Is it Worth it to Put in a Wood Furnace?

Upfront Cost

• A new wood pellet stove costs between $1,700 and $3,000 as of 2012, reports the U.S. Department of Energy. A stove designed to burn cord wood ranges from $650 to $1,200 as of 2012, according to the University of Maryland Extension. When choosing one of these indoor wood furnace options, meet with a reputable dealer who can help you size your unit correctly. As a rule of thumb, the U.S. DOE suggests that a 60,000 BTU stove can heat a house measuring 2,000 square feet; a 42,000 BTU stove can heat a 1,300-square-foot home.

  If you'd prefer a wood furnace that connects to home heating ducts, look for an outdoor wood furnace. These units start at about $5,490 as of 2012, according to Central Boiler.

Operating Costs

• To decide whether it's worth it to install a new wood furnace, consider the operating cost of your existing system as well as the upfront and operating costs of heating with wood. The average U.S. home requires 50 to 150 million BTUs of heat each year, according to the U.S. Forests Products Laboratory. Generating one million BTUs with a 78-percent efficient oil furnace costs $3,700 per year as of March 2013, according to the U.S. Energy Information Institute. That same million BTUs costs $3,528 to generate using a 98-percent efficient electric furnace, or $733 with an 82-percent efficient gas furnace. Assuming wood costs $200 per cord, it would cost $1,263 to generate 1 million BTUs with a 72-percent efficient wood furnace, reports the EIA. Of course, homeowners who cut their own firewood could greatly reduce this cost. Based on the U.S. average price of $250 per ton of wood pellets, a 78-percent pellet furnace would cost $1,943 per million BTUs. Given these figures, switching from an oil or electric furnace to a new wood stove could easily pay for itself in just a few years.

Considerations

• Oil, gas and other fossil fuels represent nonrenewable resources. When the existing supply of these fuels runs out, there's no way to make more. Given this relatively limited supply, the price of fossil fuels is likely to increase over the long term unless new supplies can be located. In addition to the cost benefits of switching to wood heating, wood offers greater price stability and reduced dependence on foreign oil compared to heating with fossil fuels.

Hidden Costs

• When considering a wood furnace, it's important to consider not only the financial costs of these units, but also the hidden environmental costs associated with burning wood. Wood smoke contains hundreds of compounds, many of which contribute to adverse health effects such as heart disease and asthma. In fact, some cities and states limit or prohibit the use of certain types of wood-burning appliances. Before you invest in a wood furnace, check with your local environmental department to ensure these appliances are permitted in your region. Homeowners who wish to reap the financial benefits of wood without the pollution may wish to consider pellet stoves, which produce less pollution than traditional wood stoves or furnaces. In fact, the EPA calls pellet stoves the cleanest solid-fuel burning appliance.