factor (for heating mode) and the Seasonal Energy Efficiency Ratio (for cooling mode). To avoid confusion, your best bet is to just look for a heat pump that is Energy Star certified (this will help make sure you are getting one that checks off all the right boxes).

Boiler

Believe it or not, boilers are still a thing. As the name suggests, a boiler is a system that heats up water in a tank and uses that water to warm your home, pumping water from the boiler’s tank through a series of pipes to individual radiators. The radiators then distribute heat around various rooms and spaces.

Natural gas boilers are as efficient, if not more so, than furnaces (some have AFUE ratings of up to 100). Electric boilers are uncommon in homes (at least in the U.S), and so are boilers that run on oil, even though you can still get them. In terms of cons, because of their shape (tall and cylindrical) boilers take up more space than the average furnace. They are also quite expensive (up to $10,000), and if anything goes wrong, the repairs can get pretty pricey, too.

(Video) How to Choose the Most Efficient Boiler | This Old House

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FAQs

What is the most energy-efficient heating system for homes? ›

Geothermal systems provide the most efficient type of heating. They can cut heating bills by up to 70 percent. Like other types of heat pumps, they are also very safe and environmentally friendly to operate.

What is the cheapest most efficient way to heat a house? ›

Air conditioning. Based on running costs alone, reverse-cycle air conditioning is by far the cheapest way to heat your home: our estimates show that a reverse-cycle air conditioner will cost only a little more to run for the entire year than an electric heater will cost to run just for three months over winter.

Which type of heating is cheapest to run? ›

electric heating cost is much cheaper. A single kilowatt-hour (kWh) unit of gas costs around 4.65p, whereas the average price for a kWh of electricity is more than 20p. This doesn't mean that electric heating running costs are four times those of gas, however!

What is the cheapest way to heat your home in 2022? ›

Gas boiler

It's not as cost-effective without solar panels, but a gas boiler is still the cheapest way to heat your home – though that's set to change soon, with the cost of gas rising more than twice as quickly as electricity.

What is the most inefficient heating system? ›

Solar heating is the most efficient home heating system on all three criteria, and electric is the least efficient and least affordable. If you want to know why electric heating is so inefficient and expensive, or how to save on electric heating, see my Energy efficient electric heaters page.

What is the most efficient heating system for cold climates? ›

Remember: electric heat pumps are great heating systems for homes in warmer climates, while gas furnaces are better for areas that get colder in the winters.

What type of heating system is best? ›

In general, furnaces are the most efficient of the heating systems, especially if you have natural gas. They work by heating air with a component called a heat exchanger and pushing it into the home through a duct system, using a fan (often referred to as a blower).

What is the cheapest way to heat your home in the winter? ›

The cheapest way to heat a room
  • Gas central heating. There's a good reason why many houses have gas central heating installed – it's the cheapest option. ...
  • Oil-filled heaters. ...
  • Electric heaters. ...
  • Change your energy supplier or tariff. ...
  • Reflect the heat. ...
  • Fit thermal curtains. ...
  • Bubble wrap on your windows. ...
  • Insulate your attic.
6 days ago

What is the most cost effective form of heating? ›

The most efficient and cost-effective heating system is always going to be the one that offers some degree of radiant heat. Compared to convection, radiant heat lasts longer and isn't affected by air movement, and yet does a similarly stellar job at keeping us cosy.

Is it cheaper to run an electric heater or central heating? ›

Overall, for heating the same space, an electric heater costs more than twice as much as using central heating. However, electric radiators can be more cost effective if you're heating a small area of your house like one or two rooms.

How can I heat my home cost effectively? ›

The 7 Cheapest Ways To Heat A Home
  1. Buy an energy-efficient space heater.
  2. Buy a smart thermostat.
  3. Use credit cards to pay your utility bills.
  4. Sign up for budget billing.
  5. Insulate your attic.
  6. Invest in warm clothing.
  7. Consider installing solar panels.
10 Sept 2020

What is the cheapest form of electric heating for House? ›

The cheapest form of electric heating is night-time storage heaters as you'll usually power these using a special electricity tariff that offers cheaper rates of electricity at night. These tariffs are known as Economy-7, as they give you 7 hours of cheaper overnight electricity.

Is it cheaper to heat with gas or electric 2022? ›

Is electric heating cheaper than gas? No. When it comes to using energy, gas is typically cheaper than electricity. Looking Ofgem's price cap rates, gas has gone up to 10.3p per kWh from October 1, 2022 from 7p and electricity up to 34p per kWh, from 28p.

How can I heat my home for free? ›

10 step guide to keep your house warm without heating
  1. Rejig your furniture. ...
  2. Use a terracotta heater. ...
  3. Invest in insulation. ...
  4. Think about your habits. ...
  5. Put a shelf above a radiator. ...
  6. Bleed your radiators. ...
  7. Analyse any draughts. ...
  8. Block your chimney up.
26 Aug 2022

Are heat pumps better than furnaces? ›

Energy Efficiency

From a strictly scientific basis, heat pumps are technically more energy efficient in that they can transfer more energy than they use. By contrast, a high efficiency natural gas furnace like the Carrier Infinity 98 with Greenspeed® Intelligence can provide up to 98.5% efficiency (AFUE).

What is the downside to a heat pump? ›

7 Disadvantages of Heat Pumps are:

High upfront cost. Difficult to install. Questionable Sustainability. Requires significant work.

What is the new type of heating system? ›

Solar heating systems

They use solar collectors that are installed on the roof of your home. These collectors can absorb the heat from the sun, using it to warm water that is then stored in a hot water tank, much like in a conventional boiler system.

Is it cheaper to run space heater or furnace? ›

The Energy Department estimates that the cost to heat an entire home with electric space heaters cost 43% more than a gas furnace. Using a space heater in your bedroom only while you sleep is a practical way to use a space heater and won't make much of a dent in your electricity bill.

Is it cheaper to leave heat on all day? ›

In fact, leaving your heat on all day can actually cost you much more than turning it off every now and then. Heat tends to diffuse, so the high heat in your home will diffuse to areas of low heat outside the home during the winter. So even when you have your furnace on, your home is always losing a little bit of heat.

Which form of heating is 100% energy-efficient? ›

Electric resistance heating is 100% energy efficient in the sense that all the incoming electric energy is converted to heat. However, most electricity is produced from coal, gas, or oil generators that convert only about 30% of the fuel's energy into electricity.

How much does it cost to run central heating for 1 hour 2022? ›

How much does it cost to run gas central heating per hour? If you're connected to mains gas, you're looking at a cost of around 11.51p per kilowatt-hour. This means that if you have a 24 kW boiler, you can expect to pay around £2.76 per hour to run it on mains gas. Information correct as of the October 2022 price cap.

Should I replace gas central heating with electric? ›

More energy efficient – Electric heating wins hands down when it comes to energy efficiency. When you pay for 1kW of electricity, you receive 1kW of heat. Gas boilers can vary in efficiency depending on the type and model of boiler you choose, but they are never 100% energy efficient.

How much does it cost to run central heating for 1 hour? ›

Using kW and kWh, you can work out how much gas your boiler is using and therefore how much it costs. A 24 kW boiler will use 24 kWh of energy per hour. According to Choose, the cost is approximately 3.8 pence per kWh, which means it would cost around 91 pence to run a 24 kW boiler for one hour.

What is the best temperature for heat to save money? ›

According to ENERGY STAR, setting your thermostat to 68 degrees Fahrenheit (20 degrees Celsius) when you're home is the ideal balance of comfort and energy efficiency.

Is it better to use gas or electric 2022? ›

Cost comparison between gas and electric heating

The unit cost of gas heating is cheaper than electric, at 10p/kWh, vs 34p/kWh for electricity. However, the average cost to install a gas central heating system is around £5,250, compared with £3,790 to install an electric heating system.

What is the best alternative to gas central heating? ›

What can I use instead of a gas boiler? Electric radiators, towel rails and electric water heaters are great alternatives, as well as biomass boilers, heat pumps, solar-powered or thermal heating panels.

Will gas and electric prices come down in 2023? ›

But will energy prices come down in 2023? According to the latest analysis by Cornwall Insight, energy bills could soar by 48%, based on current wholesale prices and based on typical average use, in April 2023. This is lower than its prediction made last month when the rise was predicted to hit 74%.

Why is my house so cold even with heating on? ›

The reasons your house is cold even with the heat on could be because of poor insulation, your furnace not working properly, rooms with high ceilings, or your heating system doesn't cover the whole house. Each of these issues can prevent your home from properly heating.

Who qualifies for home energy grant? ›

To apply you need to:

live in Greater London. own or rent your own home, landlords can apply as long as the tenant is eligible. Are in receipt of a means-tested benefit OR have a low household income (less than £20,000 a year after rent/mortgage and council tax deductions) Have a property EPC rating of D, E, F and G*

Does turning the heat on and off cost more? ›

Is it better than leaving it on steadily? ANSWER: Turning your heat on and off is not cost effective, since your system will have to work extra hard for extra long to get the temperature back up.

How do I choose a heating system for my house? ›

How to Choose a Home Heating System That's Right for You
  1. Upfront Investment. Although you may have your eyes set on a solar zoned heating system, the initial cost may be out of your budget. ...
  2. Unit Compatibility. ...
  3. Professional Installation. ...
  4. Energy Costs (Energy Efficiency)
29 Dec 2017

Is it cheaper to run gas or electric heater? ›

They found that an efficient electric heater uses only a fraction of the energy of the most efficient equivalent gas heater. As a result, efficient electric heaters have lower running costs than gas.

Which is cheaper to run central heating or electric heater? ›

Overall, for heating the same space, an electric heater costs more than twice as much as using central heating. However, electric radiators can be more cost effective if you're heating a small area of your house like one or two rooms.

What is the newest technology for heating homes? ›

Heat pumps are the newest home heating system technology. They use a system similar to an air conditioner by extracting heat from the air and delivering it to the home through an indoor air handler. A popular heat pump system is known as the mini-split or ductless heating system.

What is the most common central heating system? ›

Furnaces. Furnaces are the most common form of central heating system used in North America. A furnace is an appliance that heats up air and blows it through the ducts via air registers or grills.

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