Last year we installed a 20 SEER variable speed heat pump to replace our old, failing 12 SEER AC and furnace. I ran some numbers prior to the install and expected minimal cost savings. Well, the winter numbers are in and I was way off. I estimated $300 in savings on natural gas, and the actual is $350 in savings. I estimated this would be fully offset by increased electricity use, but actual electricity increase was a whopping $645.

So the theoretically far more efficient and environmentally friendly heat pump resulted in a net loss of $295 on winter heating. There are two major factors in play here, that I can see. First, electricity generation cost has risen much faster than natural gas. This is surprising given the sheer quantity of solar on the market. Second, I did not realize that my local utility bills the distribution charge for the first 700 kilowatts at a very low rate (~2¢) and then anything above 700 at a dramatically higher rate (~15¢). That’s a huge jump that was not included in my calculations.

It is disappointing that joining the green revolution is not paying off so far. I’ll be curious to see how the higher efficiency unit performs in a full summer period. Ideally we would get some solar panels to solve this problem, but with the reduction in rebates and net metering options, and the giant elm tree that shades most of our roof, it just isn’t viable.