What Are The Most Efficient (Least Expensive) Home Heating Systems?

Heat Pump

A cold house makes life miserable, but heating your home is a major expense. To live in a comfortable house and save money on your energy bills, you need to find the most efficient home heating system.

The most efficient home heating system to run is a geothermal heat pump. The least expensive heating system to install is a gas furnace. Air-source heat pumps are less expensive to run than gas furnaces, and less expensive to install than geothermal heat pumps. Space heaters have no installation costs but cost the most to operate.

The different heating systems have costs that make them less expensive depending on your situation. This article will help you learn which heating system will be the least expensive for you and give you tips for lowering your heating bills.

Heat SourceAnnual Heating CostInstallation CostEfficiency Rating
Geothermal Heat Pump$360-$660$18,000-$45,0003- 4.5 CoP
Air-Source Heat Pump-Ducted$550-$1,200$10,000-$25,0002.5-2.8 CoP
Air-Source Heat Pump-Ductless$200-$325 per zone$3,000-$5,000 per zone2.5-2.8 CoP
Gas Furnace$600-$2,000$2,250-$3,60097% AFUE
Radiant Heating$500-$1,800$2,500-$10,00096% AFUE
Space HeaterVariable, expensive$30-$300N/A

What Is Heating Efficiency?

Heating efficiency is measured differently for electric heating systems and gas heating systems. For electric heating systems we can use the coefficient of performance (CoP). For gas heating systems we can use the annual fuel utilization efficiency (AFUE).

Both attempt to measure the amount of energy that goes into a heating system and the amount of heat that comes out. The highest theoretical CoP rating is 8.8, but this is not achieved by any heating system in existence. The highest AFUE rating is 100%, but no gas furnace achieves that number.

Any CoP rating above 3 is a high-efficiency heat pump. The highest CoP score achieved by a geothermal heat pump is 4.5.

The higher the AFUE rating, the more efficient the heating system is. A furnace with a 95% AFUE means that for every dollar you spend on fuel, 95 cents turns into heat and a nickel is wasted.

Geothermal Heat Pumps

Geothermal heat pumps use the relative warmth below the earth’s surface to heat a home. They have high installation costs but reduce heating costs up to 50% compared to traditional heating sources like gas furnaces.

These systems have the highest efficiency rating of any heat pump. The CoP rating of geothermal heat pumps ranges from 3.0 CoP to 4.5 CoP. It can take only 1 BTU of energy to transfer 4.5 BTUs of heat into your home.

Geothermal heat pumps have no emissions, so they are one of the greenest options for home heating. If you believe that pollution has a cost to the environment, geothermal heat pumps are the least expensive.

How Geothermal Heat Pumps Work

The system relies on tubing buried deep enough to be insulated from the atmospheric temperature. The depth can be anywhere from four to ten feet. In most of the USA, the ground will stay 54-degrees Fahrenheit at those depths, no matter the temperature of the air.

Refrigerant is cycled from the heat pump in the house through the underground lines, warming the liquid, which returns to the home. A geothermal heat pump consists of several components, including:

  • Blower 
  • Compressor
  • Evaporator
  • Refrigerant lines
  • Expansion valve
  • Reversing valve
  • Condensor

The compressor puts pressure on the refrigerant, which increases its heat and causes it to move through the system. The blower moves air across the heated refrigerant, and then the hot air moves through your home’s ducting system.

Cost of Geothermal Heat Pumps

A geothermal heat pump installation costs from $18,000 to $45,000. Because they are a green system, they can be eligible for tax incentives and government rebates.

Geothermal heat pumps cost $330 to $660 annually to heat a home. The costs come from the electricity to run the mechanical components of the heat pump.

Geothermal heat pumps pay for themselves over the years because of the savings to heat your home. The amount of time it takes to pay off depends on your heating usage and electricity or gas rates in your area.

Installation of Geothermal Heat Pumps

Three types of geothermal heat pumps exist:

  • Horizontal
  • Vertical
  • Water-body

A water body system requires your home to be near a water body, so vertical and horizontal are the most common. They require a lot of space or a deep hole.

Horizontal systems spread out over at least 2,100 square feet. Excavators remove all of the earth in the space down four to ten feet, where 400-600 feet per ton of heating capacity of water tubes sit. The soil is filled back on top of the water lines, and the area above can become a yard or parking lot.

If there is no space for a horizontal system, vertical systems are drilled 150 to 450 feet deep like wells. The water lines are coiled down into the holes and buried. The borehole of a vertical system is less than one foot wide.

Geothermal heat pumps are a closed-loop system. You never have to refill the water or refrigerant in the underground tubes. The underground water tubes last for decades without leaking.

Air-Source Heat Pumps

Air source heat pumps are electrical systems that look and operate similarly to air conditioners, except they can also heat a home. They have an indoor and outdoor unit, which exchanges refrigerant to heat your home.

Air source heat pumps rely on the outside temperature to create a heat differential. They don’t work as well to heat your home if the temperature outside is below 40-degrees Fahrenheit. They will still heat your home when the temperature is lower, but not as efficiently.

This heating system has as high as 4 CoP rating in ideal conditions. Under normal conditions, an air-source heat pump is rated 2.5 CoP to 2.8 CoP. The annual heating costs for an air source heat pump ranges from $550 to $1200 depending on your heating needs and electricity costs.

How Air-Source Heat Pumps Work

Air-source heat pumps work the same as geothermal heat pumps, minus the underground water lines. They exchange heat between the indoor unit and the outdoor unit. 

An air-source heat pump works with your home’s ducting system to distribute warm air. You can also have a ductless, “mini-split” system, which gives you heat in one room per unit.

These heaters lose efficiency as the temperature outside gets below 40 because they have to work harder to create a temperature difference between the outdoor and indoor units.

Cost of Air-Source Heat Pumps

Installation of a ducted heat pump costs $10,000 to $20,000. A mini-split heat pump costs between $3,000 and $5,000 for one room. Additional indoor units cost $1,500 to $2,500 each. 

The costs will vary depending on the brand you choose, its efficiency, and the complexity of installing it in your home. The average lifespan of heat pumps is 15 years, depending on how much use it gets. 

Installation Of Air-Source Heat Pumps

A heat pump’s outdoor unit goes on the roof or the ground outside the house. Protecting the unit from heavy rains and wind can help it last longer and work better.

The indoor unit of a mini-split sits mounted on the wall near the ceiling in the room it heats. They are about three feet long, one foot wide, and one foot deep. The indoor part of a ducted heat pump connects to the ducting source, usually out of sight.

Heat pumps need connections between the outside unit and the indoor unit. This connection requires holes drilled through the walls if installation is on an existing house.

Mini-split heat pumps are easier to install on houses without ductwork. If you have a ducting system in your home, it is simple to hook a ducted heat pump up to it.

Gas Furnace

Gas burning furnaces are the most common heat source in the United States. There is a widespread distribution network to supply homes with natural gas for heating homes and cooking.

Gas furnaces create heat by burning methane or propane gas. Air is warmed by a heat exchanger and then blown into the house through the ducting system. 

It takes one BTU of energy for a gas furnace to move 0.78 to 0.97 BTU of heat into your home.

The lowest efficiency allowed by law for new gas furnaces in the US is 78-percent, and they can be as efficient as 97-percent. That means it takes one BTU of energy to move 0.78 to 0.97 BTU of heat into your home.

How Gas Furnaces Work

Gas is delivered to homes by a pipeline or trucks. When you turn your thermostat up, gas is ignited in the furnace and warms a heat exchanger. A fan forces cold air over a heat exchanger, which warms the air. The warm air then travels throughout the house.

The burning of gas creates emissions that exit the house through a flue. A gas furnace can be made more efficient by capturing some of the heat which goes through the flue and using it to heat the house.

Cost of Gas Furnaces

A new gas furnace installation costs $2,250 up to $3,600. You will need a connection to a gas line and a ducting system.

Running a gas line to your house will cost from $10 to $25 per foot of pipe. The average cost comes out to $350 to $750. The average cost to install ductwork is $1,200. 

A home with a gas furnace can expect to pay $600 to $2,000 yearly to heat their home. The price will depend on how cold the weather is and how much gas costs. 

Gas Furnace Installation

A gas furnace should be installed by a professional. Improper installation can reduce efficiency by up to 30 percent. If you have an existing furnace, installing a new one should only take a day.

If you don’t have a furnace in your home already, the installation will be more difficult. Installing ductwork, a new gas line, thermostats, or a flue would be serious jobs that could take days or weeks. 

If your home is not near a gas line, you need to have a propane tank installed on your property to store fuel. The standard tank used for home heating systems is 500 gallons.

Radiant Heating/ Boilers

Decades ago, gas boilers were the most common way to heat homes. Since gas furnaces became more efficient, they have taken over as the most popular heat source. 

Today you are most likely to see a boiler heating system used in the form of radiant flooring. In a boiler heating system, hot water circulates through pipes around a building and radiates heat into the air.

The Federal Energy Management Program requires new boilers to have at least 84 percent efficiency. The best performing boiler system has 96% efficiency.

How Radiant Heating Works

The most efficient radiant heaters run on natural gas, but there are also electric versions. In a gas boiler, the gas burns to boil water (which is why it is called a boiler). 

Then a pump circulates the hot water through pipes connected to cast iron radiators, baseboard radiators, or under-floor heaters. The heat is evenly distributed throughout a room and does not dry the air.

Costs Of Radiant Heating

A radiant heating system costs $2,500 to $10,000, installation included. These prices do not include heating lines, gas hook-up, or radiators. 

To install radiant floor heating, you need to pull up the existing floor, install heating lines, then install a new floor. This installation can cost $1,700 to $6,000. 

The cost of new radiators ranges from $1,000 to $3,500, including installation.

The annual heating costs for a home with radiant heating ranges from $500 to $1,800. 

Radiant Heating Installation

A radiant heating system needs several components installed, including:

  • Plumbing system to carry hot water through the house.
  • A flue to vent the exhaust from burning gas.
  • A gas line to take the gas to the boiler
  • A boiler that burns the gas to heat water.

Installing radiant heating that does not already have it is a big job that could require opening up walls, tearing up floors, and digging trenches for the gas line.

Radiant heating systems are closed-loop, so you don’t need a connection to the waterline. They may need to be drained, flushed, and refilled every few years.

Electric Space Heaters

Space heaters are portable heating units. Space heaters are best for heating smaller spaces like a single room, a garage, or an RV.

If your home has a central heating system, you can use a space heater as a supplemental heater. You can use a space heater to heat the room you spend the most time in and turn off your central heat. That way, you don’t waste energy heating the entire house. 

An electric space heater can be 100-percent efficient. Despite the efficiency rating, electric space heaters are more expensive to run than other types of heaters.

How Do Space Heaters Work?

Space heaters convert electricity into heat. There are a few different types of space heaters, such as:

  • Convection heaters- heats metal coils with a fan that blows the heat out of the unit to heat the air.
  • Radiant heaters- oil inside a radiator is heated and then transfers heat to the air in the room.
  • Infrared heater- transfers radiant heat directly to nearby objects.

Electric heaters work by passing an electric current through a resistor. According to the principle of Joule heating, an electrical current that passes through a resistor converts electric energy into heat energy.

Cost of Space Heaters

An electric space heater can cost from $30 to $300. You can choose from various models, from simple, small units, to large units with digital displays and remote controls. 

Space heaters can be a fire hazard. Looking for a higher-quality unit with safety features is a good idea. 

Calculating the annual heating costs of a space heater is difficult because they are not meant to heat a home. A 1500w space heater costs 17 cents to run per hour if the electricity is 11 cents per kWh. Many people notice a spike in electricity bills when using a space heater. 

Space Heaters Installation

Space heaters are small and portable, making them the best option if installing a central heating system is not possible. Place space heaters in an open area, far from anything that could catch on fire.

Choosing A Heating System By Energy Type

The type of energy that powers a heating system could make one system less expensive than another in your area. To choose the least expensive heating system, learn what gas and electricity cost in your area.

Natural gas is normally the least expensive option for heating your home. Gas heats a home faster and feels warmer because the air coming out of vents is at a higher temperature. In places with extreme winters, gas could be the best option for heating because heat pumps can become less efficient.

In areas with cheap hydroelectric power, an electric heating system could be the least expensive option. Places with milder winters are more suitable for using electric-powered heat pumps.

Ways To Save Money On Heating Costs

Any heating system will cost you money. The best way to lower heating costs could be to make adjustments to your home or lifestyle that will keep you feeling warm without adding heat.

Update Insulation

Insulation in a home keeps heat in your house when it’s cold outside. It is like a jacket for your home. If you have poor insulation, the heat you pay for basically flies outside.

Adding insulation where you don’t have any can lower your heating costs. Many older homes don’t have insulation in the attic. You can have an insulation inspection of your home to see where your insulation is lacking. 

Older insulation is not as efficient as modern insulation. It might be worth it to re-insulate your entire house because the savings from heating could pay for the cost of upgrading.

Seal Air Leaks

Doors and windows are susceptible to air leaks. Check around your doors and windows to see if they let cold air in and hot air escape. You can use caulk to seal any holes or cracks around your house that let heat escape.

You can install new weather stripping around doors and windows to help them seal better.

You can install new weather stripping around doors and windows to help them seal better. Your door might also need a new threshold and door sweep to make it air-tight. 

Upgrading single pane windows to double panes will help keep more heat in. If new windows are not possible, you can seal windows off with clear plastic for the winter.

Smart Thermostats

Modern thermostats allow you to program them to turn off when you are gone. Some of the best features of smart thermostats are:

  • Learns your heating needs
  • Adjusts different rooms to be the right temperature
  • Mobile compatibility allows you to control heat from anywhere
  • Voice control to easily set the temperature

It is easy to forget to turn the heat off when you leave for work or a weekend getaway, which can cost you a lot on your heating bill. Smart thermostats can help you only use your heater when you need it, which will lower your heating bills.

Remember to Change Your Furnace’s Filter

A dirty air filter can cause your furnace’s efficiency to plummet. Furnaces need air, and a dirty filter stops air from getting to it. Your furnace has to work harder to pump air when the filter is dirty, causing energy usage to go up.

The recommended time between air filter changes is 90 days during the heating season. Mark your calendar for every three months, and your heating bills will go down.

Luke Miller

Luke Miller is a writer, real estate professional, rental property investor, and home renovation enthusiast based in Phoenix, Arizona. He grew up in Iowa in a self-sufficient household where he learned the skills to do everything from plumbing, drywall, to basic handyman repair for everyday problems. He enjoys sharing his vast experience and his continuous learning with fellow DIY enthusiasts.

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