In any heat pump vs furnace comparison, the key difference is this: a heat pump moves heat instead of making it, so it delivers two to three units of heat for every unit of electricity. A furnace burns fuel and, at best, turns about 97% of it into heat. Which one is cheaper to run comes down to one thing: the price of your fuel compared with the price of your electricity.
The short answer
- Heat pump vs propane, oil or electric furnace: the heat pump is almost always cheaper to run, often by 30–60%.
- Heat pump vs natural gas furnace: it depends on local prices and climate. In much of the country they are close; in areas with cheap gas and expensive electricity the furnace wins.
The break-even formula
Compare the cost of one million BTU of heat from each:
Gas furnace: gas price per therm ÷ (0.1 × AFUE)
Heat pump: electricity price per kWh ÷ (0.003412 × COP)
Setting the two equal gives a simple test. With a 95% furnace and a heat pump averaging a seasonal COP of 2.6, the heat pump is cheaper whenever:
gas price per therm ÷ electricity price per kWh > 10.7
For example, gas at $1.60 per therm and electricity at $0.17 gives a ratio of 9.4, so the gas furnace is slightly cheaper to run. With electricity at $0.13 the ratio is 12.3 and the heat pump wins. A more efficient cold-climate heat pump with a seasonal COP of 3 lowers the break-even ratio to about 9.3.
Running cost example
A 2,000 sq ft home in a cool climate that needs 60 million BTU of heat a winter:
| System | Assumed price | Cost per winter |
|---|---|---|
| Gas furnace, 95% | $1.60 / therm | about $1,010 |
| Heat pump, COP 2.6 | $0.17 / kWh | about $1,150 |
| Propane furnace, 92% | $2.80 / gallon | about $2,000 |
| Oil furnace, 84% | $3.80 / gallon | about $1,960 |
| Electric furnace | $0.17 / kWh | about $2,990 |
Put in your own prices with the heating cost calculator.
Heat pump vs furnace: pros and cons
| Heat pump | Gas furnace | |
|---|---|---|
| Also cools the home | Yes | No, needs a separate AC |
| Installed cost | $10,000 – $25,000 | $3,800 – $10,000 |
| Lifespan | 12–15 years | 15–20 years |
| Air temperature at the vents | 90–100°F, steady | 120–140°F, in bursts |
| Performance in extreme cold | Drops; may need backup heat | Unaffected |
| Combustion and carbon monoxide risk | None | Needs venting and CO alarms |
Dual fuel: keeping both
If you already have a good gas furnace, a dual-fuel system adds a heat pump in place of the air conditioner. The heat pump heats the house in mild weather, when it is most efficient, and the furnace takes over below a set outdoor temperature (the “balance point”), often 25 to 35°F. It is a popular choice in cold states where gas is cheap.
Which should you choose?
- Your AC is also old, or you heat with propane, oil or electricity: heat pump.
- Cheap gas, expensive electricity, very cold winters and a good AC: furnace, or dual fuel when the AC dies.
- Somewhere in between: run the heat pump savings calculator with your numbers.
Related: heat pump installation cost, furnace replacement cost.