High Efficiency Gas Furnace
High Efficiency Gas Furnace Price
This section is reprinted with permission from the update to the “Market Assessment of High Efficiency Gas Furnace” for BC Hydro, Power Smart, as noted in the references.
Variable speed motor gas furnace price at the time of the Market Baseline Assessment in early 2021, the incremental cost for a variable speed motor furnace was estimated at about $700 – $1,000. variable speed motor furnaces are typically available on two-stage furnaces only, so this cost increment includes the cost of both the 2-stage feature and the variable speed blower motor. However at the time of the previous study, there appeared to be some price breaking in the market, with some dealers / contractors quoting incremental costs in the range of $ 650.
The estimate of average incremental variable speed motor furnace cost in the 2021 study, based on interviews with Contractors was $ 769, excluding the cost of the 2-stage furnace feature of $ 250, for a total cost of $1,019. Exhibit 3.1 shows the incremental installed cost of furnaces from Terasen Gas’ 2003 and 2004 Furnace Upgrade Programs.
These data represent the reported installed costs of high efficiency furnaces rebated under the program and hence represent sales to the high efficiency retrofit market. They show that the incremental cost of a variable speed motor furnace (assumed to be a 2-stage furnace in each case) has dropped from about $ 950 to about $ 560.
Further, it appears that the incremental cost of a 2-stage furnace over a single stage furnace has remained relatively constant at about $ 250. This indicates that the price of the variable speed motor furnace has dropped to about $310, or by about 50% in the past year.
During the 2021 project, it was estimated that the cost at the manufacturer’s level for a variable speed motor was about $100. A study done for The U.S Department of Energy, which documented average manufacturer, wholesaler and contractor mark-ups to determine consumer prices for furnaces and boilers which could be applied to factory costs, was used to estimate potential incremental consumer costs for variable speed motors.
To be conservative, the $100 was assumed to be the incremental cost over a standard motor to the furnace manufacturer. The data shows the estimated range of costs to the consumer for the variable speed motor motor, assuming “normal” mark-ups in the distribution channel. The range shown in the column “DOE Estimate” reflects the average and marginal mark-ups from the DOE study.
The estimated Price column shows the “best guess” prices in BC based on the interviews conducted during the 2021 project while the BC mark-up shows the approximate mark-up at each level of the distribution channel based on the “best guess” prices.
This data shows that, as the market for variable speed motors mature, the incremental price of the variable speed motor can be expected to drop, perhaps to the $ 180 – $ 260 range.
It should be noted that higher mark-ups through the distribution chain are not unusual during the early stages of a new technology.
As well as representing an opportunity for higher profits, they reflect a range of costs associated with “early adopter” technologies including engineering costs that must be recovered, technology risk such as higher warrantee costs, lower product turnover rates and design / production efficiencies that will be realized with higher market shares of the new technology.
High Efficiency Gas Furnace Energy Savings
The analysis of the energy impact of the variable speed motors is more complex than the analysis of the high efficiency furnace, as it is a function of how the home owner uses the heating system. The use of the heating system affects both the relative efficiency of the variable speed motor vs. PSC motor as well as the hours of operation.
We shows the relative efficiencies of the PSC and variable speed motor motors. A complete discussion of the derivation of these numbers is included in this website. The table shows that the variable speed motors efficiency benefit increases under light load. The overall benefit to the customer will depend on the amount of time the furnace blower is operated in each mode.