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A Guide to High-Efficiency Furnaces (Savings, Environmental Impact)

High-efficiency gas furnaces have improved technology over standard-efficiency ones. We’ll examine their differences.

A Guide to High-Efficiency Furnaces (Savings, Environmental Impact)

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Matt Reed


Matt Reed


September 1st, 2021

The purpose of this article, as well as other articles in our learning center, is to try to demystify the HVAC process. Technicians and salespeople use common industry terms regularly, but the lingo can go over your head.

Two-stage. Variable-speed. AFUE. BTUs. Modulating. Air Handler.

When I sit down with a prospective customer, I’m careful to define terms that might be unfamiliar because the purchase of expensive heating or cooling equipment should make perfect sense. You should know every step of the way what a certain thing is, what it is not, and why it makes a difference. Otherwise, you won’t have any idea what I’m talking about, and can’t make an informed purchase.

Let’s break down one of the more common terms, and why it matters that you know what we’re talking about: High efficiency.  

What Is a High-Efficiency Furnace?

First, let’s talk about the two main furnace types: electric and gas.

There are also propane and oil furnaces still out there, but for our purposes, they both fall into the “gas” category. (And if you still have a propane or oil furnace and you have access to natural gas, a switch to gas would go a long way toward lowering your fuel bills.)

By definition, an electric furnace is a high-efficiency furnace, even though we don’t really call it that. The reason it’s high-efficiency is that every cent you put into getting the air hot is being used. There is no waste, nothing to exhaust away from the furnace.

An electric furnace consists of an air handler that has heating coils added to it (sometimes called a heat package or heat strips). Electric furnaces work a bit like a toaster. The heated coils act in much the same way, glowing red when they’re hot. If there were an airstream flowing through your toaster, pushing the warm air into your home, you’d have a miniature electric furnace.

Gas furnaces, depending on the model and make, can be high-efficiency.

So when we talk about the definition of efficiency, we’re talking about the difference in gas furnaces: a standard-efficiency furnace versus a high-efficiency unit.

High-efficiency rates fall anywhere between 90% and 98% AFUE. Anything less than 90% is standard efficiency.

How Furnace Efficiency Is Measured

Furnace efficiency is measured in AFUE, which stands for Annual Fuel Utilization Efficiency. It’s measured in percentages and is a calculation of how much heat generated by a furnace goes directly toward heating your home.

Think of it this way: If you spend a dollar to heat your home, and you have an 80% efficiency furnace, 20 cents of that dollar will be vented from your home rather than going toward heating it.

How Does a High-Efficiency Furnace Work?

High-efficiency furnaces have a secondary heat exchanger. The furnace creates heat, recycles what it doesn’t use, and uses the waste in a secondary heat exchanger, then finally exhausts what is left. Standard-efficiency models use the heat and exhaust the rest because they lack the second heat exchanger.

Functionally they will do the same thing; you can have a variable-speed blower, a two-speed, or a fixed speed on both. The difference is how many BTUs you need to do the job. 

Standard-Efficiency vs. High-Efficiency Gas Furnaces

Efficiency is measured by the ability of the furnace to produce warm air that is being used to heat your home, versus how much is being exhausted as waste. In gas furnaces, we’re trying to keep as much of the BTUs as possible, (BTU stands for British Thermal Unit; One BTU refers to the amount of energy that’s required to increase the temperature of a pound of water by 1° F.)

No gas furnace is 100% efficient. The higher the number, the more efficient it is. To be considered high efficiency, the rating needs to be between 90 and 97%.

The best high-efficiency furnaces are up to 97, 98% efficient, whereas a standard efficiency is 80%. In an 80% furnace, 80% of the heat is being used, while 20% is being exhausted as waste.

If it’s more efficient, it won’t have to produce as much heat to do the same job.

The Trane XC95M, for instance, can get up to 97% efficiency. Those Trane models are going to be the most efficient to heat your house, not only by definition but also in actual savings. You will actually see a difference in your fuel bill when comparing 80% with 97%.

Will you see a big difference in your bills between 96% and 97%? Probably not. But the lower-efficiency furnace will be cheaper. 

What Is the Waste Created by a Gas Furnace?

The waste product of heat exchange is a liquid vapor of carbon dioxide and carbon monoxide. Your gas furnace needs to be vented. A furnace vent allows for any gases and exhaust created by combustion to be removed from the home. The vent can either go straight up through the roof with metal, or be directed horizontally outside using PVC piping.

Most high efficiencies are direct-vented because they are in the basement, so they will go straight up and then out the side of the house. Can we go straight up and out using the metal flue? Yeah, you can. It’s rare because it’s a lot more work to do it, and because you have to deal with the flashing of roofs to get the seal tight.

Whereas if you go out the side, all you have to do is seal the two holes that you make. Most of the time you’ll see a high-efficiency furnace vented this way. This direct vent is a more efficient and safer option.

Which Furnace Heats Better: Gas or Electric?

We live in Columbus and we have cold winters, which means that heat strips located in the furnace are going to require more electricity to heat a house than a gas furnace. 

Therefore, although it is technically more efficient, it’s going to cost you more to run your electric furnace because it’s going to have to stay on longer, and it’s going to take more electric power to do it.

Often, an electric furnace will act only as “auxiliary” or “emergency” heat, with the main heating coming from an electric heat pump

What Is the Environmental Impact of Gas Furnaces?

If you want to be green, then obviously a high-efficiency unit makes sense. Dual fuel is also something that we talk about. That’s where instead of an AC, you’ll install a high-efficiency heat pump outside. You can use the gas furnace as the “auxiliary” or “emergency heat” only, and let the electric heat pump do as much heating as possible.

The initial cost will be higher. If you’re environmentally aware, you know that nothing green is cheap. Because if it was, everybody would do it, whether they are environmentally savvy or not. It’s always cheaper to use the standard, and the standard is a gas line to the house.

Gas Furnace

Will a High-Efficiency Furnace Save Me Money in the Long Run?

It depends. In theory, yes. If you switch from 80% to 96%, you are saving 16 cents on the dollar, and if it lasts 20 years, you can see your investment pay off. But in practice, there are so many factors that come into play. 

A lot depends on what temperature you set your thermostat. For instance, if you’re going with a high-efficiency furnace, but you set your thermostat at 67 degrees in the winter, your furnace won’t run as much, and it’s going to take you decades to recover the initial investment. If you set it at 75 degrees, then it won’t take quite as much time. The more you use it, the more savings it will produce.

This is Columbus. We’ve had very mild winters recently. If it never gets below 35, 40 degrees outside, your heat pump can do most of the heating and you’re not really using your furnace that much. Even if you do want it at 75, it’s still not going to be used as much because you don’t need it. If you have winters where you keep it at 75 and it’s freezing out, you’re probably going to be doing pretty well savings-wise compared to your neighbor with their standard-efficiency furnace.

But the exact savings are impossible to calculate. That’s why no one should quote exactly what you’re going to save because they have no idea. Savings can be proven over time, but the exact amount will vary.

We always ask, “Do you have a high gas bill? Does it bother you? Does it bother you enough to invest in a high-efficiency furnace that will do better than your current standard-efficiency furnace?” The answer usually depends on the price.

And if their gas bills are high, the first thing I would do is look at their windows, insulation. They’re losing heat somewhere. Faulty ductwork, leaky windows, poor insulation. Something is making that furnace work harder than it should to keep heat inside the home.

If you don’t fix any of those issues, a high-efficiency furnace will still help. But a home with new windows and better insulation might be more efficient at retaining heat, even if they have only a standard-efficiency furnace.

Some companies will push high efficiency on everybody. To me, it makes no sense. Because gas is fire, and fire heats well. For the last couple of decades, gas has been relatively inexpensive. If there’s a sudden spike, obviously operating your gas furnace will cost more. 

A High-Efficiency Furnace Doesn’t Mean Better Comfort

Some people just want high efficiency because it sounds fancier. But it may not solve the concerns you have about your current furnace. If you have cold spots in your home in the winter, a high-efficiency furnace isn’t going to solve that. The efficiency doesn’t matter when it comes to comfort.

A two-stage or variable-speed furnace circulates air better, and creates less dry heat. (Air blowing over the heat strips tends to create dry air.) You get more control over the circulation of the airflow that you can adjust better.

Read more: Single-Stage, Two-Stage, and Variable-Speed Furnaces: Differences and Benefits

Cost of a Furnace Replacement

So what are the actual price ranges?

Mid-Efficiency Furnace (~80%)

  • Single-stage: $3,000 - $4,100

  • Two-stage: $3,750 - $5,300

  • Modulating (variable-speed): $4,300 - $5,400

High-efficiency Furnace (90%+)

  • Single-stage: $3,400 - $4,950

  • Two-stage: $4,300 - $6,550

  • Modulating (variable-speed): $6,250 - $7,600

This includes installation and related fees. It does not include ductwork or ventilation modification or indoor air quality add-ons.

Take the Next Steps

Your money is your own, and your home is your own, which is why the ultimate decision on a new furnace should be yours alone. However, an experienced HVAC partner - one that’s interested in presenting options and educating you on each, rather than making a sale - can help you in that decision.


The Complete Guide to Home Furnaces

Heat Pumps 101: The Ultimate List of Heat Pump FAQS

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