oil furnace replacement

When you’re considering the replacement of an oil furnace in Canada, there are a number of aspects that you need to know about, each of which has an effect on the overall price. In this article, we’re giving you the details of the costs and what affects them. We’ll also discuss the installation costs of a new oil furnace.

Oil Furnace Unit Costs in Canada

Understanding the oil furnace cost, efficiency ratings, and heating capacity of various brands is essential when considering switching to an oil furnace from a natural gas furnace, a propane furnace, an electric furnace, or any other heating system. All of these things have a major impact on how much the furnace will cost initially. Here is a comprehensive price comparison across different brands, their furnace efficiency levels, and capacities:


The cost of oil furnace units by Brands


Typically priced between 2,400 and 7,300 CAD, Armstrong oil furnaces are renowned for their affordability and dependability. This pricing range covers entry-level and premium models within their respective categories.


This high-end manufacturer offers models ranging in average cost from 2,800 to 6,000 CAD. One defining feature of Carrier furnaces is their state-of-the-art technology and energy efficiency.


If you’re looking for a furnace that strikes a nice balance between efficiency and performance, choose Lennox. Their models usually cost 3,200 to 6,500 CAD.


Rheem oil furnaces provide a great value for the money, costing anywhere from $3,000 to $7,000 CAD.


Another popular brand, Trane, offers furnaces for 2,800 to 6,400 CAD. Trane products are known for their durability and effectiveness.

Efficiency Ratings and Costs

An AFUE rating shows what percentage of fuel is used to generate heat. Enhanced efficiency typically less energy costs and results in lower energy bills over time, making a higher initial investment worthwhile:

Standard Efficiency (80%-85% AFUE):

A typical efficiency model (80%–85% AFUE) is most likely the best option if you’re looking for a more efficient furnace, but are on a limited budget. Standard oil furnaces typically cost between $2,500 and $4,500 CAD.

High Efficiency (85%-90%+ AFUE):

Modern technology used by models with high energy efficiency ratings (85%-90%+ AFUE) lowers fuel consumption and ensuing energy bills, making them more expensive than models with lesser ratings. A normal price range in Canada is between $7,000 and $10,000.

Heating Capacities and Associated Costs

Before you choose a furnace size in British Thermal Units (BTU), measure the square footage and insulation level of your property. The capacity is a key component in deciding the price since larger furnaces cost more due to their increased heat production:

Small Homes (Up to 1,500 square feet):

Furnaces designed for smaller homes often have lower BTU ratings and range in price from 2,500 to 5,000 CAD (brand and efficiency dependent).

Medium Homes (1,500 to 3,000 square feet):

Homes with a medium floor plan, ranging from 1,500 to 3,000 square feet, require a furnace that is priced between $3,000 and $6,500 CAD.

Large Homes (Over 3,000 square feet):

Over 3,000 square foot homes frequently have higher BTU needs, which can result in higher energy bills. These furnaces range in price from $5,000 to $10,000 CAD; more efficient models fetch even higher prices.

New Oil Furnace Installation Costs in Canada

Depending on the contractor's level of experience and the area in which you live, the price of labor to install and replace an oil furnace can range substantially. You might find better deals in cities where there are a lot of HVAC businesses. Oil furnace replacement costs may be greater in more remote or rural locations owing to higher travel expenses and a potential shortage of service providers.

  • Urban Labor Costs: Usually priced between $75 and $150 CAD per hour.

  • Rural Labor Costs: The extra logistical work required in rural areas might drive up labor costs by 20% to 50% compared to metropolitan rates.

Costs could vary depending on how simple or complicated the installation process of the new furnace is:

Standard Replacement:

Installation is typically easier and less expensive for a standard replacement furnace if it can be linked to the existing ductwork and oil tanks without any alterations. CAD 500 to CAD 1,500 is a typical cost to install for this situation. The cost to install natural gas furnaces, in comparison, will be less than an oil furnace or propane furnaces because they don't need an oil storage tank.

Complex Installations:

The cost may increase when brand-new ducts are required or when the current ducting and oil tank need major adjustments. When upgrading an older home to meet modern codes or replacing an outdated furnace with one that is smaller or less powerful, this kind of intricacy is common.

In addition to the oil-burning furnace itself, there are a number of necessary components for installing an oil furnace:

Oil Tank Installation:

If age or other circumstances necessitate you to replace your old oil tank, you ought to estimate between $1,000 and $2,500 CAD. The price includes the tank and the installation labor.

Ductwork Modifications:

To make changes to existing ductwork or to install new ducting, you may expect to pay anywhere from 15 to 40 CAD per linear foot. The complexity of the ductwork's integration with the new system and its total length determine the total expenditures.

Electrical Work:

Additional electrical work may be required to install the new system, particularly if the old furnace is very old and has faulty connections.

Additional expenses may arise from the necessity to remove the existing furnace. Disconnecting and properly disposing of the previous unit are part of this process. Price differences may occur due to:

  • Size and Type of Old Furnace: It may be more difficult and costly to remove larger and older furnaces.

  • Environmental Regulations: The removal of asbestos and other hazardous materials from an older system would necessitate specific methods of disposal, which will drive up the associated expenses.

To make sure the work conforms with building rules and safety standards, most localities require permits for the installation of oil furnaces. Anywhere from forty to three hundred Canadian dollars (CAD) is possible for land permissions. Further expenses may be incurred if a professional inspection of the installation is required to comply with local standards.

  • Permit Costs: Municipal fees and project scope determine the total cost of permits.

  • Inspection Fees: The cost to have an inspector look over the installation and make sure it complies with codes is based on an hourly or flat rate.

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For starters, we will show up on time with a fully stocked service van, eager to resolve your heating, cooling, plumbing or electrical problem.

Braeden RigbyBraeden Rigby
19:47 25 May 24
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premnath parthibanpremnath parthiban
14:52 23 May 24
I spent almost one year to find the best HVaC replacement company and finally landed with Comfort union .I initially thought it was a small job but then realized the magnitude of work and effort it goes into it ..Asif initially came to my house , explained to me everything in detail including what is code of guidelines expected by city of Calgary , that showed his knowledge on the whole process ..Then came his brother Moore for installation - you will never find such a wonderful person who knows in and out of the HVAC and moreover the most patient person I have ever seen .. he did the whole installation with absolute craftsmanship and love for the work he did .. the best part was his perfectness and every work he did was so perfect and tidy !Finally, came Khan ji - to do the final inspection to add perfectness over the perfectness carried by Moore .. He did inspection and made sure everything was 200% correct ..Overall , I would recommend comfort union over any other service provider …Replaced my furnace , water tank and my humidifier …
JJ YanJJ Yan
02:22 22 May 24
Muhamad and Darryl did an excellent job on installation of our new Bradford White 75 gallon water heater. Extremely professional and hard working. They not only just did the work, but also explained the procedure thoroughly and maintenance focus points. Kept the work place tidy and in order. Highly recommended to everyone. JJ
mr2008 2.0mr2008 2.0
04:08 12 May 24
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20:52 06 May 24
It was great to see a father and son team work so professionally in the delivery and installation of our new Bradford White water heater. Thanks team for a wonderful job.
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03:21 30 Apr 24
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00:15 22 Jan 24
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Operational Costs of an Oil Furnace

Fuel Costs

Fuel is the main operational expense of an oil furnace. Global oil markets and localized supply concerns can cause heating oil prices to change significantly: 

Price Variability:

Global crude oil prices, seasonal demand, and geopolitical events are some of the factors that might cause heating oil costs to fluctuate.


Regional Differences:

Local taxes, shipping expenses, and supplier availability can cause prices to vary between regions in Canada.

For instance, the most recent figures show that a liter of heating oil costs about $1.489 CAD. Still, this expense may vary, hence homeowners should monitor these changes to ensure that their heating costs are being properly controlled.

Efficiency and Consumption

An oil furnace’s fuel consumption and, by extension, its operational expenses are directly impacted by its Annual Fuel Utilization Efficiency (AFUE) rating:

High-Efficiency Furnaces

These days, most of the best oil furnaces can achieve an AFUE rating of 85% to 90%. This reduces waste by turning 85–90% of the oil into usable heat for the house.

Standard Efficiency Furnaces

Lower AFUE ratings (70–80%) indicate that older or less efficient furnaces use more fuel to provide the same amount of heat as newer, more efficient models.

Costs would look like this, for instance, depending on various furnace efficiencies, for a homeowner using 2,500 liters of heating oil per season:

85% Efficiency

Assuming all the oil is used for heating, the effective cost of heating would be roughly CAD 3,591.25 at CAD 1.69 per liter, assuming an energy efficiency rating of 85%. Lost energy accounts for the remaining 15%, costing homeowners around 633.75 CAD per year in wasted fuel.

80% Efficiency

With an efficiency level of 80%, the residence is heated with just 80% of the fuel cost, which results in increased wasted fuel expenses.

Annual Servicing

Maintaining an oil furnace efficiently requires annual servicing. Inspecting the oil tank, heat exchangers, burner, and furnace controls is a common part of this process, as is cleaning the unit and changing the filters.

Repair Costs

Depending on the nature of the problem, repair expenses can range substantially. Repairs are common whether it’s a broken burner, a leaking oil tank, or a simple replacement of worn-out components like fans and filters.

Regular maintenance could cost anywhere from $200 to $500 CAD each year, with repair expenses varying in magnitude and frequency.

Maintenance and Repair

To keep an oil furnace running efficiently and burning fuel more reliably, which affects operational costs, regular maintenance, and periodic repairs are critical:

Potential Rebates and Incentives

In Canada, understanding the world of rebates and incentives might help to lower the initial cost burden of replacing an oil furnace. Numerous federal, provincial, and local initiatives are available to homeowners to help with the initial outlay for energy-efficient heating systems.

Federal and Provincial Incentives

Federal Rebates:

Homeowners in Canada can get incentives to install high-efficiency heating systems and other energy-saving upgrades through programs like the Canada Greener Homes Grant.

Provincial Programs:

Apart from the federal incentives, many provinces offer their own rebate schemes. High yearly fuel utilization efficiency ratings, for example, qualify oil furnaces for Efficiency Nova Scotia incentives, which promote the construction of more energy-efficient heating systems.

Local Utility Rebates

Local utility companies often provide further incentives for energy-efficient improvements. These incentives usually involve large reimbursements for installing high-efficiency oil furnaces; yet, they do differ depending on the locality and utility company. Contacting their local utilities is how homeowners can find out about these incentives.

Long-term savings benefits of a high-efficiency oil furnace

Despite the larger initial investment compared to normal versions, a high-efficiency oil furnace is more cost-effective in the long term. This is why:

Modern, high-efficiency oil furnaces use less fuel to provide the same amount of heat as their earlier, less efficient counterparts (AFUE rating of 85% or more). Fuel cost savings are a direct result of this efficiency, which can be especially noteworthy considering the unpredictable nature of oil prices.

High-efficiency furnaces not only save money on heating power but also benefit the environment by using less fossil fuel and emitting fewer pollutants. This problem is getting more important as carbon pricing schemes are put in place all around Canada. These mechanisms have the ability to raise the running costs of less efficient systems.

Modulating burners and variable-speed blowers found in modern high-efficiency furnaces reduce energy consumption and improve comfort levels throughout the home. The furnace will survive longer due to these technological developments, which means it will cost less to replace and may not need maintenance as frequently.


It is imperative to do a thorough cost-benefit analysis when thinking about replacing their oil furnace, accounting for the short- and long-term effects on your finances. Consulting with a professional HVAC company, like Comfort Union, may help homeowners learn about the benefits of various furnace types and overall costs. By doing so, they will be able to make a well-informed choice that considers efficiency, resources, and the environment.

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