What if a retrofit air conditioning system could pay for itself?

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What if a retrofit air conditioning system could pay for itself?

Retrofit Air Conditioning?

There aren’t too many people who, for at least a few days a year, wish they had air conditioning. Perhaps you have a few window units that you dread lugging from the basement or closet, dripping last years condensate all over the floor, to whatever windows that haven’t been used since you last took the A/C units out in the fall. Perhaps even worse, you fear the jump in your electric bill next month after you start using them. You suffer in thick, hot, humid air for weeks with self-talk like “it’s not that bad” or “it will cool down tonight” only to lay awake in bed sweating until dawn. Maybe all that is a bit dramatic, but maybe not.

You admire the central air systems in the houses down the street. Those happy folk simply close the windows and push a button to live in summertime bliss. The thought of lifting heavy boxes of power sucking metal into a window, hoping it won’t fall out into the plants below never crosses their mind. They leave it on all summer, seemingly not bothered by the electric bill. How can that be?

What if there were another option? You know installing a central air system will be a significant investment, but for the few weeks a year where you escape to the movie theater or shopping mall just to get out the heat don’t seem to justify the cost. Could there be another answer? I suggest to you there is, and we help people every year reach the conclusion we always hear afterword: “Why, why didn’t we do this sooner?”

What if I told you that your central air could pay for itself? “Malarkey!”, “marketing mumbo-jumbo” or some other such phrase may have just crossed your minds or lips. I get it. I’m that kind of person too. But, I’m also a math kind of person. I like to see it in writing, in clearly delineated proofs. So, that’s what we’re going to do here if you will stick with me. Let me show you just how you’re already paying for your new central air system to somebody else. Let me show you how to take back your hard earned money and use it for your own good and comfort.

The key to making cooling pay for itself is heating. That’s right, we’re going to heat your house. No, not in summer. We’re going to use your new central cooling system to heat your house and were going to cut your heating bill dramatically in the process. That is where we’re going to get the money for your cooling system.

The most popular heating fuel in New England is Oil and we’re going to base this modeling on that fuel alone for simplicity. But, the calculus works for propane and other fuels as well. It just shifts the number around. So, let’s start setting the ground work of how this works. At the highest level, you’re spending a certain amount of money on heating fuel for a season to heat your home. If we can install a cooling system that offsets a significant portion of this expenditure, that money can be applied to paying for the cooling system. So how do offset heating with a cooling system you may be asking? Many of you already know the answer. The solution is a heat pump.

Heat pumps come in two basic varieties. The most common type is called an air source heat pump. Many of you may know the most common of these but the aging term “mini-split” or the brand “Mr. Slim”. There are also conventional heat pumps, and you may not even recognize the difference between these and a traditional air conditioner as they look the same from the outside. The second, and much less common type is a water source heat pump or Geothermal heat pump.  Both appliances work the same way, but get their heat (or reject it) from a different source. An air source heat pump uses outdoor air for capturing or expelling heat for/from the building whereas a geothermal heat pump uses the soil and rock below ground as the source/sink for heat. You can read some more about heat pumps here for details.

For our purposes, lets just skip over the science and get back to the economics. Trust in me that heat pumps do, in fact, work despite what some may say. That said, for this to work we have to have a heat pump that costs less to run than your oil burner. As it turns out, that is fairly easy to do these days. And with advancements in low temperature performance, full season heating is no longer limited to geothermal heat pumps. This means retrofit applications are much more feasible than they ever were. Good news for non-A/C homeowners!

So, let’s start with what it costs to heat your home now. Try out our $/BTU calculator in our resources section to test your own cases. You will also need to know your heat load and we have a calculator for that as well here.  I’m going to make this a generic house of about 2000 square feet in the southern New Hampshire region for example sake. A typical home built in the last few decades might burn 800 gallons of fuel oil per year. We can use the calculator ti back out our peak heating load of around 40,000BTUh assuming 80%AFUE. This is the “size” of the equipment needed to heat our home on the coldest day of the year and necessary to size our heat pump.

To make this practical for everyone, let’s assume were retrofitting this home with a ductless system because ductwork would be impractical if not impossible. Let’s assume there are a lot of little rooms and we only want to address a few major rooms so we’re only going to cover, say 80% of the home. Can we cover whole homes? Sure we can, but sometimes budgets and practicalities get in the way. So for this example lets be conservative and say 80%.

So we’re going to attack 80% of our heating bill of 800 gallons of #2 heating oil. Let’s say you have been paying $2.60/gallon. That’s fairly common in these parts but some pay less and some pay more. Again, you can use your own numbers or contact us and we can help you do it. At $2.60/gallon and 800 gallons that is just over $2000 per year in heating cost, real money out of your wallet and into the hands of the oil barons. 

Example Heating Cost Comparison

So how will the heat pump perform in this same “chunk” of heating season? Great question and that is exactly where we need to go next. We need to estimate our cost of heating using the heat pump. This is a little involved, but we have this built into our calculator as well. In our area, we spend about $0.18 per kWh of electricity and electricity is the input to operate a heat pump. Air source heat pumps are rated for efficiency, the amount of heat produced divided by the power consumed, using a measurement called Heating Seasonal Performance Factor (HSPF).  The higher the HSPF, the less power it will consume to do the same amount of work. So, it behoves you to get the highest HSPF rating you can.

Again, for simplicity, we will assume an HSPF value of 10. You can do better and you can most certainly do worse. If we plug the power cost of $0.18 and HSPF of 10 into the calculator it will tell us how many $/BTU the heat pump will consume. Now for the heavy lifting, and maybe I’ll program a calculator for this soon (hint, hint, come back to the site often for updates of sign up here for our mailing list). We need to know how many total BTUs are consumed over the course of the heating season to compare. And then, we need to complicate it a little more by remembering were only covering 80% of the house. So with a little manipulation, 40000BTUh multiplied by an average 2200 hearing hours cancels out the hours part and leaves us with a total of 70.4 million BTUs were attacking. So using our $/BTU value for the heat pump and total BTU work we get a cost fo $1270 to heat the same space that we have been paying the oil barons $2000. That’s almost $800 per year from your hard earned money you have been giving away since you’ve been buying oil.

So, the next question on your mind is probably “what is it going to cost me and how many years will it take to get my money back?” Fair enough, let’s explore that.  I can’t tell you exactly what it will cost do install a system at your house without seeing it. Every house is different, everybody has different needs/wants. But, keeping with our example, let’s say this house was done with a 3 zone ductless mini-split system and running the refrigerant and drain lines was relatively easy. Let’s throw a nice round number of $10,000 at it. It could be less, it could be more. As I said, every house is different. But with a $10,000 system, getting a rebate from the powers that be in our area of $1000 we’re down to $9k. Divide that value by the annual saving and your system is paid for in Just over 11 years in heating costs alone. But wait, there’s more!

Now let’s talk cooling. Let’s say you’re on the more aggressive side and like keeping your cool. You have several, or a large window AC on a dedicated outlet, maybe even both. We need to evaluate the cost of operating these window units with the cost of operating the heat pump. Here again the heat pump shines.  Cooling efficiency with air source equipment is rated in Seasonal Energy Efficiency Ratio (SEER). Window units, especially cheap or older units, are easily 10 SEER or less. A “contractor” grade conventional central air system has been a minimum of 13 SEER for many, many years. But, modern mini-split machines are routinely over 20 SEER and as high as 25 SEER.

Let’s go conservative and say 20 SEER as that is easy to hit. That means you will be spending half as much money cooling your home with a 20SEER unit than a window unit. We can estimate annual cost of cooling operation from the following maths: (BTUh load/SEER)X(Cooling Hours/1000Watts)X$/kWh = Annual cost of operation. For our area, people who set the thermostat to cool for the bulk of the cooling season run about 550 hours per year. I say this is extremely conservative in my experience. In my house, it starts running in May and stops in October. A rough ration of heating load to cooling load is about 2/3, meaning a 40kBTUh heating load suggests a 27kBTUh cooling load. With our numbers above, window units will cost about $268 per year to operate. By contrast a 20 SEER system will do the same work, more comfortably, for about $134 and a 25 SEER $107. So that means our 20 SEER example will save an additional $133 per year on top of the $800 saved in heating season. Now we’re in the 10 year range for this example break even. That’s over 9% annual rate of return on investment for those of that persuasion. That is on-par with the average return of the S&P500. Few ever bock at putting money in investments for retirement or savings, so why not get some comfort at the same time. Keep in mind, after we hit break even, this becomes positive cash flow in our pockets. And, who doesn’t want an extra $1000 in their pocket every year?Example A/C Annual Cost of Operation

It also adds significant value to the home. We get approached by realtors and home buyers alike on a regular basis as A/C has been well known to make-or-break house deals. So, even if you don’t stay in the home for long, chances are quite good you will recoup the investment in the sale. And lastly are the intangibles of unsightly and loud window units, the labor of hauling them in and out of the windows every year, and the increased comfort from the variable speed technologies used in mini-splits.

If we have swayed your mind and want to move forward, or even if you are just curious, please get in touch. We would love to make you more comfortable.

We will contact you within one business day.

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