To calculate heating cost, multiply the home’s square footage by the local Heating Degree Days (HDD) and the cost per therm of the chosen fuel, then divide by the system’s efficiency factor. For example, a 2,000 sq. ft. home in a region with 2,000 HDD using natural gas at $1.50 per therm in an 80% efficient furnace would cost: (2,000 × 2,000 × 1.50) / 0.80 = $7,500 annually.

Heating cost calculation hinges on HDD, a measure of temperature deviations below 65°F over a heating season. The U.S. Energy Information Administration (EIA) reports the average HDD for the contiguous U.S. is 2,000, though this varies by region. Square footage determines heat loss, with EIA data showing homes lose approximately 0.015 BTU per sq. ft. per HDD. Fuel type affects cost per therm: natural gas averages $1.50–$2.00, propane $2.00–$2.50, and electricity $0.08–$0.12 per kWh. Efficiency factors range from 60% (older oil furnaces) to 98% (modulating gas furnaces). Insulation quality and windows also influence HDD requirements, as per the Department of Energy, which estimates well-insulated homes reduce heating needs by 15–30%. For instance, a home with R-30 attic insulation uses 20% less energy than one with R-13. EIA’s 2022 report highlights that 72% of U.S. households use natural gas or electricity for heating, with average annual costs of $1,200 and $1,500, respectively. By optimizing HDD through weatherization and selecting high-efficiency systems, households can cut heating costs by 20–40%, saving $300–$600 annually.