Heat pumps versus furnaces: compare the real running cost

What a heat pump actually does

A heat pump moves heat between outdoors and indoors using a refrigerant circuit. It can heat in winter and reverse direction to cool in summer. The coefficient of performance, or COP, compares heat delivered with electricity used at particular operating conditions. COP 3 means three units of heat for one unit of electricity. A seasonal average is more useful for annual costs than one favorable laboratory point.

Ducted equipment distributes conditioned air through the home’s ducts. In a house with sound, correctly sized ducts, this can be a practical replacement for aging heating and cooling equipment. Leaky or restrictive ducts deserve attention in the quote; a high-efficiency outdoor unit cannot fix poor distribution by itself.

Work out the fuel-price break-even point

Use an illustrative electricity rate of $0.16/kWh and a seasonal COP of 3. Each delivered kWh of heat costs $0.16 ÷ 3 = $0.0533. At $1.60 per therm, a 95%-efficient gas furnace delivers approximately 29.3 × 0.95 = 27.835 kWh of heat per therm, costing $0.0575 per delivered kWh. The heat pump is slightly cheaper in this example.

The break-even COP is electricity rate × 29.3 × furnace efficiency ÷ gas price. Here it is about 2.78. Below that effective COP, gas has the lower variable heating cost at these assumed prices. Add fixed gas-service savings only if you will actually disconnect gas service; keeping a gas range or water heater may leave the charge unchanged.

Cold weather, backup heat and sizing

Request a room-by-room heating and cooling load calculation and the selected equipment’s capacity at your local winter design temperature. Nominal tonnage alone does not establish that it can carry the house on a cold night. Ask the installer to explain defrost operation, electric resistance backup and any furnace switchover settings.

For sensitivity analysis, try seasonal COP values of 2, 3 and 4 with your own fuel prices. If the result swings from saving money to costing more, get a more detailed operating-cost model before committing. Keep cooling savings separate so that a reduction in summer use is not accidentally presented as a winter heating improvement.

Judge the upgrade cost fairly

If both the furnace and AC are near replacement, compare the heat-pump proposal with the cost of the replacement equipment you would otherwise buy. If your existing system has years of useful service left, the full early-replacement cost is the relevant decision. These are different payback questions.

Ask what labor, electrical work, duct repairs, controls and commissioning are included. Document filter access and local service availability. After installation, compare weather-adjusted energy use and comfort, rather than one warm winter’s bill with one cold winter’s bill.

Before you request a quote or buy

• Room-by-room load calculation and matched equipment model numbers
• Capacity and efficiency at low outdoor temperatures
• Backup-heat and thermostat control strategy
• Itemized electrical, duct and commissioning work
• Seasonal cost comparison using your actual marginal fuel prices

Frequently asked questions