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alt79

HVAC advice needed - Oil, Heat Pump, or Hybrid?

ALT79
11 years ago

Oil is expensive and a pain, so I'm trying to decide if I should replace my oil furnace with a heat pump (electric back-up), get a hybrid system (heat pump keeping oil as back-up), or just keep the oil and deal with it for this winter. (FYI, natural gas is not available in my neighborhood.)

Additional info -- I live outside of Baltimore, oil is around $4/gal (but who knows what it will do this winter), and my current electricity rate is $0.08/kwh. My house is a 1500 sq ft cape cod, plus basement, built in 1952. The current forced air oil furnace was installed in 1999. The oil tank is 275 gallons, in basement, and probably original to the house. Central A/C (10 SEER) was also installed in 1999. I just got new siding with Tyvek (to replace ugly uninsulated 1970's aluminum siding), and plan to replace the old, drafty front door before winter, so I'm hoping that helps a little with heating costs as well. I also have a wood-burning fireplace insert to add some heat, and electric baseboards in the basement.

Option 1: Keep current systems - I could probably get by with two oil fill ups ($2,000+), with using electric space heaters, baseboards, and wood. (Or do like last year, use wood and space heaters only, pay high electric bills, and freeze my butt off. And that was during a mild winter.)

Option 2: Hybrid system (HP with oil back-up) - best estimate so far is around $6,200 for 13 SEER 3 ton Carrier. Would still have to keep oil, but I think I could get by with a half tank ($500 or so) for the winter, unless we have a REALLY bad winter. Estimate includes adding a few ducts as well.

Option 3: All electric heat pump - My best estimate so far is around $9,500 for 15 SEER 3 ton Carrier. Extra costs are partly because an electrical system heavy up would be required. (I currently have a 150 amp panel.) Estimate also includes adding a few ducts, and removing the oil tank from the basement.

I think at a minimum I would like to tackle Option 2, because it should pay for itself within a few years, cutting way back on use of oil and electric space heaters. However, Option 3 is appealing because I really HATE having to deal with oil at all, and the oil tank is currently empty, so it's a good time to remove it.

I can't find any good calculators for electric auxiliary back-up vs. oil cost... would I save any money with electric back-up over oil? If oil stays around $4, I don't think savings would be all that great because I know electric back-up heat isn't cheap either.

One concern I have if I keep the oil is that I'm pretty sure the tank is original to the house (60 years). Should I be concerned about the age of the tank? There is NO WAY I would EVER pay to replace that tank with a new one, so if that was ever required, I'd end up converting to all electric anyway. Same thing goes if I would ever need to replace the oil furnace, but at 13 years old, I'm not really that concerned about the furnace yet.

Another concern I have is resale - if I ever want to sell my house, would all electric be more appealing to buyers than HP with oil back-up?

Any input would be appreciated! Thanks!

Comments (24)

  • SaltiDawg
    11 years ago
    last modified: 9 years ago

    Hello neighbor - I'm in Rockville. I suspect your elctric rate is well above $0.08/Kwh. Likely the >08 cost you cite is generation cost only.

    I have a two year old heat pump with oil as a back up. As expensive as oil is per gallon, I've only used about 70 gallons of oil since March of 2011. As you say, last winter was quite mild for you and for me.

    I do not regret replacing my oil furnace nor do I regret the decision to replace the old A/C system with a heat pump. I have the option of heating either with electric heat pump OR with oil furnace.

  • neohioheatpump
    11 years ago
    last modified: 9 years ago

    You should most definitely replace your old A/C with a new heatpump. I would personally go with the highest efficiency single stage. Its up to you whethor or not to keep the oil as backup. Even with not-so-cheap electricity its gotta be much cheap than oil when above 25 degrees outside.

  • weedmeister
    11 years ago
    last modified: 9 years ago

    I would think that you would be danged lucky to pay only 8cents/kwH in MD. I would expect nearly twice that amount.

    If doing a HP, don't go less than a 15SEER and look for a good heat number (HSPF?).

    I suspect that both fuel oil and electricity prices will keep rising. Wouldn't surprise me to see $5/gal by the end of this year.

    There are a surprising number of homes built around that time frame in the Mid-Atlantic that use oil. I'm not sure how that affects resale. I would like to think that having both HP and oil would be better to potential buyers than HP alone.

    Is it possible to upgrade the efficiency of the oil burner while doing this upgrade?

  • ALT79
    Original Author
    11 years ago
    last modified: 9 years ago

    Thanks to everyone for the advice!

    I did check my electric rates, and I was only quoting supply charges. I have an alternate supplier, and am paying $0.0789, guaranteed through May 2013. BGE distribution charges add up to about $0.035, making the total about $0.114. So it's higher than 8 cents, but still not terrible. Of course no one knows what prices will do, but I would think electricity prices are going to be more stable than oil prices.

    Anyway, I am planning to get a couple of more estimates before I make any final decisions. I'm kind of leaning towards a hybrid system at this point because I'm not sure the extra cost to get rid of the oil completely will be worth it.

    I know it would ideally be better to go with a higher efficiency HP, but I've been told that I can only get 13 SEER if I get a heat pump keeping oil as back-up. I'm just wondering if there's really going to be a noticeable difference between 13 and 15 SEER? (I'm ruling out higher SEER than 15 due to cost. The 20 SEER Carrier Infinitiy was going to cost 13.5K, and that's way more than I'm willing to spend at this point. I feel like it would take way too long to recoup that cost.)

    If I keep the oil as a back-up, I don't plan to upgrade the oil burner. The furnace isn't that old, and this is really just about getting through the next 5 years or so, because I'm not really sure if I want to stay in this house much longer than that. If it ever came down to having to replace the furnace and/or oil tank, I would probably opt to convert to all electric at that point.

    Thanks again! If you have any additional input, just let me know!

  • david_cary
    11 years ago
    last modified: 9 years ago

    Of course you can get higher seer keeping oil as a backup unless there is some weird problem in your situation. I have seer 15/16 with NG backup.

    The things that make higher seer equipment pay off are high electricity rates, heat pump in colder area, and old houses.

    Sounds like you should get a pretty high seer system especially if you are almost guaranteed to have much higher electricity rates moving forward based on your market.

    At $.11 a kwh, electric backup is about 20% cheaper than oil assuming you have a 82% furnace (just the default entry).

    There is a noticeable difference between 13 and 15 seer. If you have the money or access to cheap credit, you would probably be better off getting the higher cost Carrier. But it does depend on how warm you want to be and how long you plan on living in the house.

    I would think that $3000 gets you comfortable with oil. A heatpump might get you to $1800 but the high seer Carrier might get you down to $1000 assuming it is the Greenspeed.

    Higher seer also saves with a/c and higher seer equipment often has a better warranty and is better built. In general, you should probably get a unit with demand defrost, which means if you are going Greenspeed, you would be better off with Trane or other brand than Carrier.

  • SaltiDawg
    11 years ago
    last modified: 9 years ago

    "BGE distribution charges add up to about $0.035, making the total about $0.114"

    Hi again, neighbor. You're likely still not reading your electric bill to include all taxes, surcharges, etc. I suspect you are paying north of 14 cents per Kwh.

    Also, be careful of using percentage savings on oil due to using electricity as a backup. I've only used 65-70 gallons of oil since March of 2011 - yes last winter was quite mild.

    Even at $4 per gallon that was less than $300 in oil used - I believe you said you spent $2000 on oil just last winter.

    I don't know about your home's construction, age, etc, but my place was built in 1973 and has original windows, never been sealed, but has additional blown insulation in the attic.

    I would never consider increasing my electrical service and paying to power strip heaters IN MY SITUATION as the payback compared to oil is just not there because of the low usage of oil. 20% savings of $300 oil cost is a pretty small payback.

    YMMV

  • david_cary
    11 years ago
    last modified: 9 years ago

    Agreed that the cost for electric backup doesn't make any sense from a payback standpoint if oil is working fine. OP had originally asked that question (cost of oil vs electricity).

    salti - that was a small oil year I am sure. I think I used $50 in NG and since NG is so cheap I upped the switchover to 40 degrees. Since oil is so expensive, a transition at 20 probably makes sense. Not many nights a year.

    But the OPs house sounds nearly uninsulated so that may change the math.

  • mike_home
    11 years ago
    last modified: 9 years ago

    You need to factor in the annual maintenance of the oil furnace if you decide to keep it. Also investigate whether you house is more attractive for resale with and without an oil furnace.

  • weedmeister
    11 years ago
    last modified: 9 years ago

    The difference between 13 and 15 SEER is about 8% on your electric bill.

    But if you're going to move in 5 years or less, you might not make back the difference. Without looking at pricing, I would not expect the difference to be all that much in the same product line.

  • ALT79
    Original Author
    11 years ago
    last modified: 9 years ago

    Hello again,

    @ Saltidawg:

    I made sure that I included everything on the electric bill charged per kwh. The only thing not included was a flat $7.50 customer charge. For example, my August bill was for 1903 Kwh (actual usage) * $0.114 = $216.94 + $7.50 = $224.44. Actual bill was $224.66 (assume rounding differences). I live in Baltimore County. I have all electric appliances, hot water heater, dryer, etc., and also have a pool, so if the summer usage seems high for a house my size, that's why.

    I agree that percentage savings going with electric back-up might not be a large savings over oil back-up, but peace of mind is also a factor. I hate having to maintain the oil furnace, making sure the tank is full enough (and having a broken gague so you never really know how full it is), relying on deliveries, having to get the furnace restarted if oil runs out, etc. I know HP's are not maintenance free, but it's certainly easier to deal with. We're also pretty much maxed out on the electrical panel, so it might be good to upgrade it anyway in case more power is ever needed for something else. That being said, I still haven't completely ruled out oil back-up.

    The $2,000 I mentioned was not what was actually spend last year, but just a guess at what I think we could get by with (being frugal with it, and using some wood also). We haven't lived through a full winter with oil, so I don't have any actuals. We moved into this house around Feb/Mar 2010, and made it through the tail end of that winter using the oil that was already in the tank plus additional 100 gallons, and then let the oil run out (which, yes, I know you shouldn't do). During winter 2011/2012 we went the "Pioneer Route" and got no oil, insead using the wood stove and electric space heaters/baseboards for heat. Despite being a mild winter, it was AWFUL... it was hard to keep the house continually warm, and yet electric bills were still pretty high to be so uncomfortable. During a "normal" winter, we probably wouldn't have made it and would have had to cave in and get oil.

    @ david_cary:

    I think there is some kind of unique problem with my setup, because both companies that were out for estimates so far told me that I was limited with efficiency of the HP if I keep the oil as back-up. I think it had something to do with not being able to accommodate a variable speed blower... I'm not sure WHY that would be the case, but that's what I was told. I'll check into that further. If I am limited to 13 SEER keeping oil as back-up, then that might be another argument in my case to get rid of oil.

    As far as insulation issues, I'm sure it's not the greatest. I don't know what the R-Values are. I believe my utility company offers some pretty low cost energy check-ups and audits, so I should probably look into that. Windows have been replaced at some point, but not sure when (I'm guessing in the 80's or 90's?). The front door is old (original to house) and drafty in winter, so I plan to replace that in Sep/Oct this year, and hope it will help somewhat. The fireplace insert is in the living room when you first walk into the house, so I think a lot of the heat produced from that was going right out the front door last year.

    I'm not necessarily set on Carrier, and plan to get some additional estimates as well.

    @ mike_home:

    Maintenance is certainly a consideration... that is one of my worries, that something will go wrong with the furnace or oil tank. I wouldn't want to put any money into repairs for the oil system... I'd rather use that money to get off oil. I don't know about resale... I would prefer all electric (assuming gas is unavailable), but don't know how other people feel. I would guess oil is going to become less and less desirable as time goes on.

    @ anyone:

    One other thought... would it be worth it at all in my situation to look into Geothermal? I had pretty much ruled that out due to the expense. However, there is a 30% federal tax credit, and I also found out that Baltimore County gives a $5,000 credit, and Maryland gives a $3,000 credit. That would mean a $20,000 Geothermal system would only cost a net of $6,000... even at $25,000, net costs would come out to $9,500. Of course I'd have to see what the actual costs are for installation, but it seems like it wouldn't cost more than a traditional heat pump when you factor in all of the credits.

    I think geothermal makes sense for new construction (especially when NG isn't available), but I'm just not sure it makes sense in an old house with insulation issues. A big disadvantage is having to deal with drilling/tearing up the yard, and I'm also concerned about maintenance issues. I know geothermal systems are actually supposed to last longer and have fewer problems than conventional heat pumps, having no outside compressor... but I'm just concerned that since there don't seem to be a ton of companies around here who service geothermal, there could be more issues (than with an air source heat pump) if something did break.

    Thanks everyone!

  • SaltiDawg
    11 years ago
    last modified: 9 years ago

    Not sure what all the maintenance with oil that you are alluding to.

    I replaced my 37 year old oil furnace] two years ago when I replaced my ~16 year old A/C with a Heat Pump. The only maintenance was a once a year cleaning with a filter change and efficiency test.

    Oil was delivered based on degree days and my prior usage.

    I had the infrastructure in place - oil tank and piping - and would have cost me a fortune to upgrade my home electric service to accommodate 15-20Kw(?) of backup electric heater.

    I get it that last year was a mild winter but my oil usage was down dramatically from two years prior as was my electric usage.

    You may ask, how is it possible that my electric usage was down when I was now heating (largely) with the heat pump?

    simply that I also replaced my old electric hot water heater with an electric heat pump hot water heater which is saving my wife and I about $50 a month.

  • david_cary
    11 years ago
    last modified: 9 years ago

    The difference between seer 13 and 15 is more like 15% but it depends if you say "how much do I save" or "how much more does it cost".

    You don't need to be variable speed to be seer 15 but there could be other issues.

  • weedmeister
    11 years ago
    last modified: 9 years ago

    I meant electric bill savings not price.

  • david_cary
    11 years ago
    last modified: 9 years ago

    I also meant electric bill savings.

    Seer is roughly proportional or means to be. So Seer 20 costs 50% to run what a seer 10 would be.

    Reality doesn't always play out of course.

  • mike_home
    11 years ago
    last modified: 9 years ago

    "Maintenance is certainly a consideration... that is one of my worries, that something will go wrong with the furnace or oil tank. I wouldn't want to put any money into repairs for the oil system... I'd rather use that money to get off oil. I don't know about resale... I would prefer all electric (assuming gas is unavailable), but don't know how other people feel. I would guess oil is going to become less and less desirable as time goes on."

    Heating by oil is becoming less desirable. I personally would not buy a house which relied solely on oil heat. Do yo have any realtor friends? Ask them their opinion about the resale impact of keeping the oil heat back up. Oil heating requires a tank which has a potential of leaking. This is a big headache home buyers want to avoid. This is something you should consider when evaluating opiton No. 2 and 3.

  • ALT79
    Original Author
    11 years ago
    last modified: 9 years ago

    @ Saltidawg:

    I do see your point... I suppose yearly maintenance is not that big of a deal, and it would be a good idea to have a yearly tune-up/inspection with any type of system anyway. Perhaps "maintenance" is not the right term for all my concerns... it's also the "inconvenience" factor, having to rely on deliveries and worrying about the tank running dry. I know that can be avoided by coordination with your oil delivery service, but I don't like getting on automatic fill-up plans when fill-ups cost so much. (If just using oil as back-up, it would be less of a concern though.) I'm also thinking about long-term costs, such as if the furnace ever had to be replaced (I'm guessing that would be 4-5K?), or if the oil tank had to be replaced (I'm guessing that would be about 2K?). My furnace should be ok for a while, but the tank is 60 years old, so I feel like I could have problems with it. If I consider keeping oil, I suppose I should have the tank inspected. It also has a broken gauge so that should be fixed too. (If I just got rid of the oil, I could avoid that.)

    It's about about $3,000 more to go with HP with electric back-up than HP with oil back-up. The additional cost isn't just for the electrical upgrade... it also includes going 15 SEER vs. 13 SEER, additional equipment and labor, and removal of oil tank. I would have a higher SEER, sufficient electrical power if it's ever needed for anything else in the house, the tank out of my house, never having to worry about it leaking... also approx. ~20%-ish saving over oil back-up heat if oil stays at $4/gal, potentially more if oil prices go higher. $3,000 isn't a trivial amount, but I feel like once that conversion is done, all you ever have to worry about is one system, the heat pump... no oil furnaces, no oil tanks... so over time, I feel like money would be saved. (Correct me if I'm wrong... an HP with oil back-up should have about the same lifespan as HP with electric back-up, shouldn't it? There's additional electrical components to worry about, but I feel like it's usually the compressor that craps out over time, and compressor usage would be about the same either way, wouldn't it?)

    That being said, you do have some good points, and I will take them into consideration. If my oil tank is ok, maybe it isn't worth the extra 3K at this time to get rid of oil. If it's not, well then I'd rather take the 2K that would have to go to replacing the oil tank, and put that towards getting rid of oil.

    @ david_cary and weedmeister:

    Thanks for the info. I'm still a little confused about actual percent savings, but I think if I'm going to go through with this, it would be ideal to go with a 15 SEER, which I may not be able to do that if I keep the oil. Since my current A/C unit is 10 SEER, I think I would save a decent amount on A/C bills with 15 SEER. (I wish I knew how much of my electric bill actually goes to A/C and what goes to other stuff, but I don't really have a way to tell that.)

    @ cindywhitall:

    HP with oil back-up would not have electric back-up strips. If the oil craps out, then it would come down to repairing/replacing the oil furnace, adding electric back-up later, or adding some other back-up later. If I wanted to keep oil AND add electric back-up also, it would cost more than the current higher cost route, and I'm not sure it would even be possible.

    Oil prices to me seem a lot more unstable than electricity, but that's anybody's guess.

    Yes, I know I need to make a decision soon, before it gets cold. I know I can easily get through until mid-to-end October without heat, but not beyond that.

    My electric bill doesn't have the costs on one line either... I added up all the "per kwh" usage charges, and that's where I got the $0.114. My August bill was for acutal usage of 1903 kwh. Does your bill have gas on it too? (BGE puts electric and gas both on the same bill, but since I don't have gas, my bill only includes electric.) I don't know how NJ's rates are, but MD (BGE) did have a pretty big price increase around 2007/2008... however, since then electric rates have come down every year. I use an alternate supplier for additional savings. Rates are only guaranteed until May 2013, and they'll be announcing future rates this fall. My winter rates with the alternate supplier are the same as summer rates.

    FYI - I am female. My husband doesn't think it's necessary to do an HVAC upgrade, so that's why I'm looking into it. He thinks we should either use only wood and spaceheaters (which we did last year and was AWFUL), or get some oil, but try to make one fill-up (~250 gal, $1000) last all winter, which is unrealistic. Besides the oil issue, we have some other HVAC issues that really should be addressed (we should have some additional ductwork, the A/C doesn't work well on the 2nd floor, etc.), so I think it's really necessary to do something NOW.

    @mike_home:

    As mentioned, the tank is one of my concerns, being 60 years old. I wouldn't buy (another) house with all oil either, and if I could go back in time, probably wouldn't have bought this one. BUT - I can't change that now, so here I am :)

    SO WHERE I AM RIGHT NOW: I know oil alone for heating is not a good option, and something really should be done. I still need to get some more estimates, and I'm honestly not sure yet about keeping the oil as back-up or not. I don't see a big advantage to keeping oil, except less up front cost, and the off chance that oil prices could go lower one day (which I don't ever see happening). I could keep the oil as back-up now and look into other back-up sources later. I don't think we'd really need MUCH oil for back-up... I'm not looking for a toasty 75 degrees... more like 65 degrees most of the time is good enough. We also have the wood stove too. The only drawbacks to keeping oil are that we may only be limited to 13 SEER, and I'm worried about the condition of the oil tank... also it's a good time to remove the 60 year old tank NOW while it's empty... so it's a tough call. No one has commented on geothermal, but I may look into that too... doesn't hurt to get an estimate, right?

  • david_cary
    11 years ago
    last modified: 9 years ago

    If your August bill was 1900 kwh, what was your May bill?
    The difference should be a/c.

    I think all your logic makes sense. For $3000 and all you get for that, you probably should switch off oil completely. IMO

  • SaltiDawg
    11 years ago
    last modified: 9 years ago

    "For $3000 and all you get for that, you probably should switch off oil completely. IMO"

    david_cary,

    In the OP's Baltimore and my Rockville, Maryland, it will likely take a decade or more - if ever - to recover that $3000 in utility costs.

    I am not an advocate of oil, but if gas is not available and electric rate is high and if the oil infrastructure is already in place, one simply should "do the math" and make an informed decision.

    The OP seems very much afraid of oil... but paying to have the tank removed and for removing fill and vent piping are not the only solutions.

    I've had oil heat for decades in many homes, including 23 years in my present location, and running out of oil has never even crossed my mind.


    In this part of the country having a heat pump with electric strip heaters is not the norm on houses more than 10 years old. Indeed, many people hold the belief (right or wrong) that a heat pump is not a good way to go as the sole source of heating during a cold weather snap.

    Even with as much as I've learned from you guys on this forum, I would think long and hard before even considering buying a home here in MD with a heat pump with backup strip heaters as the sole source of heating.

  • weedmeister
    11 years ago
    last modified: 9 years ago

    Fuel oil and electricity rates are not directly related. There are few power plants that use fuel oil for generation. Nat gas would be a better fuel.

    I'm not sure about this but I think the only thing that can hurt a fuel oil tank is water getting inside. Otherwise it will sit quite contented for a long time.

    DC: we're probably using different numbers. I was using 4% per unit of SEER.

    As to a HP running the same amount of time using electric backup vs oil: well, not necessarily. With an alternate fuel as backup (oil, nat gas, propane), you get to set the temperature at which you switch over to the alternate fuel. You would do this based on the cost of the fuel versus electricity. With electric coils as the backup, you would run the HP longer into lower temperatures since it would pretty much always be more efficient cost-wise than electric coils (to the point where it stops producing enough heat).

  • cindywhitall
    11 years ago
    last modified: 9 years ago

    I would get the oil tank inspected. If it is solid then just keep it. Is there any way to reinforce it (like seal the seams from the outside?)

    If your electric rates could stay that low it would seem a great idea to get rid of oil, but look at my bill compared to yours for similar usage...that could happen to you and it wouldn't be good if it was a cold winter.

    I was like you, torn between 2 choices with a husband who didn't really care either way (though I'll hear it if my choice turns out bad!)

    You do have the wood stove to keep you going if something happens to the oil. With the heat pump you can just replace the oil tank with a smaller one if you had to. Is it an option to just replace the tank NOW with a smaller one outside (do they put them outside these days?). That will take away your worries about it. Get one with a gauge and you will know when you have to call for oil, plus the wood stove can get your through a day or two until delivery if necessary, plus the heat pump will do a lot of the work anyway. The furnace will be seeing less use so it might last good and long and you'll have peace of mind of 2 fuels to choose from in the future. I still remember when rates skyrocketed when I was young. We had all electric heat. My dad was the thermostat nazi in those days.......

    Guys here will sometimes give conflicting opinions. SOrt them out and take the advice that matches your needs. Good luck

  • david_cary
    11 years ago
    last modified: 9 years ago

    Salti - it wasn't the payback I was looking at. There was a desire to get off oil. Since the $3000 included a lot more than just electric strips, it seemed like a good deal.

    And taking a decade is actually quite a good payoff or ROI. When safe investments get 1.5%, you can tolerate a 30 year payback and still do better than T-bills.

    When there is a problem with the furnace or the tank, then the change pays off at over 100%.

    While a heatpump may not be the most desirable in the location for resale, it is probably better than oil. I personally would pay more in utilities just not to have oil in my house. There is that intangible which you may not agree with or see but it sounds like the OP does.

  • SaltiDawg
    11 years ago
    last modified: 9 years ago

    "While a heatpump may not be the most desirable in the location for resale, it is probably better than oil."

    The choices are heat pump plus oil in a home already equiped for oil with no gas available OR heat pump plus electric backup in a home needing infrastructure upgrade to support electric backup.

    If you are going to assume furnace failure, of course nothing looks good. My previous oil furnace was replaced at age 37 years with only annual preventive maintenance... it was still going strong.

    If you're going to assume the oil furnace fails, should you not also assume the heat pump will also?

    If the OP has a fear or elevated concern about oil - seemingly based on little or no prior experience, I would agree that maybe he should not consider oil as the backup and he should spend the money to accommodate electric backup.

    Again, payback be damned.

  • Phoenix1986
    11 years ago
    last modified: 9 years ago

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