Propane Furnace Buying Guide – Prices, Installation Costs, Benefits, and How to Convert

Propane furnaces are a great high-efficiency heating solution for Canadians who live outside of major urban areas where there is no natural gas service. This guide will examine the typical cost of a new propane furnace, including installation and fuel costs, as well as the cost associated with switching to a propane furnace from another fuel.

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We’ll also talk about the efficiency of propane furnaces, new features and technologies to look for, warranty terms to expect, the pros and cons of propane furnaces, and how these models stack up against other types of furnaces. Plus, we’ll go over some important questions to ask that will help you decide if a propane furnace is right for your home.

The Price of Propane Furnaces in Canada

Prices for a new high-efficiency propane furnace, including installation, usually range from $3,500 to $6,000.

The final price will depend on a variety of factors, including:

• Where you live (i.e. small town vs. being close to major urban centres)
• The brand and model of the system
• The efficiency rating
• The size and BTU output of the unit
• The complexity of the installation (every home is different)
• Additional features and technology you want
• Rebates you’re eligible for
• How much competition there is in your community for local HVAC distributors
• Whether you’re upgrading an older propane furnace or switching fuel sources

Converting from Oil or Electric Can Increase Costs

The total cost of installing a propane furnace may approach $7,000 to $8,000 or more if you are also converting from another heating source like oil or electric.

Switching fuels makes the installation more labour-intensive because it can include things like making upgrades to the venting, installing piping, and removing and disposing of the old oil tank.

Furthermore, propane furnaces are popular in rural areas where there is no natural gas infrastructure, so contractors often need to travel farther to do an estimate and installation. Similarly, there may be fewer companies that provide service in your area, and this may also affect costs.

Higher installation costs and contractors working in rural areas both contribute to a higher upper range on the average price (up to $10,000) for a new high-efficiency propane furnace.

Certain rebates may be available to offset the cost of upgrading from an older model.

Propane Costs in Canada Based on 2020 Fuel Prices

Although propane prices have increased somewhat recently in Ontario and elsewhere in Canada, it still remains far cheaper than electric baseboard or oil heating for your home

According to Natural Resources Canada, the average price of propane across Canada was 89.1 cents per litre in 2020.

Factors that Can Impact Propane Costs

The cost of propane can fluctuate not only from province to province, but also from city to city. Generally speaking, prices tend to be slightly higher in less populated and more isolated areas.

Furthermore, propane prices can fluctuate seasonally as demand increases in winter and decreases in summer.

Comparing the Energy Efficiency of Propane Furnace Models

The efficiency of propane furnaces is measured in the same way as with gas furnaces, and that’s with annual fuel utilization efficiency (AFUE).

AFUE calculates how much fuel a furnace consumes versus how much heat it produces. The higher the AFUE, the better the efficiency and the lower your energy bills.

In Canada, new propane furnaces must have an efficiency rating of at least 90 percent. Most of the high-efficiency models on the market have AFUE ratings around 95 or 96 percent, but there are models available that are as much as 98 percent efficient.

Features and Technologies that Can Impact Cost, Efficiency, and Convenience

There are lots of options when choosing a propane furnace, and models range from standard entry-level ones to high-end models with additional features and designs.

If you want higher AFUE ratings, more technology, and improved design features, then you should expect to pay more. Here are some of the options and possible features that might interest you:

• Two-stage or variable-speed furnaces instead of single-stage
• Multi-speed or variable-speed blowers
• Condensing technology
• Communicating technology to improve performance
• Wi-Fi compatibility

Standard propane furnaces: These are usually single-stage, meaning they only have On and Off settings. They tend to be louder, less efficient, and not as good at keeping your whole house at the right temperature. These furnaces are typically best for homeowners on a tight budget.

Mid-range propane furnaces: These can be single-stage, but it’s more likely they’ll be two-stage. This means they have two speeds in the On position, so they can operate at a lower speed to give you better efficiency, quieter performance, and improved temperature consistency throughout the house. These models are usually equipped with multi-speed blowers that conserve energy by changing their speed.

Higher end furnaces: Top-tier furnaces have the most features and design improvements, so they’re also the most expensive. They can be two-stage, but most often they’re variable-speed with variable-speed fans, and can modulate their heating output incrementally, operating at lower speeds most of the time. These promise the best efficiency, quietest operation, and most precise temperature control. They’re also the most likely to come with additional technologies like self-diagnostics, communicating systems, and Wi-Fi compatibility.

Condensing furnaces: Any tier of furnace can be condensing, though it’s more common with mid-range and high-end models. Condensing technology means the furnace has a secondary heat exchanger that traps and recycles heat and energy that would otherwise have been lost through the venting of exhaust gasses.

Comparing Natural Gas and Propane Furnaces

Similarities Between Natural Gas and Propane Heating Systems

Propane and natural gas furnaces are very similar in many ways. In fact, many of the natural gas furnaces on the market are designed to be used with either natural gas or propane, and there are conversion kits you can buy—and have installed by a professional HVAC technician—to convert between the two fuels.

Here are some of the ways that gas and propane furnaces are alike:

• They’re available from many of the same brands
• They have comparable price ranges
• The warranty terms are very comparable if not the same
• Efficiency ratings are usually identical for propane/natural gas counterparts
• They have similar life expectancies

Differences Between Natural Gas and Propane Heating Systems

The important differences between propane and natural gas furnaces are the installation process, the cost of fuel, and the efficiency of the fuel.

Installation: The installation process with a propane furnace differs from a natural gas furnace in a few ways, and one is the burner. Some furnaces have to be converted so they will run on propane instead of natural gas. Here are some of the things that are different when you install a propane furnace:

• You have to change the burner orifices
• You must put in special screws
• A low-gas pressure switch must be installed
• You use a special pipe that has both intake and exhaust vents in one

Fuel cost versus fuel efficiency: Another major difference between propane and natural gas is the interesting dynamic with the cost versus the efficiency of the fuel.

Propane tends to cost more than natural gas in most parts of Canada. Based on that alone, you might think it would necessarily cost more to heat your home with propane.

However, propane has a higher BTU output per cubic foot, meaning the same amount of propane will give you more heat compared to natural gas.

As a result, comparing the cost of propane and natural gas must include factors like the efficiency of the furnace, the size of the house, and the cost of fuel.

Propane Furnace Pros and Cons

Pro: Propane Is Widely Available

Oftentimes, homeowners who choose propane over natural gas do so because the gas infrastructure hasn’t been installed where they live, whereas propane is typically available anywhere that’s accessible by road, train, or boat, including rural and remote communities.

Pro: Switching to Propane Could Save You Money on Your Home Insurance

Most home insurance companies have concerns about the storage tanks that are required for oil heating, which means switching to propane might save you money on your premiums.

Pro: Propane Has a Lower Environmental Impact Versus Oil/Natural Gas

Propane burns cleaner than oil and natural gas, meaning it has lower emissions and releases fewer greenhouse gasses. As an environmentally conscious Canadian, this can help you feel better about your carbon footprint and the impact your home heating has on the planet.

Pro: Propane is a Versatile Fuel

Propane isn’t just for home heating: once you have the tank, you can also use it to power your barbeque, stove, water heater, and other appliances as well.

Pro: Propane Furnaces Can Be More Affordable to Operate

Propane can be cheaper than alternative fuels for one of three reasons:

• The fuel itself is cheaper compared to electricity or oil
• A propane furnace is more efficient than an oil furnace
• The fuel itself is more efficient compared to natural gas

Cheaper fuel: Throughout most of Canada, propane is a much cheaper fuel source than oil or electricity when it comes to home heating. We mentioned earlier that the average cost of propane was 89.1 cents per litre in 2020, compared to about 93.8 cents per litre for oil.

More efficient furnace: Compared to oil furnaces specifically, propane furnaces are also far more efficient in terms of AFUE ratings, and this can reduce your monthly energy bills.

More efficient fuel: As we mentioned already, natural gas may be cheaper than propane, but propane’s higher BTU can mean you need less fuel to heat the same space.

Con: There’s a High Cost of Switching

As we discussed earlier, propane furnaces can come at a very high initial cost if you’re converting from electric or oil heat, but remember to weigh that against the long-term savings associated with switching when deciding if a propane furnace is right for your home.

Con: There’s a Higher Fuel Cost Versus Natural Gas

Although propane is usually cheaper than oil or electric heat, it does tend to cost more than natural gas in most places across Canada. However, if natural gas isn’t an option for you because there’s no infrastructure, then you will still save money on fuel costs if you opt for propane instead of oil or electric heat.

Con: You Have to Remember to Fill Your Tank

If you’re accustomed to natural gas or electric heat where you never have to worry about making sure you have a tank of fuel, then switching to propane could take some getting used to. With propane, as with oil, you have to keep an eye on your fuel consumption and stay on top of scheduling deliveries to ensure you don’t run out of fuel in the middle of winter.

Con: There are Some Additional Costs

Propane is a great fuel choice for homeowners who don’t live in areas where natural gas piping has been installed, but this also means there can be additional fees associated with propane. Namely, you might have to pay to buy or rent the propane tank that stores your fuel, and there will probably be delivery charges when you need to refill the tank. Moreover, if you own the tank, you have to take care of regular maintenance to prevent leaks, cracks, corrosion, and other issues.

6 Signs You Should Switch to a Propane Furnace

You’re paying too much to heat your home

We’ve already talked about the fact that oil and electric heat can cost significantly more than propane, so if you feel like you’re paying too much, or your heating bills continue to rise, then it might be worthwhile to look into how much you could save with propane heat.

Your home insurance premiums are higher because of your furnace

Oil furnaces come with higher home insurance premiums because of the potential costs and environmental impacts associated with spills. An oil spill at your house could cost between $250,000 and $500,000 (or more) to clean up, and that’s why insurance companies charge more for homes with oil heat. By switching to propane, you could become eligible for lower insurance rates.

You could make your home more appealing to potential buyers by switching

Most potential homeowners will see an oil tank the same way that insurance companies do—as a liability. Even if selling your house isn’t in the cards right now, you could still increase the appeal—and potentially the value—for down the road by making the switch from oil to propane.

Your furnace isn’t efficient

Electric furnaces are highly efficient, but oil ones generally aren’t, especially older ones. Modern oil furnaces tend to have AFUE ratings between 80 and 90 percent, and older ones can be at 60 percent or less. By upgrading an oil system to a modern high-efficiency propane furnace, you could increase the efficiency of your heating system by a great deal, and this will translate to excellent cost savings on heating bills.

You could get a rebate for upgrading your furnace

There are lots of rebates available these days for natural gas/propane furnaces, including through:

• Banks and financial institutions
• HVAC distributors
• Furnace manufacturers
• Utility companies
• The government
• Energy and environmental organizations

These rebates are designed to encourage consumers to purchase high-efficiency and ENERGY STAR® appliances, and to help offset the higher sticker price that comes with these types of models.

You’re eligible for a rebate if you switch fuels

Utility companies know the hassle that comes with oil furnaces, and to help sweeten the deal for potential customers, they often offer rebates to consumers who switch from oil heat to gas or propane, and this offsets some of the high initial cost of converting heat sources.

Why Propane Furnaces Are Popular for Recreational Properties

Lots of Canadians use propane furnaces to heat their primary homes, but propane furnaces are also becoming extremely popular for cottages, cabins, vacation homes, and other secondary properties that are usually located in rural or remote areas of the country.

There are many reasons why propane is popular for these properties, including:

• The fuel is available just about everywhere
• The furnaces are small and compact, making them ideal for smaller spaces like cottages
• Propane heating can be used on off-grid properties
• Well-maintenance propane furnaces have a long lifespan
• Bigger propane tanks can accommodate a larger supply of fuel that could last a couple seasons

Propane Furnace Lifespans, Maintenance, and Warranties

Life Expectancy

You can generally expect a new propane furnace to have a lifespan of 16 to 20 years, and it could be even longer, especially with regular maintenance and proper service.

Regular Service

There are some DIY maintenance issues you can address yourself, like changing the filter regularly, but it’s also important to hire an HVAC expert to inspect and tune up your furnace once a year. This annual service will keep your furnace in top shape, help extend its life, and ensure it works as efficiently as it can.

Common Warranty Terms

You can use the warranty as a guide for the expected lifespan of your furnace. The warranty—especially on major components like the heat exchanger—will indicate how long you can reasonably expect the furnace to run optimally. If the heat exchanger is warrantied for 20 years, for example, then you can expect at least 20 years of service from the unit.

Heat exchanger warranties these days are at least 10 years, but they usually cover up to 20 years or even the lifetime of the component once the unit has been installed and registered.

There are also parts warranties that last anywhere from five to 10 years. Some units even come with labour warranties, which typically range from one to three years.

Popular Propane Furnace Brands in Canada

Many of the HVAC brands you might already be familiar with from looking at natural gas furnaces also manufacture propane models. In fact, the makes and models are often the same once the conversion kit has been installed.

Most of the popular propane furnace brands in Canada are the ones that have a long history in the business, have a reputation for manufacturing reliable and quality furnaces, and that back their products with good warranties. Here are some of the brands you might want to look at:

• Goodman
• Carrier
• Rheem
• Trane
• Luxaire
• Amana
• Keeprite
• Rheem
• York
• Lennox
• Coleman

The Final Word on Propane Furnaces

When you set out to shop for a propane furnace, the key is to ensure that you get the correct type of furnace for your needs at the most reasonable price. We recommend speaking to a trusted local HVAC contractor for help with this (see below on where to get a free quote!)

Newer propane furnaces tend to be more reliable, energy-efficient, and environmentally-friendly, and they provide a more consistent heating output than older oil systems.

Despite some of the higher upfront costs of making the conversion from oil or electric to propane, it is typically a wise investment in the long run, and something Canadian homeowners should strongly consider, especially if you currently heat your home with an inefficient oil furnace or an electric furnace with high energy bills.

Request a quote on a new propane furnace from qualified local contractors in your area!

FAQ

Sources

• A Guide to Propane Furnaces
• Propane Furnaces
• Propane vs. Natural gas: What to consider when comparing home energy options
• Energy Sources
• Gas furnaces: Energy Efficiency Regulations
• Oil Tank Care