Which fuel is really cheaper?

HVAC contractors, designers and specifiers are often asked this question by concerned clients who in many cases are making energy decisions that are not easily reversed for the next 20 years or more.

As an industry expert one realizes that in today’s complex market there are constant trade offs made between capital costs and operating/maintenance costs as one moves through the design cycle.  Your customers’ question of which fuel source is the cheapest is not easily addressed.

For the commercial designer there is software available that will analyze equipment and design options and calculate life cycle costs; however, these tools are not common in the residential and small commercial markets.

One method of calculation available to help your customer with their decision is to look at the options available and equate them to a common denominator.  The easiest common measurement for all fuels is their BTU ratings and unit cost.

By understanding the relationship between these two common factors, the various fuels can be rated in terms that your customers understand.  How may BTUs’ do I get for my energy dollar?  The results can be adjusted to reflect local market conditions and the efficiency of the system you are specifying.

The heating values and system efficiencies associated with most common fuels are:

Heating Values for Fuel Systems
Fuel Efficiency Value
Electric  3,412 BTU/Kwh 100 or 163% (For heat pumps)
Residential oil  36,500 BTU/l  85% (For better burner systems)
Propane 24,500 BTU/l  83 to 94%
Natural gas 35,400 BTU/m3  83 to 94%
   
If fuel prices were:
   
Natural gas 0.2479 $/m3 Electric 0.1096 $/Kwh
Propane 0.7706 $/l  Oil 1.0184 $/l

 

Then using the formula:  [(BTU/unit * system efficiency) / (¢ per unit of fuel * 100)], the number of net BTU’s a consumer purchases for each cent spent on energy can be calculated.

It is easy to explain this concept to your customers since they are already familiar with purchasing goods in terms of cents per unit of measure.  It is also easy to up sell to a higher efficiency option, or to sell against other fuels using this method.

In areas where gas is not yet available the best option may be to support propane over other fuels in anticipation of future conversion to natural gas thus securing the customer and a future conversion.

The results based upon the assumptions are:

Assumptions Results
Fuel Efficiency Value
Natural gas high-efficiency 1¢ = 1342 BTU’s
   mid-efficiency 1¢ = 1185 BTU’s
  
Oil  better burner system  1¢ =   305 BTUs’
   
Propane high-efficiency 1¢ =   299 BTU’s
    mid-efficiency 1¢ =   264 BTU’s
   
Electric heat pump 1¢ =   507 BTU’s
    resistant heating 1¢ =   311 BTU’s

 

Recommending a high efficiency natural gas system results in reduced utility bills and a satisfied customer. A relationship you can build on.

In addition, since natural gas releases the least amount of CO2 per BTU due to its combustion properties, specification of a natural gas system has the added benefit of reducing greenhouse gasses.

System efficiencies can be further improved by the addition of a set back thermostat or a natural gas water heater.