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What Is a Condensing Furnace?

If the words "sticker shock" come to mind when you're faced with buying a new furnace, you're not alone. A new furnace, especially one with a high efficiency rating, can cost anywhere from $1,500 to $5,000 and more as of August 2011. However, there's one type of furnace that can make the bite a new furnace takes out of your wallet easier to swallow. While a condensing furnace is on the high-end price wise, it can also be a wise choice to save money on your heating and cooling bills.

Natural Gas Condensing Furnaces

Condensing furnaces are highly efficient.

A condensing furnace works with natural gas and propane furnace systems only. They cannot be used with electric or oil furnaces because they work with water, which makes them incompatible with fuel oil and electric-powered furnaces. Gas contains moisture, naturally, and as the furnace is running, it produces water in the form of condensation -- hence the name "condensing."

Condensation Conversion

The furnace has two heat exchange units and a dedicated pipe to draw air from the outside. The exchange units then convert moisture vapors into heat. Condensing furnaces also have a dedicated pipe made of polyvinyl chloride (PVC). The pipe returns exhaust gases and moisture and converts them into heat. Because the pipe is made of PVC, it is noncorrosive and not metal; it is capable of extracting and returning as much heat as possible from the exhaust gases. These overall capabilities make condensing furnaces less wasteful and much more energy efficient.

Energy Efficiency

Furnaces are given an annual fuel utilization efficiency (AFUE) rating. Because condensing furnaces essentially use everything from air to fuel to water to convert fuel into energy and then heat, they gain as many as 10 additional AFUE points. The higher the AFUE rating, the more efficient the furnace and the less you spend on energy. The minimum AFUE allowed by the U.S. Department of Energy for non-condensing gas furnaces is 78, which means that the unit must convert at least 78 percent of the British Thermal Units (BTUs) power it uses into heat. A condensing furnace will easily reach an AFUE of 90 to 97 percent, which means that the heat conversion loss percentage of a condensing furnace can be as low as 3 percent in comparison to a 22 percent heat conversion loss with a non-condensing furnace.

Costs and Savings

According to the U.S. Department of Energy, high efficiency furnaces, such as condensing furnaces will save you over $2,700 in energy costs over the life of the furnace. Prices for condensing furnaces start around $2,200 as of August 2011. As is the case with any type of furnace, the higher the BTU capacity, the higher the price, and the larger your home, the higher the BTU capacity you will require. Additional cost considerations include installation, which can start at $1,000, and any ductwork that you might need to create the ventilation system. As long as federal and state tax credit programs are active, most condensing furnace systems will qualify for credits and rebates because of their high energy efficiency.