A heat pump can use less energy than a gas furnace and still cost more to run. The deciding factor is the price of each unit of heat delivered to your home—not the efficiency rating on either piece of equipment by itself.
That distinction matters most when a furnace is failing and a replacement decision is urgent. A mild winter, expensive gas, and modest electric rates can favor a heat pump. Cheap gas, high electric rates, and long stretches of freezing weather can favor a furnace. Insulation, backup heat, and the condition of your ducts can change the result again. The useful question is: what will each quoted system cost to heat this house through a typical winter?
Start with your bills, not national averages
Collect 12 to 24 months of electric and gas bills. Record usage as well as cost: kilowatt-hours (kWh) for electricity and therms for gas. Then find the rate you would pay for additional heating use. Include per-unit delivery and supply charges; leave out charges you would pay even if you used no energy.
For gas, don't mistake the total winter bill for furnace cost. Water heating, cooking, and clothes drying may also use gas. A practical first estimate is to subtract your average warm-weather monthly gas use from each heating-season month. If you heat water with gas, this is only an estimate—hot-water use can change by season—but it's better than assigning every therm to the furnace.
Check how your electric rate works, too. A time-of-use plan may make heat used on a weekday evening cost more than heat used overnight. A tiered rate may put extra heating use into a higher-priced block. If those details are unfamiliar, compare the parts of your electricity plan that change the price of additional kWh before doing the math.
Published averages can help you sense-check a quote, but they aren't your rate. The U.S. Energy Information Administration's residential electricity price data vary substantially by state; they cannot capture your utility's tariff or the hours when a heat pump would run.
Put both heaters on the same cost basis
Gas bills and electric bills use different units. To compare them, calculate the cost of delivering one million British thermal units (MMBtu) of heat at the heating equipment. This measures fuel and equipment efficiency on the same basis, before any heat lost through ducts. One therm contains 100,000 Btu, while one kWh of electricity contains 3,412 Btu.
| System | Cost to deliver 1 MMBtu of heat |
|---|---|
| Gas furnace | (10 ÷ AFUE) × gas price per therm |
| Heat pump | (293 ÷ seasonal COP) × electricity price per kWh |
AFUE is the furnace's annual fuel utilization efficiency, written as a decimal. A 90% AFUE furnace has an AFUE of 0.90. COP, or coefficient of performance, describes how much heat a heat pump delivers for the electricity it uses. A seasonal COP of 2.5 means it delivers about 2.5 units of heat for each unit of electricity consumed over the period being modeled.
For example, at $1.50 per therm, a 90% AFUE furnace costs about $16.67 per MMBtu of heat delivered. At $0.16 per kWh and a seasonal COP of 2.5, the heat pump costs about $18.76. Under those assumptions, gas is cheaper to run. Raise the heat pump's seasonal COP to 3.0, and its cost falls to about $15.63 per MMBtu.
These rates and COPs are illustrations, not estimates for your home. The calculation follows the same fuel-price-and-efficiency approach used in a Department of Energy guide to heat pump and gas switchover costs. It also shows why “heat pumps are more efficient” is not, by itself, an answer about bills.
Find the efficiency your heat pump needs to beat gas
A quick screening test is to calculate the break-even COP:
Break-even COP = 29.3 × electricity price per kWh × furnace AFUE ÷ gas price per therm
Using the example rates above, the break-even COP is about 2.81. Above that COP, the heat pump is cheaper per unit of heat; below it, the furnace is cheaper. Run the test again using a higher electric rate, a higher gas rate, and a colder-weather COP. If small changes reverse the winner, don't treat a single projected annual savings figure as dependable.
The shortcut compares heating energy, not every charge on the bill. A furnace also uses electricity for its blower, and a heat pump estimate needs to account for any supplemental electric heat. Include those items in a detailed contractor estimate. Include fixed gas-account charges in the household comparison only if choosing the heat pump would let you close the account; those charges remain if you still use gas for other appliances.
Climate changes the COP—and how often it matters
Heat-pump efficiency and heating capacity change with outdoor temperature. A quoted HSPF2 rating is a standardized seasonal heating test result, not a promise of your home's seasonal COP. Ask for model-specific heating capacity and COP at outdoor temperatures relevant to your area, especially if winter nights often fall well below freezing.
A cold-climate designation is useful, but it doesn't settle the cost question. ENERGY STAR's cold-climate criteria include a COP of at least 1.75 at 5°F and minimum heating capacity at that temperature. Those figures help identify equipment designed to perform in cold weather; they do not tell you how many hours your house will need backup heat.
Ask each installer to estimate how much of your annual heating load the heat pump will serve and how much will come from backup. Electric resistance backup should be priced at a COP of about 1, so frequent use can change the running-cost comparison sharply. A dual-fuel system uses a heat pump and a gas furnace; its controls can switch between them, though the least-cost switch temperature depends on energy prices and the heat pump's performance at that temperature.
The key is hours at each temperature, not just the lowest temperature on a weather app. A location with a few very cold nights can have a different annual result from one that spends months near freezing. Request an estimate broken into mild, cold, and backup-heating periods rather than a projection based on one COP.
Insulation lowers the bill, but not necessarily the cost gap
A drafty house needs more heat from either system. Air sealing and insulation lower that demand, which can cut both projected bills and the capacity needed from new equipment. Department of Energy sizing guidance calls for load calculations that account for the home's insulation, air leakage, climate, and—where applicable—duct losses.
This creates an important wrinkle in lifetime comparisons. Suppose the heat pump saves $200 a year against gas before insulation work. If improvements greatly reduce the heating load, the annual dollar gap between the two systems may shrink as well. On the other hand, a better-insulated home may need less expensive equipment or less backup heat. Don't apply a pre-upgrade fuel-use estimate to a post-upgrade house.
If you plan to seal the attic or add insulation, tell bidders before they size the system. Ask for a revised heating-load calculation and running-cost estimate based on the planned work, not just the old furnace's nameplate size.
Existing ducts can save installation money—or erase expected savings
Keeping your ducts may avoid the cost and disruption of installing a new distribution system. But “ducted already” doesn't mean “ready for this heat pump.” The new air handler may need more airflow than the existing ductwork can provide. A Department of Energy duct retrofit guide identifies undersized ducts as a possible cause of poor comfort, noise, and inefficient operation.
Leaks and uninsulated runs in an attic or crawl space add another cost. They waste delivered heat whichever system serves the ducts, and their effect depends on where the ducts run and how they are repaired. Have the contractor assess supply and return airflow, duct condition, and proposed sealing or modifications. Make sure those repairs appear in the installed price and in the projected energy use.
If major duct work makes a whole-house conversion expensive, ask whether a ductless heat pump for part of the home is worth quoting alongside a furnace replacement. Compare the rooms each proposal actually heats; a partial system is not a like-for-like substitute for whole-house heating.
Turn one winter's estimate into a replacement decision
Using the earlier example, suppose the home needs 60 MMBtu of heat at the equipment over a year. At the stated rates, the 90% AFUE furnace would use about 667 therms, costing roughly $1,000 for gas. The heat pump at a seasonal COP of 2.5 would use about 7,034 kWh, costing roughly $1,125. At a COP of 3.0, its electricity cost would be about $938. Those totals exclude blower electricity, fixed charges, backup heat, and any difference in duct losses; include them before treating the figures as a bid comparison.
For each real quote, ask the installer to put these items on one page:
- The calculated heating load, annual heat demand, and assumptions about insulation and ducts.
- The exact furnace AFUE or heat pump model, plus heat-pump capacity and COP in cold weather.
- Estimated kWh and therms for heating, including backup use—not just a promised dollar saving.
- Installed cost, including electrical work, duct repairs, and any work needed for gas equipment.
- Expected maintenance costs and a separate cooling-cost estimate if the heat pump would replace or add air conditioning.
Then compare the annual heating costs across a range of rates and winter conditions. Add the installed-cost difference and expected maintenance over the years you expect to own the system. If a heat pump costs $3,000 more to install but saves only $100 a year under your assumptions, fuel savings alone are a weak case for paying the difference. If it also replaces an air conditioner you were about to buy, compare it against the combined furnace-and-AC quote instead.
Choose the proposal that remains sensible when your assumptions are tested—not the one with the most impressive efficiency label. A good replacement estimate shows where the savings come from, what happens in cold weather, and what must be fixed in the house for those savings to appear.