Low Gas Prices Curb Furnace ROIs
Many contractors focus on the benefits of improved comfort rather than energy savings
Not that long ago, when gas prices were sky high, many customers chose to purchase condensing furnaces because they saved a lot of energy. Contractors often highlighted that fact during sales presentations, noting that high-efficiency furnaces could reduce utility bills by a substantial amount.
With gas prices falling significantly over the last few years, the return on investment (ROI) of a condensing furnace is longer than it used to be. While customers are still interested in these high-end furnaces, contractors are often selling them on the basis of improved comfort and air quality rather than focusing on energy savings.
FOCUS ON COMFORT
With the price of gas being lower, homeowners are less focused on efficiency, but they are still interested in condensing furnaces, said Richard Biava, vice president, GAC Services, Gaithersburg, Maryland. Biava has found that if homeowners have the disposable income and are expecting to live in the home for a number of years, many still choose to buy a condensing furnace. In those cases, he does not focus on the payback but more on the benefits of the system, such as the comfort that can be provided by a variable-speed, two-stage furnace and how the professional installation offered by his company makes a difference in how the equipment will perform.
While those factors may lead a homeowner to want a condensing furnace, there are many applications in which it is almost impossible to install one. The typical example is a home in which the basement is finished, and it would be necessary to rip through the drywall in order to run the PVC piping outside to vent the furnace. Otherwise, the piping has to extend past a deck or patio and is not aesthetically pleasing to the homeowner. When that happens, Biava offers a Bryant Evolution, 80-percent AFUE, variable-speed, two-stage furnace, which he usually pairs with a 16- to 18-SEER condensing unit.
“That is a premium product combination that is above Energy Star requirements and also meets the efficiency for a utility rebate in our area,” he said.
Natural gas prices are not always the driving factor when it comes to buying a condensing furnace, said Kevin Fitzgerald, sales manager, Allied Air Conditioning and Heating Corp., Palatine, Illinois.
“We educate our clients on the system as a whole, focusing on the enhanced comfort benefits of modulating heat combined with a variable-speed fan running 24/7,” he said. “The combination of these features helps eliminate hot and cold spots in their homes, along with constantly filtering the indoor air. Customers also appreciate the ultra-quiet sound level of the Carrier Infinity furnace, especially when compared to their existing furnace.”
Approximately 60 percent of Allied’s retrofit furnace sales are high-efficiency models, and in new construction, it’s 100 percent.
“When a client is purchasing a new furnace, they are not only looking out for their best interest today, they are investing in their future,” said Fitzgerald. “If the cost of natural gas and electricity rises in the future, they will already have a system that will combat the higher pricing and keep their utility bills in line.”
Whether it’s maximum energy efficiency, maximum comfort, minimal sound, or all of the above, Fitzgerald said when it comes to installing a new furnace in a client’s home, the goal is 100 percent customer satisfaction.
“If we accomplish that, we have satisfied our clients, and they will refer us to new clients,” he said. “Word-of-mouth is one of the ways Allied continues to grow.”
Being in a propane market, Adam Kimpel, owner, ASK Heating and Air Conditioning, Charles Town, West Virginia, still sells plenty of condensing furnaces on the basis of efficiency.
“For customers comparing an 80-percent furnace and a 96-percent furnace, we help them realize they would be throwing 16 percent of their heat out the window,” he said. “Why would we want to push them toward lower efficiency when they can get a much higher efficiency system for not much more money?”
The cost difference just isn’t that great, especially when considering the gain in energy efficiency, said Kimpel, who sells the Maytag 1200 line of equipment. He has found that pairing a high-efficiency furnace with a heat pump often gives the customer the greatest efficiency possible.
“If you take time to talk to customers about the product and why it’s better for them, they will understand the efficiency benefits,” he said.
Besides higher efficiencies, homeowners should consider buying a condensing furnace for its ease of installation, according to Kimpel.
“If there are installation constraints, such as no sidewall or roof adjacent to the furnace room to vent outside, it may make sense to stay with a non-condensing furnace versus cutting ceilings and walls to install new venting,” he said. “We don’t usually have those issues. A condensing furnace is typically a better choice for replacement if something is wrong with the chimney on a furnace replacement. It’s much easier to run piping out of the sidewall.”
Energy efficiency is still important to customers of Wm. Masters Inc., Bloomington, Illinois, said Shawn McGuire, residential project specialist, who noted declining gas prices have not affected sales of high-efficiency furnaces at all.
“Approximately 84 percent of furnace installations are condensing models,” he said. “Once you explain the benefits of energy savings, combustion air and fresh air intake, the uncertainty of future gas prices, and the green advantages, I find that customers are willing to spend the extra amount on a condensing furnace. Top that with the rebates from local utility providers, and most customers look at it as a no-brainer.”
McGuire’s bestselling furnace is Trane’s S9V2, 96-percent AFUE, two-stage, variable-speed model, which he says offers significant benefits besides higher efficiency.
“When you explain the savings that can be achieved with a 95-percent-plus furnace and the comfort that two-stage and variable speed can provide, customers can see the benefits,” said McGuire. “I’ve always believed that customers want a system to be reliable, comfortable, and energy efficient.”
Publication date: 11/27/2017