What Are Furnace Energy Efficiency Ratings?

Here's an overview of what a furnace efficiency rating is, why it matters, and how you can check yours.

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The concept of the “high-efficiency furnace” in popular consciousness dates back to the 1980s. That’s when the National Appliance Energy Conservation Act of 1987 required all new furnaces be 78 percent efficient, meaning 78 percent of the heat went into the home. Before then, many furnaces released up to 40 percent of their heat outside through the vent!

Today, standard furnaces are 80 percent efficient, while those with a rating of 90 percent or more are considered high-efficiency.

What Do Furnace Energy Efficiency Ratings Mean?

Because all furnaces that generate heat with a flame produce carbon monoxide, they need to be vented, and those vented gases allow some of the heat to escape. Efficiency is defined as the annual heat output of the furnace divided by the annual energy it consumes. This ratio is called the Average Fuel Utilization Efficiency (AFUE).

In 2007 the Department of Energy (DOE) raised the minimum AFUE from 78 percent to 80 percent. Since then there have been multiple attempts to increase that number, especially for colder, northern climates. Those efforts have thus far been defeated or amended at the last minute. The DOE regularly reviews this policy and takes feedback from the public.

Understanding Furnace Energy Efficiency Ratings

The AFUE appears straightforward on the surface, but can get a little confusing if you dig deeper. For example, in this article we’ve been talking about gas furnaces and boilers. That’s because fully electric furnaces do not lose any heat through venting gas, so they are all considered high-efficiency.

But an electric furnace isn’t the same as a heat pump. Heat pumps have exterior units, use a separate measure of efficiency, and don’t have an AFUE rating. However, most heat pumps have a back-up heat source, usually a gas or electric furnace, and that furnace will have an AFUE rating.

It’s also worth noting that AFUE primarily tracks heat lost via intentional venting. It doesn’t factor in heat loss due to gaps in the duct system or poor insulation. A furnace or boiler’s efficiency is only one part of the heating equation. If you have a hyper-efficient furnace but no insulation in the walls, your heating bill will still be sky-high.

While it’s possible to determine AFUE on your own, it’s far easier to rely on the manufacturer’s calculation. (If you do want to wade in, here are the official procedures from the Office of Energy Efficiency and Renewable Energy.)

It’s important to understand that efficiency isn’t the only factor that determines operating cost. A low-efficiency furnace equipped with a variable speed blower or two-stage heating may consume less energy overall than a high-efficiency furnace running at full power.

How to Determine If You Have a High-Efficiency Heating System

All manufacturers are required to display the AFUE on boilers and furnaces. Look for a bright yellow label on the outside of the furnace. It should display the AFUE and indicate whether it’s high efficiency or not. If the label is missing or damaged, you can look up the model number online to learn the AFUE. You can also simply look at the layout of the furnace to determine if it’s high efficiency. Here’s how:

If the furnace vents to the chimney or roof via a metal flue, then it’s standard efficiency. If the furnace has a pair of PVC pipes acting as draw and vent, that’s a sign of sealed combustion, meaning that it’s high-efficiency.

How Does Energy Efficiency Impact Cost?

High efficiency furnaces cost more but they save on energy consumption. The real question is, are the energy savings enough to justify the higher initial purchase cost? The answer depends on how your home is designed and insulated, how much you use your furnace, and how long you plan to be in your home.

The final cost of a furnace install will depend on the size and layout of your home, as well as the make, model and features of the furnace. In general, most manufacturers price their high-efficiency furnaces at one-and-a-half to two times the cost of a standard-efficiency model. That could be anywhere from $2,000 to $6,000.

In addition, installing a home’s first high-efficiency furnace or boiler will mean extra cost, since the sealed-combustion system will require new venting (the dual PVC pipe system). Depending on your home’s layout, this may be a minor expense or a major headache. It may also require you to rework the ventilation for a gas water heater. Every home is different, but It’s reasonable to figure in a few hundred dollars here.

There may also be tax implications that affect your cost. These change based when regulations are passed, extended or repealed. So check the latest information from an official source, such as the DOE’s Energy Star site.

Determining a furnace’s efficiency is an important first step, but it’s only part of evaluating your home’s overall energy consumption.

Dan Stout
Ohio-based freelance writer and author Dan Stout is a former residential remodeler, commercial site supervisor and maintenance manager. He’s worked on nearly all aspects of building and DIY including project planning and permitting, plumbing, basic electric, drywall, carpentry, tiling, painting and more. He also publishes noir fantasy thrillers, including The Carter Series, from Penguin imprint DAW Books.