Heat Pump vs Furnace: Which Is Cheaper to Run?
There's no universal answer — it comes down to your local electricity price versus your gas price. A heat pump delivers about three units of heat per unit of electricity, so it usually wins against electric and oil heating and is competitive with gas. But where gas is cheap and electricity is expensive, a furnace can still be cheaper to run. Here's the math that decides it.
Why a heat pump can beat a furnace
A gas furnace burns fuel and is 80–97% efficient — it can never deliver more heat than the energy in the fuel. A heat pump moves heat from outside air, so for every 1 kWh of electricity it delivers 2.5–4 kWh of heat indoors. That multiplier is the coefficient of performance (COP), and it's why a heat pump can be cheaper even when electricity costs more per kWh than gas.
The break-even rule
A heat pump is cheaper to run when:
electricity price ÷ COP < gas price per kWh ÷ furnace efficiency
Put simply: divide your electricity price by the heat pump's COP to get its "cost per unit of heat," and compare that to your furnace's cost per unit of heat. An example at COP 3:
| System | Energy price | Efficiency / COP | Cost per kWh of heat |
|---|---|---|---|
| Heat pump | $0.15/kWh electricity | COP 3.0 | $0.050 |
| Gas furnace | $1.20/therm ≈ $0.041/kWh | 90% efficient | $0.046 |
| Oil furnace | $3.80/gal ≈ $0.094/kWh | 85% efficient | $0.110 |
| Electric resistance | $0.15/kWh electricity | 100% | $0.150 |
In this example the heat pump ($0.050) and gas ($0.046) are almost tied — cheap gas makes it close. Against oil ($0.110) or electric resistance ($0.150), the heat pump wins easily, cutting heating cost by 50–65%.
What tips the balance
- Your local prices. This is everything. Cheap gas + pricey electricity favors gas; the reverse favors the heat pump.
- Climate. Heat pump COP falls as it gets colder. Standard units drop toward COP 2 near freezing; cold-climate models hold COP 2–2.5 well below 0°F/−18°C. Colder regions shift the math toward gas or a hybrid system.
- Cooling. A heat pump is also your air conditioner. If you'd buy AC anyway, that's a cost the furnace-plus-AC option has to match.
- Incentives. Rebates and tax credits can cut heat pump install cost substantially, changing the payback even when running costs are close.
Run it with your own numbers
Plug your actual annual heating cost and local prices into the heat pump savings calculator — it does this break-even math against gas, oil, propane, or electric heating and shows the yearly difference. Then price the electricity side against your whole bill with the electricity bill calculator.
FAQ
Is a heat pump cheaper than gas heating?
Often, but not always. At COP 3 it beats gas whenever your electricity price is under about 3× your gas price per kWh of heat. With very cheap gas and expensive electricity, gas can still be cheaper to run.
Do heat pumps work in cold weather?
Yes — cold-climate models heat effectively down to −15 to −25°C, though efficiency drops as it gets colder. Many cold-region homes use a hybrid (heat pump plus gas backup for the coldest days).
What COP should I assume?
Seasonal average ~3.0 for modern air-source units in moderate climates, 2.0–2.5 in cold climates, 3.5–4.5 for ground-source.
Related tools
- Heat Pump Savings — the break-even, with your prices.
- AC / Heater Running Cost — any heating or cooling appliance.
- How to Lower Your Electric Bill — where heating fits in the bigger picture.