Case Study 18-2: Dave Kowalski Converts from Propane to a Cold-Climate Heat Pump

Background

Dave Kowalski has owned his rural property in central Wisconsin for nine years. The house was built in the 1970s, sits on 12 acres, and is completely off the natural gas grid. His heating system has always been propane: a 100,000 BTU/hour forced-air propane furnace installed in 2006, serving the whole house through a duct system in the basement. He keeps a 500-gallon propane tank on a concrete pad behind the house, on automatic delivery from a local supplier.

Dave is retired from the trades (he spent 25 years as a commercial electrician) and is comfortable doing almost anything to his house. He's not afraid of the propane system, but he's paying close attention to his fuel costs.

Over the three winters before this case study, his propane usage averaged 920 gallons per heating season. At his supplier's average price of $2.85/gallon, that's $2,622/year in propane. In the year propane spiked to $3.40/gallon — which happened during a winter cold snap — he paid $3,128. Dave started asking whether there was a better option.

The Problem with His Current System

Dave's propane furnace was 17 years old. It was an 80% AFUE unit, which meant 20% of the propane he bought went up the flue as wasted heat. His burner nozzle was slightly worn (he could tell from burner flame behavior), and an inspection the previous spring had found a cracked inducer housing — a component that cost $340 to replace. The system was serviceable, but Dave was mentally starting a countdown on its remaining life.

The bigger issue was propane price volatility. Electric rates in his area are relatively stable (he's served by a rural electric cooperative), and he knew the cooperative had been building out wind capacity aggressively, which meant low wholesale electricity costs. His current electric rate was $0.11/kWh — below the national average.

The Research Phase

Dave spent roughly three months researching the heat pump option. His concerns: 1. Wisconsin winters are genuinely cold — lows below 0°F are not unusual in January and February. 2. His house is 2,200 square feet with modest insulation (R-19 walls, R-38 attic — he had upgraded the attic insulation himself six years ago). 3. He wanted to keep his ductwork if possible — he'd spent real time sealing and upgrading it over the years.

He read extensively about cold-climate heat pumps and called three HVAC contractors, two of whom were unfamiliar with the technology and one of whom — a woman named Carla, who ran a company that had been installing cold-climate units for four years — knew what she was talking about.

Carla did a proper heat load calculation (Manual J) rather than a guess-and-size approach. The result: Dave's house had a design heating load of approximately 46,000 BTU/hour at the local design temperature of -5°F.

Carla recommended a two-stage cold-climate heat pump — a ducted whole-house unit, using his existing ductwork, rated at: - 47,000 BTU/hour heating at 47°F outdoor temperature - 36,000 BTU/hour at 17°F - 28,000 BTU/hour at -5°F

At -5°F, the heat pump alone would cover 61% of his heating load. The remaining 39% would be covered by integrated electric resistance backup strips rated at 20,000 BTU/hour.

"You'll have some aux heat use on the coldest nights," Carla told him. "That's fine. You'll still come out ahead of propane, because the heat pump will be doing most of the work even at cold temperatures."

The Financial Analysis

Dave built a spreadsheet (he's the sort of person who builds spreadsheets). His analysis:

Current propane system: - 920 gallons × $2.85/gallon = $2,622/year - Assuming $3,000 in equipment life remaining (prorated replacement cost)

Estimated heat pump system: - Heat pump electricity (estimated 5,400 kWh/season at blended COP of 2.4): 5,400 × $0.11 = $594 - Aux heat electricity (estimated 1,100 kWh on cold nights): 1,100 × $0.11 = $121 - Total annual operating cost: $715/year

Annual savings: $2,622 − $715 = $1,907

System cost: - Heat pump and air handler: $5,800 installed (Carla's quote) - Electrical panel upgrade (Dave needed a 30-amp circuit added; he pulled his own permit and did the work): $0 labor, $85 in materials - Total project cost: $5,885 - Federal tax credit (25C): 30% of equipment cost, approximately $1,740 - Net cost after incentive: $4,145

Simple payback: $4,145 ÷ $1,907/year = 2.2 years

Dave found this calculation almost unbelievable and checked it three times. The economics were this favorable for two reasons: propane is expensive relative to electricity in his area, and the federal incentive was substantial.

Installation and Commissioning

The installation took two days. The old propane furnace was removed; Carla's crew installed the new air handler in the same location, connected to the existing ductwork. The outdoor unit — a compact wall-mount unit that clears snow off the coil design — was mounted on a bracket on the south side of the house.

Dave asked Carla to pressure-test the existing ductwork before connecting. The results: total duct leakage to outside measured at 18% — not great, but not catastrophic (Section 20.3). He committed to sealing the accessible duct sections himself before winter, which brought the leakage down to about 9% post-sealing.

Carla commissioned the system and went through the controls with Dave in detail. Key settings she configured: - Balance point for aux heat integration: 10°F (below 10°F, the system allows aux heat to supplement) - Defrost interval: standard (the system manages its own defrost timing based on sensors) - Emergency heat lockout: configured so that "Emergency Heat" mode on the thermostat bypasses the heat pump entirely for true emergencies only

She also explained to Dave that his old thermostat was incompatible with the heat pump's variable-speed compressor and installed a new communicating thermostat as part of the job. "Your old thermostat would have worked for basic on/off control," she told him, "but you'd lose the efficiency benefits of the variable speed without the communicating controls."

First Winter Results

Dave tracked his electric consumption obsessively for the first winter. Results for the full heating season:

  • Heat pump electricity consumed: 5,210 kWh
  • Aux heat electricity consumed: 890 kWh (fewer very cold nights than the design case assumed)
  • Total electricity cost: 6,100 kWh × $0.11 = $671

His actual savings in year one: $2,622 − $671 = $1,951. Slightly better than his projection.

He noted three things he hadn't anticipated: 1. The house was more comfortable. The variable-speed heat pump ran almost continuously on moderate days at low capacity — essentially a constant gentle warmth rather than the on-off cycling of the propane furnace. Dave had heard about this effect but was surprised by how much difference it made. 2. His propane tank sat full all winter except for his gas water heater usage (approximately 180 gallons). He's now evaluating replacing the water heater with a heat pump water heater to eliminate propane entirely. 3. On one night when temperatures dropped to -12°F, the system ran aux heat heavily for about six hours. The electric bill spike was noticeable but manageable.

What Dave Would Do Differently

Dave's one regret: he didn't get three quotes. Carla's price turned out to be reasonable (he later asked two other contractors what they'd have charged — one was $1,200 more, one was $600 less), but he took her word for it rather than verifying. "I got lucky," he says. "I knew enough to ask the right questions and ended up with a contractor who knew what she was doing, but I should have confirmed the price was competitive."

He also wishes he had done the air sealing work before the installation rather than after. "Carla told me to do it first and I didn't get around to it. The system commissioning was done on a leakier house than it needed to be."

Key Questions for Discussion

  1. Dave's simple payback calculation showed 2.2 years. Identify every assumption in that calculation and assess how sensitive the conclusion is to changes in those assumptions. Under what conditions might the project have been a poor investment?

  2. Carla recommended a two-stage heat pump rather than a single-stage unit. What operational and efficiency benefits does two-stage (or variable-speed) operation provide?

  3. Dave's house had R-19 walls and R-38 attic insulation. If he had added insulation to R-40 walls and R-60 attic before installing the heat pump, how would that have affected the system sizing and operating cost? Would the insulation upgrade have been a good investment to do first?

  4. Why is "Emergency Heat" mode on a heat pump thermostat a costly emergency-only option rather than an alternative operating mode?