Converting from Home-Heating Oil to a Heat Pump, Part 1: Cost and Initial Assessment

Reader Contribution by Peter Callaway
1 / 5
2 / 5
3 / 5
4 / 5
5 / 5

This two-part series documents homeowner Peter Callaway’s experience in a region that relies predominantly on fuel-oil for home heating to convert his household to a heat pump system. This heat pump system supplanted fossil fuels used for Peter’s heating, cooling and hot water heating needs with a more renewable alternative.

Part 1 describes how the author took advantage of a free home energy audit to make energy-efficiency changes and explains why the switch to heat-pump technology was made and what benefits were expected and achieved. Learn how to estimate running cost savings based on a Central Hudson online tool and how to calculate actual savings from actual use.

In Part 2, find out how to work with a contractor and get the job done, with Peter’s thoughts on cost, technology, and service contracts. The author does not intend this article to be a recommendation or endorsement for a particular technology or contractor.

I live in a 1,624 square-foot, ranch-style house that was heated by an oil furnace with baseboard and cooled by window-installed air conditioners. Hot water was provided by a coil in the oil furnace, which meant having the furnace on all year. To lower my household carbon footprint while increasing my energy security by moving away from oil, I converted to a heat pump-based heating and cooling system. My heat pump system has different units for the living and sleeping areas, a separate unit for the basement, and yet another smaller, specialized heat pump for hot water.

I threw out the 50-year-old, rusting, low-efficiency oil furnace, drained all the pipes, and left them in place but sealed off. In case of prolonged electricity outage, I have a propane gas insert fireplace unit in the family room in the basement, together with a number of standalone electric resistance heaters.

But let’s not get ahead of ourselves. Before ever moving forward with choosing a technology, I did a home energy-efficiency assessment, or home energy audit, to find out what needed to be done to minimize wasted energy due to leakage, inadequate insulation, badly designed or inefficient appliances, and other findings.

Home Energy Audit

In New York State, an energy audit can be done by certified contractors for free and everyone should have one done! This invaluable service is defined, sponsored and managed by: 

New York State Energy Research & Development Authority (NYSERDA), but quite a few other states have similar programs. (For those in New York, go to the section on “Residents and Homeowners”, select the program “Save Energy at Home”, go to “Home Energy and Audits” and click on “learn more about home energy audits and ratings”.

All is fully explained, including how to get an audit done and how to select a certified audit contractor in your area. Your auditor will come to your house and spend a couple hours going over a checklist. You will be provided with a free report on what needs to done, including an estimate of the cost, where possible. You will then be able to prioritize the order in which to take corrective measures based on urgency, cost, and your budget (or ability to borrow or your ability to do some of the work yourself).

Personally I was shocked at my audit report, because I thought I had done the most obvious things, such as to add about a 1-foot layer of insulation in my attic, seal off my open fireplace and replace it with a sealed gas insert, put plastic over most of my windows for the winter, switched to fluorescent or LED lamps, used power strips to make it easy to turn off all electronic devices not in use, etc.

No, what surprised me was that my built-in garage, located directly under my living room, has no insulation. It gets very cold in the winter, and its walls and ceiling are directly adjacent to my living space. Also, all house external walls are minimally insulated and the windows have become leaky and ill-fitting and need to be replaced with double- or triple-glazed instead of add-on storms and screens. Worst of all, probably, is that I have a cathedral ceiling in the living/dining area, which doubles the volume of air that needs to be heated and cooled without providing additional living space. Nice to live in but not at all energy efficient.

It soon becomes obvious looking at energy audit results that, in the U.S. post-World War II, when oil and gas was cheap and global warming unheard of, energy efficiency was not a priority and many houses, including mine, now require serious work to address the current global climate crisis. 

What is a Heat Pump?

Think of a heat pump as a highly efficient, reversible air conditioner. It’s called a heat pump, because it moves heat into the house in the winter and moves heat out of the house in the summer. You may have noticed when you run a standard air conditioner that blows cold, dry air into your house in the summer, that if you stand next to it outdoors, hot air is coming out. So if you turned it around in the winter, it would blow that hot air into the house.

But viewing a heat pump as a reversible air conditioner begs an important questions: How is warm air moved into your house from outdoors when its already very cold outside? The full answer requires a bit of knowledge about thermodynamics and advanced refrigerants, but we’ll skip that lesson and get right the practicalities.

One way is to sink a loop of pipes deep into the ground down to where the temperature doesn’t vary much from 50 degrees year round. You can extract heat from it in the winter when it’s 15 degrees Fahrenheit outside aboveground and extract coolness from it in the summer when it’s 80 or 90 degrees. That loop is called the geothermal piece, and it adds to the cost and maintenance of heat pump systems, especially in rocky terrain.

Until a few years ago you couldn’t do without a ground-sourced heat pump in the colder parts of the USA, such as the Northeast states. Now with advances in technology and refrigerants with lower evaporation temperatures, heat pumps are effective, with or without the geothermal piece, throughout the USA. Without the geothermal piece, they are called air-sourced heat pumps and they can now heat your house even when the outside temperature is as low as 0 degrees Fahrenheit. Below 0, the ability to extract heat decreases and drops off to nothing at -15 degrees. So, if you live in an area where it’s zero degrees or lower on a regular basis in the winter, you would need a geothermal loop or keep your oil and gas furnace, or propane fireplace, or standalone electric heaters as a backup.

Why Install a Heat Pump for Home Heating and Cooling Systems?

You can eliminate a major component of your carbon footprint from burning fossil fuels: heating and cooling your home and providing year-round hot water.

You significantly reduce the running costs of heating and cooling because of the technology used. Heat pump cooling is about twice as efficient as conventional air conditioning, while heat pump heating is four times as efficient as heating directly using electricity resistance devices. However, these savings may be significantly reduced by the increased service plan costs, because heat pump technology is much more complex than traditional technologies.

Service technicians may be required by the manufacturer to be factory trained, and there are multiple components, such as condensers, evaporators, inverters, as well as expensive and highly toxic (to our atmosphere) refrigerants that have to always be 100% tightly sealed within components and connecting lines. Contractors and heat pump technologies are relatively new and wide variation in purchase and service costs are likely to be encountered, so savings, if any, are likely to vary considerably until the industry is more widely established and settled and until government energy policies subsidize this industry over coal, oil, and gas industries.

You can increase the flexibility and efficiency of use of your heating and cooling by using ducted air distribution in bedrooms and bathrooms. With a ducted system, there is a central air distribution unit with insulated hoses leading to separate closeable vents in each room served. Rooms not in use can have their doors closed and vents closed off. In effect, you have a thermostat in each room, since the vents have variable closure settings.

Ducted bedroom/bath ceiling vent with adjustment screw

Non-ducted air distribution in the living/dining/family room areas can be directed left or right, up or down, or can swing between both limits. In July 2019, community-choice aggregation (CCA) was approved in New York State, allowing individual communities to source 100% renewable electricity for all (in my area, this is called the Hudson Valley Community Power CCA). This means for communities with CCA available, your home HVAC becomes totally fossil fuel-free. That energy source switch eliminates between 20 and 60% of your carbon footprint, depending on your lifestyle.

Wall-mounted interior air unit

Do Heat Pump-based HVAC Running Costs Really Save Money over Conventional Fossil Fuel Systems?

First, I used the Fuel Switching Calculator available on Central Hudson’s website. Second, I calculate my 2016/2017 winter heating costs based on fuel oil and propane gas heating and compare the five-month total (November through March) with my 2018/2019 winter heating cost, which uses data exclusively from heat pump electricity cost. This is an estimate, because oil delivery dates are not consistent, year to year. I omitted the 2017/2018 winter, because I was still using the old oil heating system downstairs. Service Plan costs are not taken into consideration.

Fuel Switching Calculator. Go to Central Hudson home page and click on “My Energy” button. Select the “Fuel Switching Calculator”. Select primary heating source as “fuel oil” and “Air Source Heat Pump” as the option to switch to. Enter the number of gallons of fuel used and look at the “Annual Fuel Savings ($) column. I entered three numbers: 550 gallons for a warm winter, 573 gallons for an average winter and 900 gallons for a long, cold winter. These numbers were based on actual usage over the 25 years that I used mostly fuel oil and a bit of propane. The calculator yielded savings of $573, $651, and $1,837 respectively.

Actual heating costs for my home. For the five months of the 2016/2017 winter, during which I used fuel oil, propane gas, and electricity, my total cost was $2,164. For the five months of the 2018/2019 winter, during which I used only electricity powered heat pumps, my total adjusted cost was $1,574. The actual cost was $1,749, but this has been adjusted to take into account the difference in heating degree days for the two winters and the difference in electricity supply costs. In other words, the adjusted cost is my estimate for what it would have cost had the two winters been equally cold and electricity supply rates had stayed the same. The savings resulting from the use of heat pumps was $590, or 27% — pretty close to the Central Hudson calculator’s estimate of $651 for an average winter.

 Bonus saving from hot water heat pump. My hot water heat pump is located in the old oil furnace room. It takes heat from the surrounding air and transfers it into the water tank. In the process, it takes humidity out of the air by condensation and the latent heat of condensation is given to the water thereby acting as an additional air conditioner and reducing the air conditioning load for the basement rooms. Think of all that heat and humidity your old air conditioner used to take out of your house and release into the outdoors — with a heat pump water heater, all that heat goes into your hot water for showers, dish washing, and clothes cleaning. That’s another reason heat pump water heaters are so much more efficient and energy saving.

Wait a minute, you say. What about in the winter? Isn’t your hot water heat pump making the basement colder and dryer?! Yes, and there’s an easy solution. Turn up your 24,000-BTU room heater heat pump a bit (it’s four times more efficient than straight electricity in heating). In effect, you have a cascaded water heater. The main room heat pump extracts heat from outdoors and pumps it indoors; then, your hot water heat pump takes that heated air and heats it up even more to bring your water to 120 degrees. It looks to me the next improvement will be to optionally eject the cold dry air from the hot water heat pump outdoors in the winter and leave it indoors in the summer.

Heat Pump Purchase and Installation Cost

My home required two Fujitsu Halcyon 24,000-BTU, extra-low temperature heat pump air conditioners for the main floor: one non-ducted mini-split for the living and dining area and one ducted for the bedroom and bathrooms. It required a third 24,000-BTU, extra low temperature mini-split heat pump for the finished basement (family room, bedroom, bathroom, laundry room, storage room).

Outdoor 24,000 BTU heat pump condenser

Hot water is provided by a 50-gallon Bradford White Heat Pump Water Heater. The Fujitsu units were $8,000 each, the Bradford unit $1,339 for a total cost of $25,339. Two-thirds of the cost was paid for with a 24-month 0% interest loan from Synchrony Bank. Costs included electrical hookup to the distribution panel. The panel had to be upgraded to a 200-amp unit with an extra two-phase, 240-volt breakers, and that was priced and installed separately. (This upgrade was also necessary to support a Level 2 Electric Vehicle charging station, so the price is not included in the HVAC cost.)

50-gallon hot water heat pump in old oil furnace room

Read Part 2 of the series here.

Peter Callaway is a Philipstown Climate Smart Community Task Force member and veteran environmentalist in the Hudson River Valley region of New York. He took on this extensive heat-pump conversion project to respond to recommendation 42 of the Project Drawdown framework.

Mother Earth News: Guide To Home Energy Savings

You’ll save money on home energy bills for years to come with this convenient collection of recent articles from Mother Earth NewsThe Guide to Home Energy Savings filled with information on solar heating options, plus natural ways to cool your house. If you want to heat your home for free, you can find instructions for building a DIY solar heating system. And if you’re planning to remodel or build a new home, the Guide includes articles to help you make your home super-energy efficient by tapping the free energy of the sun.

 Order from the MOTHER EARTH NEWS Store or by calling 800-234-3368.

All MOTHER EARTH NEWS community bloggers have agreed to follow our Blogging Guidelines, and they are responsible for the accuracy of their posts. To learn more about the author of this post, click on their byline link at the top of the page.