December 3, 2019

Is Propane or Heating Oil Better in Colder Climate?

A 2013 study by Newport Partners used building energy modeling to compare 15 different heating systems using propane, electricity, or heating oil in new and existing homes in 20 locations across the United States.  By comparing so many systems, the study established that in most cases, systems incorporating high-efficiency propane furnaces cost less to purchase and install than comparable heating systems running on heating oil or electricity. 

Further, the propane furnaces operated at energy costs that were competitive to other systems, making them a better overall value in many cases than systems known for their energy savings, such as ground source heat pumps (GSHPs). Propane furnaces possessed the measurable environmental benefit of lower carbon emissions from system operation than many other alternatives. 

• Propane furnaces can have both lower installation costs and lower monthly energy costs than other heating options.
• In any climate, propane furnaces deliver a more comfortable heat.

A high-efficiency propane furnace paired with a standard central air-conditioning system yields upfront savings and competitive energy costs.

Across the 15 heating systems evaluated, the four heating oil systems had the highest energy costs for new homes in cold climates.

In new installations, high-efficiency propane furnaces were the most affordable to purchase and install of all the systems. In fact, because high-efficiency units can vent through plastic pipes, the furnaces had lower total upfront costs than even standard efficiency propane furnaces, which require metal venting. The lower first costs and lower energy costs associated with high-efficiency propane furnaces are good news for builders and homeowners.

In all cases, GSHPs produced lower monthly utility bills than propane systems, but the study also showed that those energy savings could not compensate for the high upfront cost of GSHPs until after 16 to 36 years of operation.

Installing a GSHP with a backup propane furnace (40/60 load split) in cold-climate regions significantly reduced initial costs by decreasing the size of the GSHP’s loop field. As one might expect, adding the propane backup increased the system’s energy cost; but the propane backup reduced the rate of payback from energy savings by up to 13 years, compared with a standard GSHP setup.

Also in cold-climate regions, replacing an air source heat pump (ASHP) with a high-efficiency propane furnace had an immediate payback compared with a standard efficiency ASHP because the high-efficiency propane furnace was less expensive to purchase, install and operate. Comfort, low upfront costs, and long-term energy savings are the top reasons homeowners choose one system over another. Some homeowners also consider the effect their homes have on the environment. Construction professionals can remind buyers that propane systems are able to operate at a lower carbon dioxide (CO2) emissions rate than systems running on electricity or heating oil.

For example, the study showed that a high-efficiency heating oil furnace caused 15 percent higher CO2 emissions than a high- efficiency propane furnace. That propane furnace operating for 20 years would avert as much CO2 as 514 tree seedlings could sequester in 10 years.

Propane furnaces offer best-in-class efficiency, with ratings from 90 to 98 percent, and will provide a comfortable, even and consistent heat during even the coldest weather. Propane-powered boilers offer efficiency, space savings, and the versatility to provide space heating, water heating, and even snow melt. Even in the coldest, outdoor climates where a dual-fuel hybrid system is used, propane improves the efficiency and comfort of air- or ground-source heat pump systems and further protects homeowners from rising utility costs. Explore the many ways in which propane outperforms fuel oil in the Northeastern part of the U.S.

A high-efficiency propane furnace paired with a standard central air-conditioning system yields upfront savings and competitive energy costs. Across the 15 heating systems evaluated, the four heating oil systems had the highest energy costs for new homes in cold climates.

Installing a GSHP with a backup propane furnace (40/60 load split) in cold-climate regions significantly reduced initial costs by decreasing the size of the GSHP’s loop field. As one might expect, adding the propane backup increased the system’s energy cost; but the propane backup reduced the rate of payback from energy savings by up to 13 years, compared with a standard GSHP setup.

In cold-climate regions, replacing an air source heat pump (ASHP) with a high-efficiency propane furnace had an immediate payback compared with a standard efficiency ASHP because the high-efficiency propane furnace was less expensive to purchase, install and operate.

In a mixed or cold climate, replacing an old propane furnace with a high-efficiency propane furnace, instead of a standard efficiency one, produced a faster payback than any other option considered. This included standard- and high-efficiency ASHPs, GSHPs, high-efficiency oil furnaces, and ASHPs with propane backups. On average, the payback period of a high-efficiency propane furnace was merely 1.2 years in both climate regions.

Comfort, low upfront costs, and long-term energy savings are the top reasons homeowners choose one system over another. Some homeowners also consider the effect their homes have on the environment. Construction professionals can remind buyers that propane systems are able to operate at a lower carbon dioxide (CO2) emissions rate than systems running on electricity or heating oil.

For example, the study showed that a high-efficiency heating oil furnace caused 15 percent higher CO2 emissions than a high- efficiency propane furnace. That propane furnace operating for 20 years would avert as much CO2 as 514 tree seedlings could sequester in 10 years.