Yearly savings with a heat pump
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How a heat pump saves energy
A furnace makes heat by burning fuel or running electricity through a resistance element – at best, one unit of heat for each unit of energy. A heat pump moves heat from the outdoor air into your home using a refrigerant cycle, delivering two to four units of heat for each unit of electricity. This ratio is the coefficient of performance (COP). In summer the same unit runs in reverse as a high-efficiency air conditioner.
Heat pump cost = heating load (BTU) ÷ 3,412 ÷ seasonal COP × electricity price
Cost per million BTU of delivered heat
| System | Fuel price | Efficiency | Cost per MMBtu |
|---|
| Natural gas furnace | $1.40 / therm | 95 % AFUE | ≈ $14.70 |
| Propane furnace | $2.80 / gallon | 95 % AFUE | ≈ $32.20 |
| Oil boiler | $3.90 / gallon | 85 % | ≈ $33.10 |
| Electric resistance | $0.17 / kWh | 100 % | ≈ $49.80 |
| Heat pump (COP 2.6) | $0.17 / kWh | 260 % | ≈ $19.20 |
Heat pumps are almost always cheaper than propane, oil and electric resistance heat. Against low-cost natural gas the result depends on local prices and the heat pump's efficiency – which is why this calculator shows a break-even electricity price.
Heat pumps in cold climates
A heat pump's capacity and efficiency fall as outdoor temperatures drop. Modern cold-climate heat pumps with variable-speed compressors keep working efficiently well below freezing, many down to −13 °F (−25 °C). In very cold regions, a dual-fuel system pairs a heat pump with a gas furnace that takes over in the coldest hours.
Ratings to compare
- HSPF2: seasonal heating efficiency; divide by about 3.4 for an approximate seasonal COP.
- SEER2: cooling efficiency.
- Capacity at 5 °F and the ratio to rated capacity, for cold climates.
- Variable-speed (inverter) compressor for comfort and efficiency.
Before you switch
Have a contractor perform a room-by-room load calculation, check that ducts are sized and sealed properly, and ask about electrical panel capacity. Improving insulation and air sealing first reduces the heat pump size you need. Federal, state and utility incentives change frequently – check what's available in your area before signing.
Frequently asked questions
Is a heat pump cheaper to run than a gas furnace?
It depends on local gas and electricity prices. Against propane, oil or electric heat a heat pump is almost always cheaper; against cheap natural gas it can be close.
How much does a heat pump save per year?
Switching from electric resistance or propane heat often saves $800 – $2,000 a year; from natural gas, savings range from negative to several hundred dollars.
Do heat pumps work in cold weather?
Yes. Cold-climate heat pumps keep heating efficiently well below freezing; backup heat may run in extreme cold.
What does HSPF2 mean?
Heating Seasonal Performance Factor 2 – seasonal heating output in BTU per watt-hour of electricity. Higher is better.
How long does a heat pump last?
Typically 12 – 15 years, similar to central air conditioners.
About PumpPayback
PumpPayback is an independent, free calculator comparing the running cost of heat pumps with furnaces and boilers. Heating loads are estimated from home size and climate; an energy audit or Manual J calculation gives precise figures. We are not an HVAC contractor, utility or manufacturer.
Every formula on this page runs entirely in your web browser. The numbers you type are never uploaded, stored or shared. Our goal is simple: give you an honest starting point so you can compare product specifications with confidence and avoid paying for capacity you do not need – or buying something too small to do the job.
The methodology combines widely published engineering rules of thumb, manufacturer data sheets and the electrical code practices that installers use every day. We review the assumptions regularly and update the calculator when typical product specifications change.
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Last updated: October 28, 2026
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