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Energy Saving Tips – Replace Your Refrigerator, Heating System and Water Heater

Updated: Jun. 30, 2017

Does it make financial sense to do it now or later?

FH09DJA_ENEGUZ_02-3Family Handyman
Does it pay to replace an old but still working appliance with a new, more efficient model? Learn how to calculate the real costs over the life of the appliance.

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Still faithfully chugging away, but sucking up enough power to light up a small town.

The furnace (or boiler), water heater and refrigerator are the biggest energy hogs in most homes. It may be hard to believe, but replacing your older but still functioning equipment and appliances with new Energy Star–qualified models can really save you big bucks. In some cases, it can cut your energy bills in half. That's because each of these items has two price tags: the initial cost of the equipment and the cost of operating that equipment over its 10- to 20-year lifetime.

This article will help you decide when it makes economic sense to replace these big-ticket energy guzzlers with new energy-efficient models. And we'll also give you a list of things to look for that can save you hundreds or even thousands of dollars when you do start shopping.

Don't forget about rebates and recycling

Federal, state and local rebate programs are often available that pay you back for purchasing energy-efficient appliances and equipment as well as for recycling your old equipment. Consult appliance dealers or look online for a list of available rebates.

#1 Energy guzzler—your refrigerator

Out with the old

You can save money by replacing an older refrigerator, even if it works.

In with the new

Even after factoring in the cost, a new, efficient refrigerator is cheaper to operate than most 8-year-old models, even if they're working fine.

Your refrigerator consumes a whopping 13.7 percent of household energy. Refrigerator efficiency has really improved in the past few years, so if you haven't gotten a new fridge recently, replacing yours probably makes sense. If you have an older second fridge in your garage or basement, you'll save big by replacing it with a newer, more efficient model (or, of course, by getting rid of it!).

Will I save by replacing my existing refrigerator?

  • If it's 8 years old or older, yes. A 2009 model will save 40 percent in energy use over refrigerators manufactured as recently as 2001. It may seem crazy to get rid of a perfectly good 8-year-old fridge, but it's a smart financial move in most cases.
  • If it's 5 years old or less, maybe. Doing a bit of research at can really pay off. Under “Products, ” choose “appliances, ” then “refrigerators, ” and under “For Consumers” use the “Refrigerator Retirement Savings Calculator” to see when it makes sense for you to purchase a new fridge. If your refrigerator needs repairs that cost more than half the price of a new refrigerator, it makes sense to buy a new one—even if yours is only 5 years old.

Refrigerator shopping tips

A new, efficient fridge will cost you anywhere from under $1000 to several thousand dollars depending on the size, style and features you choose.

  • Buy an Energy Star–qualified model. Savings are shown on the labels, and may almost equal the cost of the appliance over the 15-year average life of the unit.
  • Buy a 16- to 20-cu.-ft. model with a top or bottom freezer, which are the most energy-efficient sizes and styles. If you can't live without something larger or a side-by-side model, find the most efficient model possible.
  • Buy a model without an automatic icemaker (or don't hook it up) or a through-the-door dispenser. These increase energy use by 14 to 20 percent.
  • Before you buy, get updated efficiency information online. The Energy Guide label on a refrigerator will tell you where it falls on a scale of efficiency compared with similar models, but it won't tell you whether it's the most efficient model available.

#2 Energy guzzler— your heating system

Still efficient?

It may be time to retire an old heating system.

Energy guide

All major appliances come with stickers showing energy use.

In a cold climate, two-thirds of your energy budget is spent on heat. Cutting your heating energy use is the single most effective way to cut your utility bills. Replacing your furnace or boiler is expensive, but it may be the smartest tax-free investment you can make. The information here applies to propane, oil and natural gas systems.

Will I save by replacing my furnace or boiler?

  • If it's 15 years old or older, yes. Furnace and boiler efficiency is measured by annual fuel utilization efficiency (AFUE). Older systems have a 55 to 65 percent AFUE, whereas the least efficient systems today are at least 80 percent efficient.
  • If it's 5 years old or less, no. Replacing your furnace or boiler makes sense only if your system needs serious repair, you're switching fuel types or adding air conditioning.
  • If it's 5 to 15 years old, maybe. You'll need to do some research. Find out how efficient your current unit is with an online search or by consulting the manufacturer. Then go to or the furnace dealer and compare the annual operating costs of your current equipment with those of an Energy Star–qualified unit, which uses 6 to 15 percent less energy than a new standard model. You can use the product lists to compare specific Energy Star–rated equipment by efficiency ratings, brand names and model numbers.

To see whether replacing your current heating equipment makes sense, the final step is to do a simple return on investment (ROI) calculation (see below). It may sound like a lot of work, but an hour of your time could save you thousands of dollars.

When super-efficient heating makes sense:
If you live in a cold climate where temperatures remain in subzero territory for a sustained period each winter, it makes sense to spring for a high-efficiency “condensing” furnace or boiler with an AFUE of 90 percent or higher. This will add substantially to the initial price of a furnace or boiler, but over the life span of that equipment (actually the payback period is within three to seven years), you'll recoup those costs and more through lower utility bills. Also, rebates and tax credits are available that will cover much of the initial cost difference.

Furnace and boiler shopping tips

Here are some things to keep in Mind before you buy a furnace or boiler:

  • Make sure your contractor sizes the furnace or boiler by doing an a heat loss analysis. Contractors often oversize equipment “just to make sure,” which means you're paying more in usage costs as well as for the unit itself.
  • Buy a unit that's at least 83 percent efficient. Higher efficiency models like these will have vent dampers or an induced draft fan to prevent heated air from escaping up the chimney when the system is off.
  • Choose a furnace with a variable-speed fan motor, which will save you a substantial amount each year in electricity costs.
  • Add insulation, seal air leaks, and replace your leaky windows and doors. These energy upgrades might allow you to buy a less expensive heating system and together can cut your fuel bills in half.

ROI calculation

To see how much money you'll save each year with more efficient equipment, calculate your return on investment (ROI) using this formula:

ROI = first-year savings divided by the installed cost

(Find your first-year savings at Remember, as fuel prices increase, so do your savings.

What about electric heat?

Even minimum-efficiency electric heating systems (and water heaters) are already 90 to 100 percent efficient, so upgrading to a new system probably won't save you much if you have an electric furnace or boiler, or electric baseboard units. The best way to save on electric heat is to make sure your home is properly insulated and sealed. Using off-peak electricity is another great way to save. Contact your power supplier to see if that's an option in your area. If so, you could cut heating costs by 40 percent or more by installing a backup heating system.

Heat pumps

If you use electricity to heat your home and you live in a mild climate, consider an energy-efficient heat pump, which provides three times more heat than the equivalent amount of energy it consumes in electricity. During the heating season, the pump extracts heat from the outside air (air-source heat pump) or the ground (ground-source heat pump) and delivers it to the house. During the summer, the pump reverses the flow of refrigerant and functions like a conventional air conditioner. An efficient heat pump can trim your electricity costs by 30 to 40 percent. Consider replacing your heat pump if it's 10 or more years old. New heat pumps use a fraction of the energy used by older models.

Also, have your installer check the refrigerant levels in your heat pump. Studies show that up to 75 percent of installed cooling equipment may have incorrect refrigerant levels, which reduces energy efficiency and increases the chance that your heat pump components will fail prematurely.

For readers in cold climates, a “dualfuel” heat pump might be an option.

Go to for more information on heat pumps.

#3 Energy guzzler: your water heater

High-efficiency water heater

High-efficiency water heaters save a substantial amount of money compared to an older, conventional water heater.

Your natural gas or propane water heater uses about 17 percent of the energy in your home and is notoriously inefficient. Even a brand-new, mid-priced conventional tank-style water heater is only 57 to 59 percent efficient because it loses heat through the flue and through the walls of the storage tank. Older water heaters are even worse, wasting more than half the heat. So upgrading your old gas or propane water heater to a high-efficiency model can save big bucks. Electric water heaters are also serious energy guzzlers, but as with electric heat systems, upgrading to a newer electric model probably won't cut your utility bills by much.

Will I save by replacing my gas or propane water heater?
—If it's 10 years old or older, yes. Gas models manufactured before 1998 typically operate at less than 50 percent efficiency.
—If it's 5 years old or less, no. Replacement only makes sense if your system needs serious repair.
—If it's between 5 and 10 years old, maybe. Water heaters last an average of 10 to 15 years. If yours is getting older, it's worth replacing it now before it fails. Check online for the efficiency ratings of different makes and models, and use the ROI calculation to see if replacement makes sense.

Water heater shopping tips

A new tank-style water heater may cost up to several thousand dollars (installed) depending on the model and installation requirements (a power-vented unit that exhausts gases directly outside is more expensive). When you're shopping for a tank-style water heater:

  • Buy an Energy Star–qualified unit with at least 63 to 67 percent efficiency.
  • If you have an electric water heater, call your electric utility and check into off-peak electricity rates. (You may need a second or larger water heater to take advantage of off-peak rates.) Buy a high-efficiency electric model with an insulation rating of R-22 or better.
  • Buy the right size for your home. A water heater that is either too big or too small will be less energy efficient.
  • Examine the efficiency rating (EF) carefully. Similar water heaters can vary dramatically but with very little price difference. For example, a 64 EF model might cost only $75 more than a 53 EF model.
  • Look for models with longer warranties (10 to 12 years), which typically mean better insulation and heat transfer, and larger heating elements.

Required Tools for this Project

The only tools you'll need are a calculator and a computer with internet access.