Not all of the energy potentially available in a ton of coal, a cubic foot of natural gas, or a gallon of oil ends up as usable heat in the home. Energy is lost in a number of places in the conversion and distribution process. The heating system efficiency is the ratio between the amount of usable heat produced and the amount of potential energy in the fuel.

A number of efficiency measures have evolved to allow useful comparisons to be made between systems. The three main types of heating efficiency are: Combustion (which looks only at the efficiency of the combustion process); Steady-State (the efficiency when the heating system is in steady-state operation); and Seasonal (the average efficiency over the entire season). This section describes the most commonly-used heating efficiency measures, illustrates how each is computed, and gives guidelines as to what is considered good.