Saving Money with Duel Fuel Heating and Cooling - the Best of Both Worlds

Question: It’s time for me to select a new heating and cooling system for my home. I expect energy costs to continue to rise over time so I want to select the most economic system to own. How do I know which is the best solution?

Whether you are building a new home or upgrading an existing home one area of concern should be the type of energy you use for heating and cooling. With the technology available today the wisest way to address these answers is by using a systems approach, where discrete subsystems merge and fulfill multiple needs.

Source: Department of the Environment - Energy Star 2011

Electricity is expensive compared to other fuels mostly because it is generated by other fuels and then looses over half of its energy getting from the generating station to your home. What does this mean, well for every Kilo Watt (KW) of energy you use in your home the utility company generates over two KW. The cost to you is for 2KW.

 

The largest energy used in a home is for heating and cooling; it’s about 46%. When it comes to these functions a homeowner has choices as to which type of fuel to use. For 90% of us the choice is natural gas or electricity, but for a few it is heating oil, propane, coal or wood. There are also the renewables, wind and solar, that generates electricity; however, renewables are a very small part of the residential energy supply and in most cases can’t provide stand alone power sufficient to support a home in winter. Renewables will be discussed as an extension to this article.

 

The bottom line for any decision is how much energy I need to condition my home for comfort and how much will it cost; this is where an analysis comes in. Ideally you should know how much energy your home loses through conduction, convection, radiation and air leakage through its outer skin. This is the amount of energy your heating and cooling system has to replace to maintain in home comfort. An energy audit can supply this information.

 

When comparing heating and cooling systems the common energy measure is the British Thermal Unit (BTU). The gas company bills a homeowner in Therms, which is 100,000BTU and the electric company bills its customers in Kilo Watt hours (KWh) where a KWh is equal to 3412BTU; now with the conversion in place it is easy to compare the cost of electricity with that of natural gas.

 

Now let us look at the cost of these fuels. Based on numbers from the Energy Information Administration (EIA) the average price of natural gas is $1.137 per Therm and electricity 11.84c per KWh; as we need to compare like with like, we need to determine the cost of an equivalent Therm of Electricity.

 

A Therm of gas is 100,000BTU and a KWh of electricity is 3412BTU; therefore, a Therm of electricity is 100,000/3412 = 29.31KWh x 11.84c = $3.47. Much higher than the $1.137 for natural gas. There is one other parameter to consider, the efficiency factor of the furnace; an electric furnace is effectively 100% efficient, but the natural gas unit can be between 80% and 95% efficient depending on combustion techniques. This inefficiency must be accounted for in the cost; if the unit is 90% efficient then the cost of gas would increase by 10% from $1.137 to $1.25 per Therm.

 

It is important that you use costs based on your own energy bills as they tend to be higher than the average. All energy bills are based on the fuel you use and a large fixed cost due to distribution and taxes. The large fixed costs change the cost per Therm of energy you use and needs to be accounted for. Divide each of the twelve monthly bills dollar value by the Therms or KWh used, the results are $/Therm and $/KWh per month. Add the twelve results together and divide by twelve. This gives you the average cost you actually paid.

 

From above the same Therm of electric energy supplied to heat or cool your home costs approximately 300% more than natural gas – why, because over 50% is lost in the transmission to your home from the power station. This is why in most cases electricity isn’t used for home heating. That is unless you consider a heat pump system.

 

A heat pump is a device identical to the air conditioner in your house or car, the only difference is it can reverse direction and heat in winter and cool in summer. There are two configurations, one uses air as its transfer medium and the other called geothermal uses the ground and or water as its medium. Heat pumps are a science unto themselves and beyond the scope of this discussion. The important point to note is that heat pumps extract energy from the air or ground and can produce more energy than they use; that is for a KWh of electricity driving the unit 3KWh of equivalent BTUs energy is heating your home. All other heating systems absorb some energy during the input to output conversion called efficiency factor, the heat pump is the only device that supplies more energy than it consumes in electricity.

 

However, it has limitations; its coefficient of Performance (COP) the ratio of input to output energy levels varies with outside temperature. The air based system is more susceptible to temperature variations than geothermal as the ground temperature is reasonably stable below thirty feet. Geothermal systems require drilling wells, are more difficult to configure, more expensive and more difficult to service if problems occur. For this discussion we will concentrate on air based systems only.

 

Dual fuel heat pump and natural gas combination

 

We know that natural gas costs $1.137 per Therm and electricity costs $3.47 per therm, but if we now consider the heat pump with a 300% efficiency boost the electricity cost drops to a third or $1.15 per Therm and inline with the natural gas cost.

 

As an example and taking real data from a currently available Carrier heat pump we look at the balance point worksheet below. These curves determine the outside temperature at which the gas system is more economically efficient than the heat pump. It establishes COP from temperature, heating capacity and the equivalent output KW. The data sheet identifies the input power as 3.52KW for the high stage of this two stage system.

The objective is to find the COP for different temperatures and establish the cost of electricity versus natural gas at that temperature. This will determine the most economical point to switch from electricity to natural gas. We will use the 25HPA648 48KBTU unit in this case.

 

Taking the 40’F temperature point and following the green line we see that the output power in KW is 11.7KW. We know the input power is 3.52KW

COP = 11.7/3.52 = 3.32

 

Now the equivalent cost of the electricity is

$3.47/3.32 = $1.04

Less than $1.137 for natural gas

 

If we look at the 60’F point and follow the orange line we see the output power is 17.1KW and a COP of 4.86 and a cost of 71c much lower than the cost of natural gas and emphasizing the advantages of heat pump efficiency at higher temperatures.

 

The real issue is at what point does the heat pump advantage reverse? It’s when the cost of natural gas is less than the cost of electricity. That point is when gas and electric balance:

COP of 3.47/1.137 = 3.05

 

We know the input is 3.52KW therefore the output is:

3.25 x 3.05 = 10.7KW output power.

 

Using the chart above, look back from 10.7KW onto the curve and down to the temperature line; the balance point is approximately 37’F and the outside temperature point at which the heat pump stops and the gas units starts.

 

For temperatures below 37’F the heat pump becomes economically inefficient; for example from the chart, at 27’F the COP drops to 2.49 and the cost of electricity is $1.40 and at 8’F the COP drops to 1.66 and the cost to $2.09. This is why a stand alone air based heat pump is not practical in cold climates, but the natural gas dual fuel system makes a lot of sense. Be careful with the electric dual fuel systems as the electric back-up unit is costing $3.47 per 100KBTU and not the $1.137 natural gas 100KBTU.

 

The chart below plots the curve of gas versus electrical cost showing the balance point at 37°F.

 

One other advantage of a natural gas dual fuel system is that as fuel prices change the temperature at which the systems switches can be adjusted for the best economics. As an example natural gas prices based on new found supplies based on fracking have started to bring prices down and therefore change the balance point at which economics work.

 

And remember your heat pump is also your air conditioner and with a device called a desuperheater your heat pump can provide effectively free hot water to you home when the heat pump is running.

 

Dual fuel systems cost a little more than a stand alone natural gas furnace and air conditioner unit, so you will need to perform a return on investment and payback calculation, but as a system dual fuel makes a lot of sense.