What is AFUE and How Do You Use It?  An Explanation of Annual Fuel Utilization Efficiency

What is AFUE and How Do You Use It? An Explanation of Annual Fuel Utilization Efficiency

Most people in Santa Clarita don’t have furnaces because air conditioning is the name of the game, but for those that live up in the mountains a properly maintained furnace is an essential.  So what is AFUE, and what does AFUE stand for?  AFUE is an acronym for Annual Fuel Utilization Efficiency, which is a measure of how efficiently your furnace can utilize it’s fuel.  The more efficient your furnace, the more heat you will get per unit of fuel.  But AFUE can’t be used for everything, and learning how to properly use AFUE is essential when buying a new furnace.  In this article, we will define what AFUE is, some warnings about using the Annual Fuel Utilization Efficiency rating system, and finally we will discuss the proper way to use AFUE ratings to buy a new furnace.


What is AFUE - Carrier high AFUE furnaceWhat is AFUE?

AFUE stands for Annual Fuel Utilization Efficiency, and can be thought of as being something like SEER or EER ratings for your air conditioner.  AFUE is used to measure the efficiency of your furnace.  But unlike SEER, which has an arbitrary rating associated with it (like SEER-16, etc), AFUE is actually far simpler to read and understand.  A furnace’s AFUE rating is listed as a percentage of how much fuel it can convert into usable heat, with a scale ranging from around 30-100 (anything less than around 30 would be useless).  For instance, a furnace with an AFUE rating of 85 would mean that 85% of it’s fuel is translated into usable energy that can then be used to heat your home.  The remaining 15% is lost through the exhaust.

AFUE and Type of Fuel

You will hear me repeat this again and again: AFUE is important, but if it is price that you are concerned with, your type of fuel has a bigger affect on your annual expenses.  Different fuels can be combusted at different efficiency rates though, as you can see in the graph below.  Electricity is the only means of heating with a 100 AFUE rating.  This is a general guide to AFUE by fuel type so you can get an idea of which fuels are most efficient: (Courtesy of Wiki – Annual Fuel Utilization Efficiency).



What is AFUE - fuel comparison graph

Fuel AFUE Comparison by Type



Cost of AFUE

Simply put, Annual Fuel Utilization Efficiency is just the percentage of fuel that is used by a furnace.  The higher the number, the better your furnace is at converting fuel into heat.  This efficiency comes at a price, however, and the more efficient your furnace is, the more expensive it is likely to be.  Efficiency is not the same as cost.

Just because your furnace has a high AFUE, doesn’t mean it will be cheaper to operate than your old furnace!

For instance, electric heat is by far the most efficient type of fuel, with an AFUE of 100.  However, it is also one of the most expensive means of heating your house!  Unlike air conditioning, your furnace’s AFUE is not the largest factor that affects your annual heating expenses – your type of fuel is, as you can see below:

what is afue - cost comparison graph

A Warning About Using Annual Fuel Utilization Efficiency

One of the most common misconceptions about AFUE is in thinking that it can be used to directly compare the cost of running two different types of furnaces.  Be careful.  Like we saw above, your fuel type is by far the biggest factor in lowering your annual energy bills in the winter.  For example, an electric heater will run circles around a natural gas furnace in efficiency, but can’t even come close to beating it in cost to operate.  A natural gas furnace will almost always be cheaper than an electric heater.

Simply put, AFUE has little affect on comparing cost to operate.  It is only a means of comparing two of the same type of furnaces.

Whereas AFUE can be used as a means of comparing two different furnaces of the same kind (i.e., two different propane furnaces), it cannot be used to directly compare the cost to operate two different types of furnaces (i.e. propane vs fuel oil).  As an example, if you are trying to decide between a Carrier propane furnace that has an AFUE of 96, and a Lennox propane furnace that has an AFUE of 80, the Carrier furnace will by far be cheaper to operate.

However, AFUE could not be used to compare a Carrier electric heater with an AFUE of 100 to a Lennox natural gas furnace with an AFUE of 84 because they are different types of fuel.  Even though the Carrier electric is more efficient, it will also be more expensive to run despite this extra efficiency.

what is afue - annual fuel utilization efficiency tagHow to Properly Use Annual Fuel Utilization Efficiency to Buy a New Furnace

You’ve learned so far what AFUE is, and how it cannot be used to measure the cost to operate two different types of furnaces.  In this section, we will tell you the proper way to use AFUE to purchase a new furnace.

Step 1: What are the long-term goals for your house?

There is a big difference between holding on to a house for a few years, and living in the dream house you want to retire in.  Like I mentioned above, a higher AFUE furnace will also cost you more to buy.  So if you are in a smaller two bedroom house but plan on upgrading to a four bedroom house in a few years when you start having kids, then a lower AFUE furnace would be more cost effective in the long run.  This is because the cost of purchasing a high AFUE, super-efficient furnace would be recuperated over the life of the furnace.  But if you are selling your house in a couple of years, there is no way that you will make up the price difference between an AFUE 80 furnace and an AFUE 96.8 furnace.  If you are building your dream house, however, and plan on spending the next 30 years in it, then it is definitely worth spending the money on a high AFUE furnace.  If you have no idea or can’t decide, then I’d recommend you split the difference and go for a medium-AFUE option.

Step 2: What type of furnace fuel is best for you?

Much of what determines the type of furnace you will buy depends greatly on where you live.  For instance, if you live in a well populated, suburban area, then natural gas or electric will be the most common sources of heat.  However, if you live in more rural areas, then the infrastructure probably doesn’t exist to deliver natural gas to your house, and electricity prices can go up.  That is why it is much more common to see propane and fuel oil as sources of energy for furnaces in rural areas, where they can be delivered.  A wood burning stove would also be more common in rural areas where natural gas or even propane might be scarce or more expensive.

Make some phone calls in your area and examine the prices for various fuel types.  Just because your old propane furnace needs to be replaced, does not mean that buying a new propane furnace is the most cost effective option for it’s replacement (but it usually is if they did it right the first time – don’t assume).  Take a look at the prices for various fuels in your area and decide which option is best for you.  If you decide to go with a propane or natural gas option, take a look at: Furnace Smells Like Gas, a guide to the dangers of gas furnaces.

Take a look at the map below – as you can see, the type of fuel used in a furnace varies greatly depending on what area of the country you live in.  In the southern United States where using heat in the winter is not that common, electricity as a means of heating is more common than Bozeman, Montana, for instance, where natural gas is more common.  Do some research and decide which fuel type is right for you:

what does afue stand for - fuel type used by region

Fuel Type Used by Region

Step 3: Use AFUE to shop for furnaces and cost compare.

Only after you have answered those two questions: your longterm goals for your house and which fuel type is best for you and your home, should you start shopping for furnaces.  For our example, we will say that we decided that this is our dream home, and we are going to retire here.  We will also say that we live in rural Montana, where propane is the most cost-effective option.  We can now use AFUE to shop for our furnace.  Our options are as follows:

  1. Lennox Signature Series Propane Furnace – AFUE 98 – Cost $5,100 installed without ducting.
  2. Carrier Infinity Series Propane Furnace – AFUE 98 – Cost $4,400 installed without ducting.
  3. Carrier Comfort Series Propane Furnace – AFUE 80 – Cost $3,800 installed without ducting.

If you look at your options above, the Carrier Comfort Propane Furnace is the cheaper option, coming in $600 cheaper than the Carrier Infinity, and $1,300 cheaper than the Lennox furnace.  However, since we are planning on staying in this house for some time, we should go with the higher AFUE options.  So we can rule out the Carrier Comfort Furnace as an option.  As you can see below, the operating cost difference between a 95 AFUE and an 80 AFUE is 13%:

what is afue - energy savings chart

What this means is that if you have an average monthly heating bill of $100 (average out winter and summer by adding all the months and dividing by 12), then the 98 AFUE options would save you around $13 a month on your heating bill over the 80 AFUE furnace.

Now that we have narrowed it down to the two 98 AFUE options, we can decide between the two using your personal preferences in options and brand.  For information on comparing these two particular furnace brands, you might like: Lennox vs Carrier Furnace Review.  After doing our research, we have decided on the Carrier Infinity 98 AFUE propane furnace as our best option for this example.  It isn’t as expensive as the Lennox furnace and it has more options and higher reliability.  We can then figure out how long it will take to pay the difference between our new high-efficiency furnace and the cheaper, 80 AFUE option that we were considering:

  • $4,400 (cost of Carrier Infinity Furnace) – $3,800 (cost of Carrier Comfort Furnace) = $600

We are paying $600 for our extra 18 AFUE points.  By looking at the graph above, we can see that we are saving about 13% on our energy expenses by switching to the 98 AFUE Carrier Infinity Furnace.

33% – 20% = 13%

$100 (energy bill) X 0.13 (decimal version of 13%) = $13 savings each month.

Next, just divide the price difference between the high AFUE furnace and the low AFUE furnace by the amount you save each month, then by 12 (the number of months in a year).

$600 / $13 = 46 months

46 / 12 = 3.8 years

So you will pay the difference between an 80 AFUE furnace and your new 98 AFUE furnace in about four years.  If you are staying in your house for longer than 4 years, then it is worth buying the higher AFUE option.  If you are moving in a year, then it would be more cost effective to buy the 80 AFUE option.

Excerpt Page 2 of 12 - HVAC Design & Consultation Program

Click to Enlarge – Excerpt Page 2 of 12 – HVAC Design & Consultation Program


Save Money on Your New Furnace

Before you buy anything, I’d highly recommend you get the information you need to make the right decision.  Here’s how:



Final Thoughts on AFUE

What is AFUE?  AFUE is a direct measure of how efficiently your furnace can translate the fuel that it burns into usable heat.  However, this measure of efficiency can only be used to compare two of the same types of furnaces.  As a general rule, the type of fuel that your furnace uses is far more important to determining your operating costs than the AFUE.  Once you have made your decision on what type of fuel to use, you can then use AFUE to make a direct comparison between units and calculate how much you can save by going for the high AFUE unit.  For more information on related topics, see Furnace Not Blowing Air, and Why is My Heater Blowing Cold Air?  Or you can visit the ASM Air Conditioning Blog for all sorts of topics and reviews.  If you live in Santa Clarita or or the Greater Los Angeles area, give us a call.  We’d be happy to answer any questions you might have.


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Timothy Kautz
About the author
Tim K.

The University of Virginia - 2005 / The Wharton School of Finance - 2016 / U.S. Naval Aviator 2005-2015. At All Systems Mechanical air conditioning and heating, we believe that the experience our clients have is every bit as important as the products they receive. Simply put, our results speak for themselves, and we'd be happy to help. If you're in the market for a new AC or furnace, make sure that you get a fair price! Try our online calculator; click the tab on the top of this page for more information.

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