Lessons Learned from an Air-Source Heat Pump with Fuel Oil Integrated System

Reader Contribution by Adam D. Bearup and Hybrid Homes
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The author’s air-source heat pump resembles an air conditioning unit, and it pictured here alongside one of the heating oil fuel tanks. Photos by Adam D. Bearup

The following story covers our recent upgrade to an air-source heat pump, which works in conjunction with our fuel oil furnace. The efficiency of heat pumps has improved in recent years and most of our building projects that do not have access to natural gas now have propane forced-air furnaces with heat pumps instead. The heat pumps provide heat and can help to conserve propane.

The heat pump that I am writing about is an air-source heat pump and it looks very similar to a conventional air conditioning condenser unit like those that sit outside of a house. According to the United States Department of Energy, “an air source heat pump can deliver one-and-a-half to three times more heat energy than the electrical energy it consumes”.

An air-source heat pump is efficient, because it does not generate heat, but rather, it transfers heat. The heat pump unit that sits outside of the house pulls heat out of the outside air — even if the temperature is below freezing — and puts the heat into the house. In the summer, the heat pump reverses its action and will cool the house. Keep in mind that if you currently have a propane forced-air furnace, then this story may apply to you as well. This is our story.

The Cost of Heating an Old Farmhouse with Oil

We have lived in our old farmhouse for nearly 10 years, and it took this long to finally decide how to combat the expensive fuel bills that we pay each year to heat our house. When I say “heat our house,” what I really mean is to keep our bedroom at 67 degrees Fahrenheit (the thermostat is in the bedroom) and the rest of the house is what it is. We do run a wood burner in the living room area of our house to keep that area warm. We have an older forced-air furnace that uses fuel oil.

I work out of town and lived away from home for most of the years that we have owned this charming, old, drafty manor. After working a full week, I would come home on Friday evening and walk directly to the fuel oil tank to see how much fuel oil that we had used while I was gone. On the coldest weeks, my heart would sink to see nearly a quarter of a tank was gone!

For years, my mind was always on how much fuel oil we were using to heat our house and we were finally ready to upgrade to a more efficient heating system.

We have paid a wide range of prices per gallon for fuel oil throughout the years — from $1.85 per gallon to $3.45 per gallon — and when we go through as much fuel oil as we do, that really adds up. To be fair, I will average the cost of fuel oil over the years at $2.65 per gallon and if you multiply that price by 500 gallons (full tank of fuel oil), the average cost of a tank of fuel oil is $1,325. Some years, we would go through three 500-gallon tanks of fuel oil at a total average price of $3,975 for the season! If you have fuel oil heating at your house, then this story may seem familiar to you.

I have been a sustainable builder for close to 20 years and during that time, have been part of many cutting-edge, super-energy-efficient projects. Can you imagine my response when people ask me what kind of house that I live in? My normal response is that I live in a drafty old farmhouse, because I love the tall ceilings and all of the outbuildings. Normally people look at me oddly; even I cannot believe that I live in such an un-energy efficient home. The reality is, my wife and I have a passion for growing and raising our own food and my career is just a small part of who I really am. Every year, we make improvements to our house and each year it becomes more energy-efficient. Our farm help us to live out our passion, and this is why I could justify to myself that spending that much money on fuel oil was ok.

Top of the air-source heat pump unit.

Would an Air-Sourced Heat Pump Work for Cold Michigan Winters?

As the years went by, my mind increasingly searched for a solution to our heating bills. Over the past few years, I started to hear more and more about heat pumps being used as part of forced-air heating systems. I did not get very excited about using heat pumps on our projects until I learned that certain heat pump units would work down to 20 degrees Fahrenheit. I was always told that these kinds of heat pumps would not work below about 30 degrees Fahrenheit, so I never considered using them.

The heat pump that I am talking about looks very similar to an air conditioning unit that sits outside of a house and is connected to a forced-air heating system. This kind of heat pump provides air conditioning and heat (within certain exterior temperature ranges.)

The benefit of this heat pump system is that the heat pump can provide heat instead of the fuel oil or propane forced-air furnace during certain temperature ranges. I mentioned the three oil tank refills each year. For a bit more detail: here in Michigan, it is not uncommon to start using the furnace in September. Throughout the years, I started to recognize that we would use a 500-gallon tank of fuel oil before the end of December in most years. This meant that we would need to come up with another (on average) $1,325 to fill the tank with fuel oil so that we could have heat for part of the actual heating season. We would need to fill the tank yet again in March to have enough fuel oil to provide heat through late Spring.

Could a Heat Pump Integrated with an Old Fuel-Oil Furnace?

My hopes when looking for a solution to use less fuel oil was to find something that ran on electricity to provide our heat during the non-winter months. We do not have access to natural gas, and I wish we did. I contacted the fuel oil company and asked them if they had any programs that would cut the cost of fuel oil. Their response was that they have a yearlong payment plan to spread out the large amount of money that we were spending on fuel oil, and that they would just fill the tank up as many times as we needed each year for a set price. I tried not to sound upset on the phone when the lady mentioned that option, I could not help but think about all of the people who must be wrapped up in that payment program with no other option.

This past summer, I contacted a heating contractor that I use on our building projects and asked him to look into getting a heat pump installed on our older fuel-oil furnace. I asked this guy because I know that he likes a challenge and that he is very good at figuring out issues with furnaces. He first sounded like I had gone mad for suggesting that we add a state-of-the-art component to an old furnace. Thankfully he said that if I sent him pictures of the current fuel oil furnace that he would talk with his supplier to see if adding a heat pump was even an option.

After a few days, the heating contractor called me and told me that they would be able to get the two systems to work together. The heating contractor sounded more confident when I told him that we had a contractor service our fuel oil furnace a few years before to clean the furnace and make sure that the furnace was running properly.

I was relieved to hear that his supplier told him that our furnace was not that old and that there were still parts available for the furnace. The supplier also said that this fuel oil furnace was a nice, reliable unit and that it was 65% efficient, like most fuel oil furnaces of that era. To put this into perspective, a 65%-efficient furnace only utilizes 65 cents out of every dollar spent on fuel oil. That means that the remaining 35 cents of every dollar basically goes up through the chimney and does not go to heat our bedroom to 67 degrees. To build the case even stronger for investing in a heat pump, 35% of our yearly fuel oil usage — roughly $1,391.25 (35% of $3,975) — was wasted. One full 500-gallon tank of fuel oil wasted each year!

Can a Heat Pump Supply Air Conditioning and Heat?

This was the year that I was finally going to decide on a way to save money on our fuel oil bill. The current air-conditioning unit that we had was outdated and had been crushed by ice falling off of the roof, and we needed to get a new air-conditioning unit installed. This helped me to grow more comfortable about replacing that old unit with a heat pump, which would be extremely more efficient for air conditioning during the warm months than the existing unit.

The dual-function heat pump would also provide heat during the months before and after winter that would normally use so much fuel oil. As I talked to the heating contractor, he mentioned that we would need a 5-ton unit to be powerful enough to heat and cool our old farm house.

How Much Does a Heat Pump Cost?

The cost of the installation and heat pump would cost $5,000, which I didn’t think was too expensive considering that the price of a new air-conditioning unit and labor was about $3,800. The price for the heat pump included extra funds for the heating contractor in case he ran into trouble or the installation would take more time and components than what the supplier had figured. I was ok with the extra amount for the heating contractor, because it seemed like it made the heating contractor more comfortable, and I knew from all of our projects over the years, that projects such as adding a state-of-the-art heat pump to an aging furnace would not be easy.

My wife and I discussed the amount and agreed that the payback would be relatively quick and that we could not go any longer buying so much fuel oil. I explained to her that the upgrade to our heating system would take just three and a half tanks of fuel oil to pay for. My wife knows how excited I get about things, especially when it comes to making houses use less energy to run. My wife and I agreed that we would not know for sure how much the new unit would cost each month until we started running it.

Which Contractors Install Heat Pumps?

When I told our heating contractor that we wanted to have him install the heat pump, he didn’t sound very excited. He mentioned that it wasn’t going to be easy but that he would do it for me because we knew each other. I was used to this response, because our building projects usually require an open mind and willingness to step outside of the box.

I asked for the model number of the heat pump ahead of time so that I could download the installation and use manuals ahead of the installation. I was hoping that I could catch any issues before they occurred.

The night before the installation, I noticed that the unit required a 35-amp dedicated circuit with a shutoff switch next to where the heat pump unit would sit. When I looked at the shutoff for the existing air conditioning unit, I noticed that the circuit for that unit was only 20 amps. This meant that I would need to run a new wire and shut off before the crew showed up in the morning. I highly recommend hiring a licensed electrician to do this work if you are considering upgrading to a heat pump. It was past dark when I finished the new shutoff switch, and I slept easy that night knowing that I had handled the issue before the installation crew knew about it.

How the Heat Pump Regulates Temperature

The thermostat that is used with a forced-air heating system and heat pump works with the on-board computer that the heat pump has as part of the outside unit. There are eight wires that connect the thermostat to the furnace and heat pump and those wires control everything from the furnace fan to the heat pump and everything in between.

We do not have internet at our farm, so the thermostat uses an outside temperature sensor to determine which heating system will be used for heating the house. Had we had internet at the farm, there is a thermostat that goes online wirelessly and that thermostat uses an online weather service to determine the outside temperature. The outside temperature is important, because the thermostat can be set to a specific outside temperature that will switch the heating system from the heat pump back to the fuel oil furnace.

The heat pump has a coil inside of the furnace, just like an air conditioner has. With a heat pump, the heat is produced in the outside unit and pumped into the coil that sits at the top of the furnace unit. The furnace fan turns on and off with the heat pump, just like it would if the fuel oil burner was running. The fan blows the heat through the duct work and also draws the air inside of the house back through the return air ductwork.

The heat produced by the heat pump is not as hot as the heat produced by fuel oil, so as a result, we had to get used to cooler air coming out of the heating registers.

The thermostat paired with the new system.

Troubleshooting an Issue with the Installation

As the installers were dialing in the thermostat, I got excited to start using the heat pump! When they left that day, I felt liberated from the fuel oil company. Later that evening, the system stopped working, and I became very frustrated. I had to tell myself that I already knew that there could be “bugs” that needed to be worked out of the system, because of the old furnace and the new heat pump.

The installers came back within a few days and talked the wiring through with the manufacturer’s engineer and that is when they noticed that a wire was crossed. After the installers fixed the issue, the heat pump turned back on. I was back to being excited and relieved to be not heating with fuel oil.

The next day at lunch, I was sitting at our table and my wife was in the kitchen. The heat pump unit sits outside of the kitchen window and I was looking at my wife. I could see what looked like smoke rising up behind her. At that moment, she looked out the window and said nonchalantly, “Honey, your thing is on fire out there.”

I jumped up and ran to the breaker box and turned off the breaker to the heat pump. I left my lunch on the table and ran out to the outside unit, which was pumping out a big cloud of what looked like steam and not smoke. I stuck my nose over the unit and started trying to smell smoke. I was baffled, I had no idea what to think. I wanted to call the heating contractor and start yelling, because I was getting very frustrated. Instead, I went online and Googled “heat pump on fire” to see what would pop up.

The first link I clicked on explained that many first-time heat pump users freak out when they see steam pouring out of their new outside unit. As I read the information, I discovered that the steam pouring out of the unit was normal and was part of the defrosting process. The outside unit can get iced up as it runs and the defrosting process melts that ice, creating steam.

OK, I am a hero again I thought, and I went back inside to turn the heat pump’s breaker back on and eat my cold soup. My wife is very used to my getting up from the table and taking off running. Sometimes it is because there is a big buck out back sneaking through the tall grass or a hawk will fly over to check out our chickens that are out foraging in our yard. “Everything ok?” She asked under her breath, and I responded with a confident “oh, yeah, the unit is defrosting, perfectly normal to see all of the steam.” I didn’t see her role her eyes but I am pretty sure she did.

It is difficult when you upgrade anything in life and I understand why people won’t change the way that they do things unless absolutely necessary because it can be stressful to learn a new system or process. In this case, we had to make the upgrade because we could not spend so much money each year on fuel oil.

Cost to Operate a Heat Pump System

We started running our heat pump for heat in late September and when we got our electric bill in October, we noticed that keeping the bedroom at 67 during that time had raised our electric bill by about $75 for the month. We did not use any fuel oil during that amount of time and we were very happy, although our electric bill looked different and that concerned us at first.

The temperatures during the month of October ranged from the low- to mid-60s during the day to the mid- to upper-40s at night. This means that the heat pump wasn’t running all of the time and most often times, just ran at night when the thermostat called for heat. In past years, during the same time frame and temperature range, we would use about one third of our 500-gallon fuel oil tank, which equates on average to about $437.25 (165 gallons x $2.65). If we minus the $75 electric bill from the average fuel oil expense of $437.25, our net savings by using the heat pump over fuel oil during that month was $362.25.

This information helped me to predict what kind of savings that we could expect during the other months of the heating season. I thought that the $75 to run the heat pump was not that bad in terms of cost, but I knew that as the colder days and nights arrived, that the heat pump was going to run more often, thus costing more to run.

The basic logic is that the colder the outside temperature gets, the less efficient the heat pump would be and the higher the electric bill would be. My hopes were that the electric bill would be only about double the cost of the October bill during the coldest months of the heating season. This additional $150 on the electric bill for the coldest months would help us save fuel oil, because the heat pump would heat part of the time and the fuel oil furnace would heat our house during the coldest days.

Coils inside the heat-pump unit.

Operating Our New Heat Pump System

November and December came and went and the heat pump heated our house every day and night except for two nights when the outside temperature got down to 18 degrees. We had the thermostat set to turn the heat pump off when the outside temperature dropped to 20 degrees. I called this stage of our heating system upgrade the “experimental stage”, because we had no idea what the ideal settings were for our heat pump. My guess was that we should have the setting at 26 or 28 degrees for the cutoff temperature, because I was noticing that the heat pump ran more when the outside temperature got below 28 degrees.

We noticed that the air coming out of the heat vents in our house was cooler when the outside temperature dropped below 28 degrees and warmer when the outside temperature was above 28 degrees. Our bedroom was still at 67 degrees as we had the thermostat set for, but I could tell that the heat pump was working harder to make the heat.

How I Protect the Heat Pump Unit from Falling Roof Ice

I built a structure around the heat pump to protect it from falling ice from our roof. It would take an enormous effort to stop the ice from forming on our roof and building a tough structure would take less time and money then addressing the ice build-up issue. Maybe someday I will tackle the reasons why the ice builds up on our roof, but we will save that for another time.

The structure that I built looks more like a fortress (my wife thinks that it looks like an outhouse and hopes that no one mistakes it for one). The heat pump has specific requirements for spacing of walls and the roof of the structure, which in our case, was 4 feet above the heat pump unit and 10 inches from each side. That means that the structure that I built has a roof about 9 feet off of the ground, I used 2-by-10 lumber that I had laying around to build everything. My father-in-law stopped by when I was building the protective structure and thought that I had gone crazy until we discussed how important it was to protect the heat pump from falling ice.

The enclosure the author built to protect the heat pump unit from falling roof ice resembles an outhouse, according to his wife.

Costs to Operate a Heat Pump During the Coldest Months of the Year

When we got our electric bill for those months, the bill reflected how the heat pump was working and had increased both months to about $125 per month for the month of December. Keep in mind that the fuel oil furnace also works harder during the lower outside temperatures and that means that we would use more fuel oil to heat during that time frame also.

The increased electric bill amount for running the heat pump for heat was still extremely less than what the fuel oil would have cost during that same period of time. On average, we would have used the rest of the fuel oil in the tank during that time period, which would be about 335 gallons, or $887.75 (335 gallons x $2.65 per gallon). We would have had to come up with another $1,325 to fill the fuel oil tank up at this time, so we were feeling really good about our investment into the heat pump because the fuel oil tank was still full from using the heat pump for heat.

The outside temperature was starting to get really low as we progressed into the month of January, and I started to notice that the heat pump was running and defrosting many times per day. We received our electric bill and when we opened the enveloped and looked at the amount, we were taken back at what looked like an enormous increase in our electric bill.

I sat down with a calculator and started to add up what we were running with electricity. I wanted to know what the heat pump was costing to run during the cold months. I determined that the heat pump cost about $175 that month to run to keep our bedroom at 67 degrees.

How Much We Saved Switching from Fuel Oil to Heat Pump

This amount was a little higher than I had hoped for but still extremely less than using 250 gallons of fuel oil, on average, during that same time period had we run only the fuel oil furnace. The fuel oil cost would have been about $660 during that time frame — versus the $175 that we paid for the additional electrical usage from the heat pump. That is a savings of $485 for the January heating time frame.

We knew that we would have to get used to the way that the heat pump worked and the cooler air that it pumped through the ductwork. I also knew that I had to tweak the settings until I found an acceptable compromise between using the heat pump and using the fuel oil furnace for heat. I changed the setting on our thermostat to an outside temperature of 26 degrees which would shut the heat pump off and turn the fuel oil furnace on when the outside temperature got to 26 degrees.

We decided that we needed to still use the fuel oil furnace for heat and that instead of using three full tanks of fuel per year, that we were ok with paying for and using one tank of fuel oil per year. This is exactly what I had hoped to do for many years and we are very happy that we upgraded our heating system.

Lessons Learned

The dual system is best for us. We could have gutted our heating system and put in a higher efficiency propane furnace, but I firmly believe that our old farmhouse needs the hot fuel oil heat to keep us warm during the coldest months of the winter. I really wanted to keep the fuel oil furnace and add something to it that would make more sense during the starting and ending months of the heating season.

Set realistic expectations. I tried very hard to practice what I preached with the homeowners that I build houses for and that means having realistic expectations when it comes to hoping how much money we would save on heating fuel each year. In other words, there are limitations to everything and the heat pump is no different. We must understand that the fuel oil furnace will need to run at certain times during the winter no matter how much we hope that it doesn’t.

Upgrade insulation too. The heat pump is a way for us to only use the power of fuel oil heat when it is needed. We have insulated our house the best that it can be, given the way it was built in the 1800s and, after seeing how little effect the upgraded insulation had on our fuel oil usage, the next step was for us to look for ways to limit the fuel oil furnace from coming on.

 Solar could offset electricity further—but at a cost. In areas that do not have access to natural gas, I have used heat pumps and propane-fueled forced-air furnaces on all of our new builds and remodels over the past few years. In several instances, we have had solar panels installed to offset the amount of electricity that gets used by the heat pump. We hope to have a large solar array someday at our farm to offset our electrical usage, but that takes a considerable investment.

The upfront cost is manageable. The debate for years has been on how to use less energy without spending an unjustifiable amount of money to do so. My hope is that by making a smaller investment, like our heat pump, that we can drastically reduce our energy bill without breaking the bank.

The quandary is: How can we ever save enough money to invest in upgrading a system to be more efficient if all of our money is being spent on paying the cost to operate the system that needs to be upgraded?

In a perfect world, we would all just buy what we think is the best fit solution to use less energy, and in reality, that is only an option for a very small part of the population.

Adam D. Bearup is a designer, green builder and farmer, who learned about biodynamic and regenerative farming for a project he built in Northern Michigan, The Earth Shelter Project MichiganAdam has degrees in marketing and management and a Masters of Science in Green Building. Read all of his MOTHER EARTH NEWS posts here.


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