# Thread: Help calculating the long-term all-in cost of different heating systems

1. I am going to be building a new home in Kingston Ontario in a year and don't have access to natural gas. So my choices are:
1. Electric
2. Propane
3. Ground source heat pump (I have lots of land for a horizontal closed loop)
4. Standard air source heat pump
5. "HE" air source heat pump such as Mitsubishi ZUBA

I am trying to calculate the per year cost of each system including the upfront cost and the time-value of money over the life of the equipment (I'm an accountant so I can handle the numbers if I understand how they interplay and have the data). There are some other calculators out there such as this Gov't of Canada one, but they don't have a ZUBA-like product included and I would like to make my calculations as specific to my circumstances as possible. As well I always like to see the calculations and understand the assumptions.

I found a methodology for calculating Electric, Propane and GS Heat Pump on geo-exchange.ca - see page 12-13 of this document. I've updated it for the fuel unit costs in my area.

Unfortunately they don't evaluate air source heat pumps (ASHP). I was hoping to use the same method as the GS heat pump but just enter a different Coefficient Of Performance (COP) for the ASHP but I can't find these figures. Can I create them from an HSPF number? I am aware that ASHP have markedly different performance at lower temps. I've obtained some weather data so I can handle different COP numbers at different outside temperature levels.

So I am looking for some assistance in how to determine the annual operating costs of ASHP and "HE" ASHP. Any suggestions?

Also, if anyone has comments on the accuracy of the upfront costs for my area (Ontario), it would be appreciated (excludes ducting, just the "machinery"):
1. Electric - \$\$\$\$\$\$\$ for electric furnace, electric AC and electric hot water heater. Assumed 17 year life (halfway between 20 years furnace and 15 year AC)
2. Propane - \$\$\$\$\$\$& for 95% propane furnace, electric AC, and propane hot water heater. Assumed 17 year life (halfway between 20 years furnace and 15 year AC)
3. Ground source heat pump (I have lots of land for a horizontal closed loop) - - \$\$\$\$\$\$ for furnace/AC, horizontal loop install, and hot water heater. \$\$\$\$\$\$\$\$\$\$ for equipment replacement in 20 years but using existing underground piping.
4. Standard air source heat pump - \$\$\$\$\$\$for furnace/AC and propane hot water heater. Assumed 15 year life
5. "HE" air source heat pump such as Mitsubishi ZUBA - - \$\$\$\$\$\$\$\$for furnace/AC and propane hot water heater. Assumed 15 year life

Once I get something usable on ASHP's I will post to Google docs for others to critique and maybe even use.

Last edited by jpsmith1cm; 02-15-2012 at 02:58 PM.

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Pricing of systems is not allowed per the rules.

Only a professional in your area will be able to tell you which will be the long term most efficient. Here in the states we have a a 30% federal tax credit on a geothermal system and it makes it the most efficient in a situation like yours. While the ZUBA is a great system I would put it second after geothermal. Because you see such low temperatures in your area you would probably be better off with the geothermal because it will also assist or completly do your hot water heating as well.

3. Originally Posted by Jim418
I am going to be building a new home in Kingston Ontario in a year and don't have access to natural gas. So my choices are:
1. Electric
2. Propane
3. Ground source heat pump (I have lots of land for a horizontal closed loop)
4. Standard air source heat pump
5. "HE" air source heat pump such as Mitsubishi ZUBA

I am trying to calculate the per year cost of each system including the upfront cost and the time-value of money over the life of the equipment (I'm an accountant so I can handle the numbers if I understand how they interplay and have the data).
Well, first off, you are opening a can of worms with your "long term" all-in question. I tried to do this for a system I was researching, and all Natural Resources Canada seems to be interested in are the AFUE ratings, not the longevity or reliability costs. NRC is not alone in this regard, other countries' governments are the same at least as far as I could determine. I think some manufacturers may have knowledge of these figures, but those figures are likely secret.

The time-value of money is a most logical method to determine the best system, but finding or even calculating those figures without detailed knowledge of maintenance costs and energy cost projections (you may be able to estimate energy costs) is a giant task all by itself.

The sad fact about these systems is that they are generally not really designed to last for a long time (over 15 years), especially with the typical lack of maintenance by the average homeowner. If you are obsessed with keeping your equipment in top notch condition, you will likely exceed that 15 year figure by perhaps a large margin, but only you will know because no one else really (apparently) cares, hence no data available.

It sounds like you are building on an acreage, so I'd suggest asking any neighbours what they have and how they like it, in terms of what you are looking for. Several of the options you mentioned are pretty expensive and sophisticated, so figure that maintenance may become a significant issue in terms of cost, but again, if any neighbours have similar equipment, talk to them about it.

Air source heat pumps are likely not a good option in Canada (maybe Kingston is milder) even though some will undoubtedly dispute me on this. Again, ask someone who owns one in your area.

Personally, would just go with a propane fired furnace or boiler, but if you have the money and can project maintenance/energy costs, the ground source heat pump is exotic, trendy and supposedly eco-friendly (don't know anything about them). Electric heating is usually pretty expensive, but historically many in Ontario (and Oregon/Washington) have used it because of lower electricity costs, ask someone in your area who has it.

To get some handle on costs though, get the degree day heating figures for your area, determine the heating/cooling requirements for your projected home, then you can figure out your costs based on type of equipment and energy consumption required to operate that equipment at your home's inside temperature.

Sorry this wasn't much help, but perhaps stirred your thoughts a bit...

4. Get the Btu conversion factors for each fuel you choose to compare and then plug in the cost and efficiency of the different products. It's important that you convert the kW, therms, gallons, into Btu's, then apply the appropriate multiplier so that you know the cost of 1,000,000 Btu's for each fuel and efficiency.

Once you know that, you'll need to get out the crystal ball polish and give yours a good shine. Then figure out the Btu's it will take to heat/cool your home and the future costs of all the fuels. Once you complete that, you'll be able to make a fairly accurate comparison of all the fuels over the time frame you forecast.

5. Originally Posted by SkyHeating
Pricing of systems is not allowed per the rules.

Only a professional in your area will be able to tell you which will be the long term most efficient. Here in the states we have a a 30% federal tax credit on a geothermal system and it makes it the most efficient in a situation like yours. While the ZUBA is a great system I would put it second after geothermal. Because you see such low temperatures in your area you would probably be better off with the geothermal because it will also assist or completly do your hot water heating as well.
I was hoping my question about system costs was general enough to not violate the rules, but sorry if it wasn't!

Unfortunately I find most of the info put out by heating vendors either simplistic, not comparing apples to apples, only telling part of the picture and/or being horribly skewed towards their product. Hence my attempt to do something as clean, comparable, up to date and specific to my circumstances as possible.

I am including water heating as part of the equation since it is part of geothermal systems. Based on the data I have right now geothermal does seem to be the least expensive over the life of the equipment with ZUBA second but I don't have much confidence in the system costs yet.

Originally Posted by enb54
The time-value of money is a most logical method to determine the best system, but finding or even calculating those figures without detailed knowledge of maintenance costs and energy cost projections (you may be able to estimate energy costs) is a giant task all by itself.

Air source heat pumps are likely not a good option in Canada (maybe Kingston is milder) even though some will undoubtedly dispute me on this. Again, ask someone who owns one in your area.

Personally, would just go with a propane fired furnace or boiler, but if you have the money and can project maintenance/energy costs, the ground source heat pump is exotic, trendy and supposedly eco-friendly (don't know anything about them). Electric heating is usually pretty expensive, but historically many in Ontario (and Oregon/Washington) have used it because of lower electricity costs, ask someone in your area who has it.

To get some handle on costs though, get the degree day heating figures for your area, determine the heating/cooling requirements for your projected home, then you can figure out your costs based on type of equipment and energy consumption required to operate that equipment at your home's inside temperature.

Sorry this wasn't much help, but perhaps stirred your thoughts a bit...

I am focusing on the upfront and fuel costs. I agree that this does ignore maintenance but I think it does cover the large majority of the costs I will incur. It is always difficult/impossible to predict the future but I'd like to do my best to understand the numbers especially with such a large difference in upfront investments.

I agree that standard air source heat pumps aren't likely a good option, but the newer versions like the ZUBA seem viable.

I do have weather data and am working on figuring out projected heat gain/loss numbers.

6. Originally Posted by skippedover
Get the Btu conversion factors for each fuel you choose to compare and then plug in the cost and efficiency of the different products. It's important that you convert the kW, therms, gallons, into Btu's, then apply the appropriate multiplier so that you know the cost of 1,000,000 Btu's for each fuel and efficiency.

Once you know that, you'll need to get out the crystal ball polish and give yours a good shine. Then figure out the Btu's it will take to heat/cool your home and the future costs of all the fuels. Once you complete that, you'll be able to make a fairly accurate comparison of all the fuels over the time frame you forecast.
THANKS! I think I am on the right track but had been using kWh rather than BTU's. I've got a conversion factor for kWh -> BTU/h so I can make that change.

And I am working on shining up my crystal ball to make it as clear as I can! :-)

But my main stumbling block at this point is converting air source heat pump information on efficiency. Any tips on this? For example the "data" on the ZUBA for heating:
Max Capacity 40,000 Btu/h
Max Input 3,670 W
HSPF 9.4
(all from page 6 of this info flyer)
Can you help me understand how to translate this to Btu/h production?

7. Made some progress on understanding the cold-weather air source heat pump efficiency.

I got this info from Mitsubishi:

Then I:
• got daily weather data for Kingston Ontario for a couple of years (2009 and 2011),
• determined the COP of the Min and Max temperature each day
• Ignored June-Sept (no or minimal heating in these months)
• then averaged the daily average COP for the year.

My resulting heating COP for my location was 2.6-2.7.

Any comments on whether the Mitsubishi data looks believable? (other than it looks like the COP for lines 2&3 should be swapped with 4&5, which does not instill confidence)
Any comments on whether my result seems reasonable?

8. Updated my calculations to weight the average daily COP by degree days to reflect the fact that there will be more heating required on the days that there is the lowest COP.

Weighted average COP for 2009 was 2.42 and for 2011 was 2.41.

Now if only I could do this for the ground-source heat pump!

9. So here are the worksheets I've developed to compare the long-term costs of different systems.

The first tab (Cost by Energy Source) has data on energy use and the current energy/operating cost by equipment type.

The second tab (Long Term cost per year) calculates the discounted cost of equipment and operating cost over the life of the equipment. It then divides that total number by the life of the equipment by the number of years and compares the results.

The main result that I am struggling with is the annual heating cost of geothermal. Seems crazy low, but is consistent with this website's result when I change the energy use to their value and the COP to 3 (it doesn't say what COP it used).

10. IF the spreadsheet works correctly, for my data set the biggest driver of ground-source heat pump advantage over the long run is equipment longevity. If you assume 20 years for all of propane HE furnace + AC and ground source HP, the difference it negligible.

I also expect that propane costs (based on oil costs) will rise faster than electricity.

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