Can Changing Your AC Unit Save You Money on Your Energy Bill?

Cooling your home is one of the largest energy loads in your household and U.S. homeowners pay a total of over $11 billion a year for cooling their homes. According to the U.S. Department of Energy (DoE), about 6% of the total electricity generated in the United States is used for air conditioning.

Installing a new air conditioning system is a big investment but changing your AC unit can lower your energy consumption significantly and save you money on your electricity bill. DoE data suggests that replacing an old air conditioner with a modern, energy-efficient unit can save you up to 40% on cooling costs.

The Best Time to Replace Your AC Unit

New AC units are generally more efficient than older ones. Depending on your electricity prices, the increased efficiency of the new unit will usually make up for the cost of the investment after a few years. While there are multiple factors to consider, the general rule of thumb is to replace your air conditioning unit or heat pump if it is 10 years old or older.

If your current AC unit is not functioning properly or if the repair bills are piling up, it may be time to consider changing your AC unit even if it less than 10 years old. The same is the case if you added more square footage to your home or if you’ve made any bigger energy efficiency improvements. Your existing air conditioner may now be undersized or oversized respectively.

Energy Efficiency Ratings

The efficiency of air conditioners is commonly measured with the Seasonal Energy Efficiency Ratio (SEER) for a typical cooling season. The SEER rating allows you to compare the operating cost to other cooling systems. The higher the SEER rating the more efficiently the air conditioner operates. Switching to a same-size unit with a higher SEER rating can significantly reduce your energy consumption. You can find the SEER rating on the EnergyGuide label on your air conditioning unit.

The SEER rating is the ratio of the cooling output to the total energy input over the same time period. The minimum SEER rating for residential air conditioners manufactured since 2006 is 13 SEER or higher. Since 2015, new units installed in the U.S. Southwest and Southeast Regions need to have a 14 SEER minimum. Compared to the previous 10 SEER minimum from 1992, the current 13 SEER air conditioners are about 30% more efficient. ENERGY STAR rated air conditioners are even more efficient and require a minimum SEER of 14.5.

When choosing a new air conditioner, try to select a model with the highest SEER rating you can afford to maximize the savings on your energy bill. While the initial cost for more efficient systems is typically higher, the operating costs are significantly lower for higher SEER units, effectively decreasing the total cost over the course of its life. Higher SEER rated units are especially advantageous in warmer climate zones.

Install the Right Air Conditioner for Your Home

The capacity of your AC unit is an important factor for the energy consumption of your cooling system. While the efficiency of your air conditioner is commonly measured by its SEER rating, it is also based on the size of the unit. In the U.S., air conditioner sizes are rated in Btu (British thermal units) or in tons. The size of a new AC unit must fit the size of your home. A smaller unit is usually less expensive and uses less energy to operate than bigger units with the same SEER rating.

Under-sized AC units may not provide sufficient cooling. Over-sized air conditioners are noisier, waste energy and provide inadequate temperature control and dehumidification of your home. An incorrectly sized AC unit will increase your electricity consumption and your energy bill. According to the U.S Environmental Protection Agency’s (EPA) Energy Star program, an improperly sized air conditioning system can reduce the system performance by up to 30%.

While the capacity is generally based on the size of your home, there are other factors that influence the required size such as the local climate, the insulation standard of your home, the condition of your ductwork and other variables. A right-sized air conditioner increases the efficiency of the unit, regardless of its SEER rating.

In many cases, the existing AC units are already oversized and should not be replaced with a same-size model. Before changing your air conditioner, have a professional technician conduct a load calculation to determine the correct size for your new system. To save money on your energy bill, it’s also important to choose the right type of system. While packaged AC units are smaller and cheaper to install, split systems are more energy-efficient and come with higher SEER ratings.

Rebates and Incentives for New Air Conditioner

With the purchase of AC units with high SEER ratings and especially of ENERGY STAR rated devices, you’re often eligible for rebates or incentives. Many utilities offer rebates and other discounts for installing new energy-efficient heating and cooling equipment and other energy efficiency improvements. In some areas, you can also benefit from municipal or state tax credits.

Additional Benefits of Changing Your Air Conditioner

Replacing your AC system has more benefits in addition to saving money on your energy bill. New equipment is typically less noisy and has improved controls such as smart thermostats. Replacing your air conditioning unit also reduces repair costs, improves the airflow and increases the indoor air quality in your home.

While a new AC unit significantly lowers your energy bills, a few more improvements can further lower your bill and increase the comfort in your home. While you’re upgrading your system, consider installing automation for your air conditioning system such as a programmable or smart thermostat. To increase your savings, consider a zoned system to regulate the temperature in different areas of your home independently. This will further lower your electricity bill as well as maintenance and repair costs.

Maintaining Your Air Conditioning System

Maintaining your air conditioner as recommended by the manufacturer will keep your system running at peak performance. A well maintained and clean system will use less energy and increase the overall life of your equipment.