Considering Heat Pump, ROI question...

• posted on November 10, 2005, 7:06 pm
I have a single story 1600sq ft home in the Pacific Northwest, it was built in 1981. I'm currently looking at replacing my electric furnace with a heat pump. Gas isn't an option at my home. Up here I'm looking at heating my home as the primary usage. A/C would be a nice benefit but really isn't a big deal.
After getting estimates from two heat pump installers they tell me that it typically takes 4 years for a return of investment. I also heard that a heat pump is 33 - 50% more efficient then my current setup. They both gave me estimates between \$8000 - \$9000 for an install.
So looking at last years bills I spent a total of \$1800 on electricity. I figure to run the basics (hot water, lighting, basically everything without heat) costs \$65 a month. That's my August bill.
So \$1800-(\$65x12) = \$1020 on heating.
If I were to save 50% on heating (the high estimate) I'd save \$510 a year.
\$8500 for install divided by \$510 = 16.6 years for my return of investment.
I understand there are other benefits (a/c in the summer, better resale, etc...) but looking at my math it just doesn't make sense to me. Am I missing something here? Is the 4 year return of investment marketing b.s.? Or is my math wrong?
I should also add that I have a hot tub that I turn off and on as I use it. So that \$1020 number is high, which would mean my roi should be even longer!
I really would like to justify the purchase but can't.
Thanks Sage
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• posted on November 10, 2005, 7:28 pm
snipped-for-privacy@gmail.com wrote:

Seeing as you would have to assume that all of your electricity is now used for heating and that the heat pump would not use any electricity to hit that \$9000 savings in 5 year mark, I would say that their roi estimates were a little "optimistic".
Did they know how much electricity you actually use now before they made their ROI estimate? Could be that your house is unusually well insulated or you keep the thermostat set lower than most homeowners they have worked with. Sounds like you would have to be quite the aberration though.
Keep in mind that if you start using the air conditioning, your savings will be even lower.
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• posted on November 10, 2005, 9:12 pm
Brian Attwood wrote:

No they don't ever seem to ask. The 5 year mark seems to be a canned reply.

I just don't think thats the case though. I have the thermostat turn the temp down to 62 during the work day, up to 72 at night between 5-10:00 then down to 62 at night only to fire it up to 72 again at 6:00am to 8:00am. I'm sure I'm not the worse case senerio I'd have to guess I would be average. I tend to think they are simply spitting out a number to make me say ok I'll buy your system.

Great point!
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• posted on November 10, 2005, 11:24 pm
I sure hope you have seen the "I'VE BEEN HAD" thread posted about about 12:05 PM Pacific time on 11/ 10/ 2005 by another Pacific Northwest resident.
There's a guy very not pleased with his brand new \$8,000 heat pump.
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Jim McLaughlin

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• posted on November 11, 2005, 12:59 am
Jim McLaughlin wrote:

Thanks Jim. It sounds like I use my heating system the same way he does. I'll have to ask them that question.
So how long should it take to heat my home from 62 to 72 degrees with a heat pump?

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• posted on November 11, 2005, 12:38 am
snipped-for-privacy@gmail.com wrote:

They could be figuring the cost difference recovery time. That is they are assuming you are going to replace what you have anyway and all they are recovering is the additional cost of a heat pump over the cost of a new resistance heat furnace.
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Joseph Meehan

Dia duit
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• posted on November 11, 2005, 7:25 am
"They could be figuring the cost difference recovery time. That is they are assuming you are going to replace what you have anyway and all they are recovering is the additional cost of a heat pump over the cost of a new
resistance heat furnace."
Exactly. I'd be looking at how long it takes to recover the cost DIFFERENCE between the various alternatives you have, ie a new electric only, heat pumps of various efficiencies, etc.
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• posted on November 11, 2005, 4:07 am
You forgot to factor in the future value of money, as well as the opportunity cost. That would help a bit.