What Makes a Heater Energy Efficient?

Walk into any shop or online store and you’ll see bold claims being made about how energy efficient heaters are. But what makes a heater energy efficient and what does it mean anyway? I’m sure most people think of saving money when they looking for an energy efficient heater, but be careful going down that past. An energy efficient heater doesn’t always mean it’ll save you money. Pellet heaters are about 90% efficient and electric heaters 100%. Which one is cheaper to run? In Tasmania it’s the pellet heater. There’s more to heater running costs than just energy efficiency. You also need to look at fuel cost and then you can work out how much the heater costs to run.

what makes a heater energy efficient
  • The cost-effectiveness of a heater is determined not just by its energy efficiency but also by the cost of the fuel it uses.
  • Despite having lower energy efficiency than electric heaters, pellet and wood heaters can be cheaper to run due to the lower cost of wood-based fuel.
  • Heat pumps have the highest energy efficiency levels, ranging from 200% to 350%, making them a great choice if cost and efficiency are your main concerns.

How Do Pellet Heaters Work?

If you aren’t familiar with how pellet heaters work, they are a space heater which burns wood that is compressed into pellets. The fire inside a pellet heater heats a heat exchanger which heats air that is blown out of the heater warming the room. They are kind of a cross between a wood heater, since they have the lovely warmth of a fire, and a heat pump, because they start and stop with the push of a button. So you get the best of both worlds, real heat and easy to start/stop, but none of the hassle, there’s no dealing with firewood etc. It’s this that makes pellet heaters so efficient for heating.

If you’d like to know more about the different types of pellet heater models out there, I’ve created a few good articles that may help. For those living in Tasmania please take a look at the top 5 pellet heaters in Tassie. Outside of Tasmania, I’ve got a best pellet heater in Australia article. I go through several different models of pellet heaters and I am sure you’ll find something there that interests you.

Understanding Energy Efficiency

When look at a heater and the energy efficiency rating you’ll usually see percentages used. Like pellet heaters being about 90% efficient and electric heaters 100%. What this means is the percentage of energy that is converted into heat. So, about 10% of energy contained within wood pellets is lost, meaning it’s not converted to heat. Where does it go? Usually it is lost out the flue as the heat escapes. An electric heater converts 100% of electricity into heat. So, to put it another way, if you spent $100 on wood pellets, you would only get about $90 worth of heat. The other $10 was “lost” or wasted during the process of turning wood pellets into heat.

The $100 you spend on electricity for your electric heater would give you basically $100 of heat. This is what you need to be careful of, especially when looking at electric heaters. Electric heater manufacturers run advertising material that highlights just how efficient their electric heaters are. 100% sounds impressive and it sounds like it’s the best you can get in energy efficiency. However, energy efficiency is only one part of the running costs of any heater. Before you buy a pellet heater or any heater, what does the fuel cost?

Cost of the Energy

This is where things can get a bit confusing, especially when comparing different types of heaters. Once you know the efficiency of your heater you need to figure out the cost of the “energy”. In Tasmania in 2023 it’s about 26 cents per kw/h. A 1000 watt electric heater would obviously cost 26 cents an hour to run and you’d get about 26 cents of heat from it as they are basically 100% energy efficient. Pellet heaters burn wood pellets to produce heat. I made another post on the running costs of a pellet heater but I won’t bore you with the details here. Basically, a pellet heater cots about 11.5 cents per kw/h and that includes the “lost” energy.

What that means is even though electric heaters are 100% energy efficient and convert more of the energy used into heat than pellet heaters, in reality pellet heaters are cheaper to run. How is that possible you may ask. It’s possible because the cost of energy for pellet heaters (wood pellets) is cheaper than the cost of electricity. Wood heaters are about 60% efficient. To calculate running costs of wood heaters you need to do something similar to what I did for pellet heaters, but to not bore you in Tasmania it’s anywhere from 8 cents to 11 cents per kw/h. Again, wood heaters are terribly inefficient, only 60% of the energy in firewood is converted to heat.

Hopefully now you can see the importance of the cost of energy AND energy efficiency. Wood heaters are 60% energy efficient but still cheaper to run than an electric heater. Pellet heaters are 90% and also still cheaper. Electricity is expensive and that’s why using an electric heater all the time will increase your power bill immensely during winter. If you take anything away from what I’ve said up until now, it’s don’t buy a heater, any type of heater, based purely on manufacturer or retailer bold claims about energy efficiency. You should be asking what the heater costs to run in dollars, not just the efficiency.

Energy Efficient Heaters

If all you care about is energy efficiency and by that I mean cheapest to run, then get yourself a heat pump. I’m a huge fan of pellet heaters and I think in a pellet heater vs wood heater vs heat pump showdown the pellet heater comes out on top but I understand some people don’t care what or how they get their heat, they just want it to be as efficient, meaning cheap, as possible. Heat pumps are extremely efficient even though the cost of electricity in most states around Australia is exorbitantly high.

Just to give you an idea, heat pumps range from 200% to 350% energy efficiency levels. This means that for ever $100 you spend on electricity to run a heat pump, you would get anywhere from $200 to $350 in heat. Sounds like magic, doesn’t it. I won’t get into how they work but you can see now that an electric heater at 100% efficiency with $100 on power only gives you $100 in heat. The same $100 spent to run a heat pump can provide over three times the heat output. If you live somewhere cold in Australia and just want cheap heat and a lot of it, get a heat pump.

Pellet Heater Energy Efficiency

As I already mentioned above, pellet heaters are about 90% efficient. This is much less than a heat pump 200% to 350% but this is why I said it if you don’t care about the “type” of heat and only want cheap heat, then get a heat pump. However, if you want real heat that warms you to the bone, then a pellet heater is, in my opinion, the best choice. In addition to the 90% efficiency from the heater, wood pellets don’t need to be dried, like firewood. This means if you burnt a tonne of wood pellets you’d get more heat from it than a tonne of firewood.

Wood heaters are terribly inefficient. The heater is typically 60% efficient, so you are already losing 40% of the heat you paid for out the chimney and not into your house. Then, you have firewood. Firewood that hasn’t been dried properly gives off less heat. This heat is lost as water in the wood boils off and doesn’t get turned into heat. So in addition to losing heat out due to wood heater inefficiency, you also lose heat due to how much moisture content there is in firewood. This is why wood heater manufacturers recommend burning firewood that has a moisture content of 20% of less. However, that 20% means you are losing 20% of the heat.

Summary of Heater Energy Efficiency and Pellet Heaters

There’s more to heater running costs than energy efficiency. Energy efficiency is only part of the puzzle. You also need to look at what the energy costs, like electricity and wood pellets. Pellet heaters are about 90% efficient, so you will get more heat from the money you spend. If you buy wood pellets today they can be burnt today as they don’t need to be dried, making it an energy efficient fuel. I understand pellet heaters may not be for everyone, but if more people knew how efficient they were and great the heat was, pellet heaters would be more popular in Australia than they currently are.


What does energy efficiency in a heater mean?
Energy efficiency refers to the percentage of energy that a heater converts into heat. For instance, pellet heaters convert about 90% of their energy into heat, while electric heaters can convert 100% of their energy.

Does a more energy-efficient heater necessarily mean it will save me more money?
Not always. A heater’s cost-effectiveness is not only determined by its energy efficiency but also the cost of the fuel it uses. Even if an electric heater is 100% efficient, it might be more expensive to run if electricity costs are high.

How do pellet heaters work?
Pellet heaters burn wood that has been compressed into pellets. The fire inside the pellet heater heats a heat exchanger, which in turn heats air that is blown out of the heater, warming your room. They’re convenient because they start and stop with the push of a button, and they don’t require dealing with firewood.

How does the efficiency of a pellet heater compare to an electric heater and a wood heater?
Though pellet heaters are only about 90% efficient compared to the 100% efficiency of electric heaters, they can be cheaper to run because the cost of wood pellets is typically lower than the cost of electricity. Wood heaters, on the other hand, are only about 60% efficient, yet they may still be cheaper to run than electric heaters in areas where firewood is relatively cheap.

What is the cost of running a pellet heater?
The cost of running a pellet heater comes down to the cost of the wood pellets it uses. In 2023 in Tasmania, for example, a pellet heater costs about 11.5 cents per kilowatt-hour to run.

How efficient are heat pumps?
Heat pumps are extremely efficient, ranging from 200% to 350% energy efficiency levels. This means that for every $100 you spend on electricity to run a heat pump, you could get anywhere from $200 to $350 in heat.

If I want the most efficient heater, which one should I choose?
If your primary concern is efficiency and cost, a heat pump is an excellent choice due to its high energy efficiency levels. However, if you want a heater that provides a warm and cozy ambiance, a pellet heater could be a better choice. Pellet heaters are about 90% efficient and provide a heat that many people describe as more ‘real’ or ‘comforting’ than other types of heaters.

Why do you recommend using dried firewood?
Dried firewood gives off more heat than wood that hasn’t been dried properly. When firewood with high moisture content burns, a lot of the potential heat is lost to boiling off the water instead of being converted into heat.

Is there anything else I need to consider when choosing a heater?
Yes, apart from energy efficiency and fuel cost, you should also consider the type of heat you prefer, the ease of use, and whether you are ready to deal with the logistics of storing and loading the fuel, especially in the case of wood and pellet heaters.

Why should I consider getting a pellet heater?
Pellet heaters are very efficient and produce a satisfying type of heat. They are easy to use and, unlike traditional wood heaters, do not require handling firewood. Wood pellets can be burnt as soon as you buy them as they don’t need to be dried, making them a highly efficient fuel.

Energy Efficiency Council – Heat Pumps