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High Efficiency Furnaces

Published Oct 31, 2016
By Chris Brooks

Proponents of high efficiency furnaces offers homeowners a win-win proposition: using less fuel to heat your home is good for the environment, and it's good for your wallet.

But, there are downsides as well, and it's easy for these issues to get lost in the feel-good optimism of high-efficiency marketing: high-efficiency furnaces are more expensive up-front, and they require more complicated machinery and more complicated installations. If these systems aren't installed properly by experienced technicians, homeowners can potentially face years of frustrating and expensive repairs.

Efficiency Standards

The heating industry in the United States measures the fuel efficiency of a furnace in terms of annual fuel utilization efficiency or AFUE. According to the U.S. Department of Energy, heating systems meeting minimum DOE efficiency standards earn AFUE ratings of at least 80 percent. High efficiency furnaces, in contrast, have AFUES of 90 to 98.5 percent.

While no organization measures and calculates the AFUE of 20 - 40 year-old furnaces, many organizations and contractors toss around an estimate that such furnaces probably have an AFUE of 60% or less. Replacing such an outdated appliance with even a medium efficiency furnace would save the homeowner a minimum of 20 percent on energy usage.

Which Furnaces are High Efficiency?

Here is a short list of high-efficiency furnaces. All burn natural gas.

This is not a comprehensive list -- there are many high-efficiency furnaces that we have not included.

Greater Efficiency: The Technology

An older furnace typically has a standing pilot igniter that lights the fuel in a combustion chamber and heats up air that travels to a heat exchange chamber. There, a fan blows it via the home’s ductwork to individual rooms. Meanwhile, the hot exhaust generated in the combustion chamber goes up the chimney. Typically, this wastes 20 to 40 percent of the fuel burned.

Mid-efficiency furnace

A mid-efficiency furnace meeting DOE’s 80 percent AFUE standard features some upgrades over the older models. Some come with dual heat exchangers that draw more warmth from the air but still waste up to 20 percent of the fuel value. Some have variable-speed blowers that do not count toward the AFUE rating but still conserve energy. Other models offer add-ons to improve their AFUEs.


  • Less expensive to purchase and install than higher-efficiency models
  • Simpler systems typically result in lower maintenance costs


  • Use more fuel and produce more byproducts than higher efficiency models
  • Require roof (chimney) venting

High efficiency furnaces

A higher-tech furnace uses an electronic or a hot surface igniter, eliminating the old-fashioned standing pilot light that burns a small but constant quantity of gas. Also called a condensing furnace, this type of unit ushers condensed exhaust gases into a second heat exchanger designed to extract as much of the remaining heat as possible. A venting system expels the cooled air while the condensation left behind drains away with the help of an integrated pump.

An ultra-efficient furnace has a programmable thermostat that controls the speed of the heat exchanger fan to maximize performance. By running the blower longer at lower speeds, it reduces noise and delivers heat more evenly over time while conserving energy. The most efficient of these high-tech models has a waste factor of only 1.5 percent.


  • Fuel efficient
  • May qualify for Energy Star rebate


  • Greater up-frontexpense
  • Requires professional maintenance
  • Retrofits can be complex

Tax rebates for High Efficiency Furnaces

Homeowners should keep in mind that Energy Star offers a federal tax rebate on the purchase of a high efficiency furnace that is not available for mid-efficiency models. A gas furnace must be at least 97 percent efficient and have a blower fan that requires less than two percent of the unit’s total energy usage to qualify for a $150 tax credit as of 2016.

How Quickly Does Fuel Efficiency Pay for Itself?

The US government estimates that Energy Star certified gas furnaces save their owners an average of $94 per year in energy costs in the northern United States, and $36 per year in energy costs in the South.

While estimates and details will vary, you can expect to spend at least $2,000 more to move from an 80% efficient furnace to a 95% efficient unit. (And, you can easily spend much more).

In the northern US, that puts your payback period at more than 20 years.

Of course, your situation may vary a lot from those "average" savings. If you want to figure out how much a high-efficiency furnace would cost you, you should get quotes from several contractors, and read more about calculating the payback period.

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