On a recent project, I was asked to estimate heating and cooling costs for a variety of HVAC systems on a large new construction commercial building. My research and results lead to some very useful insight that I find myself applying to many of my projects. Let’s start with the following table from NH.gov which breaks down heating fuel values:
|Fuel Type||Price/Unit||Heat Content
|Fuel Oil (#2)||$2.75/Gallon||138,500||80%||$24.81|
|Natural Gas (1st Tier)||$0.84/Therm||100,000||80%||$10.48|
|Natural Gas (2nd Tier)||$0.84/Therm||100,000||80%||$10.48|
(Air Source Heat Pump)
There’s a lot of information packed in, but it’s only the last column that matters. At only $10.48 per MMBTU (Metric Million British Thermal Unit) natural gas is the clear winner for heating applications. In addition, the U.S. Energy Information Administration predicts the cost of natural gas will come down slightly in 2022. On the other end of the spectrum, electric resistance heat at $48.14 per MMBTU is almost comically expensive. As a designer, I do my best to avoid electric resistance heating, but there are certain small areas where supplemental electric resistance heating is practical. The one important row that an untrained eye may miss is the very last: Air Source Heat Pump. At $19.26 per MMBTU the cost appears to be middle of the pack but consider the following points. Heat pump technology has improved significantly in the last 10 years and has reached a point where more than 300% efficiency can be achieved. Furthermore, an air source heat pump system provides both heating and cooling so although the equipment is expensive, you only need to install one system for the building. Finally, an electric HVAC system becomes even more appealing with the possibility of solar panels.
The following is a summary of price forecasts from the U.S. Energy Information Administration
|Heating Oil (Propane or other)||$2.97/Gallon||$3.04/Gallon|
|Natural Gas||$11.36/1,000 Cubic feet||$11.23/1,000 Cubic feet|
Having this information in the back pocket has been very useful, but by no means ultimate. I still believe there are certain projects where propane is the right choice. It is helpful to have a measuring stick to consider the true operating costs of your new HVAC system. Give us a call if you need help estimating!