Upgrading your HVAC system can significantly reduce your energy costs. Here’s how much homeowners typically save and what affects the results.
If there’s one surefire way to save money on your energy bills, it’s by eliminating your old, outdated HVAC system and replacing it with a newer, more efficient model. But how much you’ll actually save isn’t just about unpacking your shiny new system.
“Compared to 20 years ago, most systems today will see savings of at least 20% to 30% just by upgrading to today’s efficiency,” said Steve Wade, senior director of operations and procurement at ARS, a national HVAC service provider.
Want to know how much energy you can save in your home? These are the factors you need to consider.
Average energy savings for HVAC
Most homeowners can expect the following: Save at least 20% While you may save money on energy bills when replacing an old HVAC unit, you could potentially save more than double that percentage. In dollar terms, this equates to: Savings of $300 to $500 per year Especially if you choose a heat pump.
“You would You can comfortably save 30% to 40% “It’s a comparison of the electricity usage of today’s system versus a system from 20 years ago, assuming similar usage and weather conditions,” Wade says. Although other factors are involved, we expect the following:
- Older systems (more than 10-15 years): Annual savings of 20% to 40%
- Very old system: Annual savings of 10% to 20%
Compare HVAC costs and savings
These cost and savings projections are based on national averages from January 2025 to January 2026. For the most accurate pricing, contact your local HVAC contractor.
| Types of HVAC systems | average cost | Annual savings potential |
|---|---|---|
| central air conditioning | $13,000 to $16,000 | $150 – $500+ |
| furnace | $6,500 to $9,000 | $50 – $300+ |
| heat pump | $12,000 and $15,000 | $300 – $1,000+ |
Figures are drawn from ARS National Service data for completed housing jobs from January 2025 to January 2026 (more than 3,000 system installations; component figures come from a larger sample). The range reflects variation by system type, home size, market, and scope of work.
Things to note:
- Central AC tends to offer greater savings than furnaces because “efficiency standards have improved significantly over time,” Wade says.
- Furnace profits are smaller because the baseline efficiency hasn’t changed much over the past few decades.
- Heat pumps offer the greatest savings, especially when replacing older electrical systems or in mild climates.
What affects your savings?
Exactly how much you save each year depends on your home, energy usage, and climate. All of these factors must be considered to accurately estimate how much money you can save when purchasing a new HVAC system.
Age and efficiency of current system
The new system features upgraded technology that improves the performance of your air conditioner, among other things. Features such as variable speed blowers adjust airflow more precisely, reducing energy waste and maintaining a more constant indoor temperature.
Systems that are compatible with smart thermostats can be set to fluctuate the temperature throughout the day, allowing you to set your preferred temperature when you’re home. When you are away, you can enter eco mode to save money. “Lowering your body temperature by 7 to 10 degrees while you’re out and about can save you hours of energy each day,” Wade says.
The more efficient you are (i.e., the higher your SEER or EER rating), the more money you save. “SEER is similar to miles per gallon in a car; the higher the number, the more efficient the system is,” Wade says. SEER is relative, meaning a 20 SEER AC unit is twice as efficient as a 10 SEER unit.
house size and layout
The larger your home and the more rooms you have to maintain, the more your HVAC unit will run. You’ll likely also need a larger HVAC unit, and in some cases, dual controls may prove to be a better (albeit more expensive) option for maintaining your home’s preferred temperature.
climate and location
“Savings are always weather-related, and the amount of cooling time you have throughout the year impacts your total energy usage,” says Wade. Warmer climates that rely less on heating and cooling naturally result in lower energy costs throughout the year. Regions that experience extreme heat or cold use more energy.
Energy costs in your area
Energy costs have a big impact on how much money you can save with a new HVAC unit. “While there will certainly be some variation in electricity costs and usage, assuming the same conditions from year to year, you should be able to expect significant savings,” says Wade.
The national average energy cost is 18.83 cents/kWh, but in some states like New York, California, and Connecticut, energy bills are nearly double that cost. If you live in an area with high electricity costs, you’ll see the most significant cost savings by switching to a new HVAC system.
your energy usage
How often you run your HVAC system has a direct impact on your overall costs. People who prefer cooler temperatures during heat waves, or fairly warm settings in the winter, will typically see higher electricity bills due to increased system demand, and vice versa.
How long does it take to see return on investment (ROI)?
Most homeowners realize the full ROI of their new HVAC system. 3 to 7 years. Climate, usage, system costs, and energy costs all affect how quickly you can recover your initial cost.
“Upgrading to current efficiency standards will reduce overall power consumption, especially on the cooling side,” Wade says. No matter how often you use your HVAC unit, your energy bills will be reduced to some extent.
Will a more expensive HVAC system provide more savings?
Contrary to appearances, Expensive HVAC units don’t automatically lower your energy bills. More importantly, how well it is installed, whether it is properly sized, and how it is used.
“A properly installed standard system will perform better than an improperly installed high-end system,” says Wade. Your HVAC professional will perform a load calculation to determine the system size you need for your home. When sized and installed correctly, your home ecosystem will function like a well-oiled machine.
When does HVAC replacement make the most sense?
It makes sense to replace your HVAC system if:
- Even though energy costs are stagnant, you can see that your utility bills are increasing compared to a few years ago.
- HVAC units are more than 10-15 years old.
- Your home may have unstable temperatures, humidity issues, or poor airflow.
- The system will run longer than before just to maintain the same comfort level.
- If you meet the criteria for the $5,000 HVAC rule, that means the repair cost is more than $5,000 and a complete replacement makes the most sense.
If you don’t save much
Even newer, 80% efficient furnaces will perform well, so you may not need to splurge on a high-efficiency 96% model just to save money. “You may still be using a relatively inefficient furnace, which means your gas usage may not change much,” Wade says. In warm climates or homes with low heating demands, the difference in annual energy savings between medium- and high-efficiency systems may be so small that the cost may not be justified.
Another reason not to buy a super-efficient HVAC system is if you’re moving soon. If you’ve invested in a system like this and plan to buy a new home in the near future, you may not have had enough time in your home to see the full ROI. In that case, a new system that meets minimum efficiency standards may be your best option.
Additionally, if your home is poorly insulated and sealed, you may not see any meaningful savings. Drafts, poor insulation, and air leaks can degrade even the most efficient furnace, allowing heated air to escape and increasing system load. Your money would be better spent upgrading your insulation.
Energy prices where you live also matter. If natural gas prices are relatively low in your area, the cost savings from increased efficiency will not be significant. This means it can take much longer to break even on high-efficiency upgrades than in regions with higher fuel costs.
Tips for maximizing HVAC energy savings
Even the most energy-efficient HVAC system won’t perform as well when certain barriers are present, so here’s how to maximize your energy savings.
- Select ENERGY STAR certified models: ENERGY STAR certified HVAC models maximize efficiency and reduce energy costs.
- First, upgrade the insulation and seals for leaks. When your home is poorly insulated, all the warm or cool air you need indoors slowly leaks out, doubling the load on your HVAC system and raising your utility bills.
- Installing a programmable or smart thermostat: “Smart thermostats allow you to control your system from anywhere and optimize usage based on your schedule,” says Wade. This saves you money because your system doesn’t have to work as hard to maintain your preferred temperature when you’re not home.
- Schedule regular maintenance: Regular HVAC maintenance ensures that your system is working properly and catches small problems before they escalate into expensive repairs or, in the worst case, complete replacement.
- Get a properly sized system: Bigger systems don’t necessarily mean more AC. The system will simply not work properly. They stop and start too quickly, failing to dehumidify your home and ultimately increasing your energy costs.
- Work with licensed contractors: Companies like ARS have a national presence, have the proper licenses, and are more likely to be around if you need to cash out your HVAC warranty, but smaller companies with solid reputations are also good options. “The biggest contractor is not always the best, but reliability and long-term service are important,” Wade says.
FAQ
How much will a new HVAC system reduce my energy bills?
A new HVAC system can reduce your HVAC bill by up to 40%, but it could be as much as 20% to 30%.
Which SEER rating will save you the most money?
The higher the SEER, the more efficient your unit will be and the more money you will save. “The numbers are relative: a 20 SEER system is twice as efficient as a 10 SEER,” Wade says.
Is a heat pump cheaper to run than an air conditioner + furnace?
Depending on the situation, heat pumps are generally cheaper to run than air conditioner and furnace combinations. However, “heat pumps run more continuously, so while they are more efficient, they may require more regular maintenance over time,” Wade says.
How long does an HVAC system last?
Most HVAC systems have a lifespan of 10 to 20 years. Proper HVAC maintenance will help you see the upper end of that range.
