Top 5 Reasons to Convert Heating Systems From Oil to Natural Gas

Topics: Sustainability, Construction

Michael Tobias
Author : Michael Tobias on May 15, 2018

Natural gas has displaced fuel oil as the main energy source used by heating systems in NYC. There are many economic and environmental reasons why the replacement makes sense, and this article will explain five of them.

Ideally, a boiler upgrade project should be complemented with building envelope improvements to reduce the heating load - up to 25% of the heat supplied to a building can be lost due to poor envelope performance. Automatic controls are also recommended, since they can reduce the operating cost of a heating system by up to 10%.

1) Natural Gas Reduces Heating Expenses

The US Department of Energy carried out a study for household heating expenses between 2007 and 2012. They determined that the average US home spends $1,700/year on heating when using fuel oil, but only $700/year with natural gas. In other words, savings of up to 60% can be expected after a fuel conversion.

New York City is located in the Northeast, where natural gas is more expensive than in other parts of the US. However, there is still a cost advantage over heating oil.

  • As of 2017, fuel oil #2 has a price of 278.4 cents per gallon in NYC.
  • However, the price of natural gas is $16.11 per MCF (thousand cubic feet).

In terms of heat content, one gallon of fuel oil #2 contains 1.385 therms, while one MCF of natural gas contains 10.37 therms. After some math, the cost per therm in NYC is the following:

  • Fuel oil #2 = ($2.784 / gal) / (1.385 therm / gal) = $2.01 / therm
  • Natural gas = ($16.11 / MCF) / (10.37 therm / MCF) = $1.55 / therm

In terms of cost per unit of heat, natural gas is around 25% less expensive than fuel oil #2 in NYC. Assuming both boilers have the same fuel efficiency, the natural gas boiler will be 25% less expensive to run. The savings are even higher if an old and inefficient oil boiler is replaced with a modern ENERGY STAR gas boiler, for instance.

Energy savings can be further increased if the new gas boiler has a lower heating output than the existing oil boiler. Old heating systems are often oversized, and the heating load can be reduced before the boiler upgrade by improving the building envelope.

2) Simpler Logistics and Maintenance

Keep in mind that Con Edison has a natural gas distribution system, but heating oil must be delivered by truck to the point of use. As a result, natural gas is readily available for property owners, but in the case of heating oil someone must schedule deliveries and keep track of fuel levels.

Also due to the lack of a utility service, heating oil needs a large storage tank that requires frequent maintenance. Heating oil also releases more particulate matter during combustion, which may clog system components if unattended: an oil-fired boiler is more demanding in terms of maintenance, compared with an equivalent system that uses natural gas.

3) Environmental Stewardship

Fuel oil is a highly polluting heat source: only around 1% of NYC buildings still use it, but their total emissions are higher than those of all vehicles in the city combined. According to the US Energy Information Administration, heating oil emits 161.3 pounds of CO2 per million BTU, while natural gas emits 117 lb CO2 per MMBTU - a 27% reduction in CO2 emissions alone. Other pollutants that are emitted in large amounts during fuel oil combustion are particulate matter, nitrogen oxides and sulfur oxides. Being a fossil fuel, natural gas also emits them, but in smaller concentrations.

The emissions reduction when converting from oil to natural gas is enhanced if the new boiler has a high efficiency. The building will not only be using a fuel with reduced emissions, it will also be using less of it.

4) Con Edison Incentive

Con Edison manages an incentive program for property owners who upgrade their heating systems from oil to natural gas. Three different conversion rebates are available, each for a different type of property:

  • Residential properties up to four dwellings are eligible for a $2,000 conversion rebate, and an equipment rebate up to $1,000.
  • Multifamily buildings (5-75 dwellings) get a conversion rebate of $300 per dwelling, plus an equipment rebate of up to $17,500.
  • Large commercial properties and multifamily buildings above 75 units get a $10,000 conversion rebate and a $15,000 equipment rebate.

It is important to note that funding is limited per year and Con Edison closes the application once rebate capital has been fully allocated for the corresponding year. Property owners applying for the rebate can get in touch with a qualified engineering company to make sure their equipment is eligible, since there are various performance requirements to meet.

Both boilers and furnaces are eligible for the rebate if they are fired by natural gas and if they replace an oil-based system. However, if the equipment is configured for dual-fuel operation it is not eligible; the unit must run exclusively with natural gas.

5) Reliability

When NYC was struck by Hurricane Sandy in 2012, the natural gas distribution system continued to operate with almost no interruptions. Heating oil deliveries may be impossible during emergency conditions, but heating systems fired by natural gas can continue to operate normally.

Natural gas becomes even more useful if a property is equipped with a gas-powered electric generator. This guarantees both space heating and electricity even under harsh weather conditions, as long as the gas supply remains operational. It is important to note, however, that key equipment must be installed above the reach of floodwaters for this approach to work.

Other than technical reliability, natural gas also offers cost reliability. While heating oil prices have been increasing in recent years, the trend for natural gas is a price decrease.

Conclusion

There are technical, financial and environmental reasons why upgrading from heating oil to natural gas makes sense. However, professional services are recommended to achieve the best results, like in any engineering project.

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