Heat Pump vs Furnace Savings Calculator

How This Heat Pump vs Furnace Savings Calculator Works

This calculator estimates and compares the annual operating cost of heating your home with an electric heat pump versus a fuel-burning furnace (gas, propane, oil, or other fuels). By entering your annual heating load, equipment efficiencies, and local energy prices, you can see which option is likely to be cheaper to run and by how much.

The goal is not to replace a professional HVAC design or quote, but to give you a clear, numbers-based starting point so you can ask better questions and quickly test different “what if” scenarios.

Key Inputs You Can Adjust

• Annual Heating Load (kWh) – The total heat your home needs over a year, expressed as kilowatt-hours (kWh) of heat delivered to the space.
• Heat Pump COP – The coefficient of performance (COP) is the ratio of heat output to electrical energy input.
• Electricity Cost per kWh ($) – Your retail electricity price from your utility bill.
• Furnace Efficiency (%) – How much of the fuel’s energy is converted into usable heat (e.g., 80%–98%).
• Fuel Cost per kWh Equivalent ($) – The cost of your furnace fuel converted to a per-kWh-of-fuel basis.

You can run the calculator with your best estimates and then refine the numbers as you gather more accurate data from utility bills or equipment specifications.

Cost Formulas Used in the Calculator

The calculator uses simple energy-balance equations to estimate annual operating cost. The idea is:

• Your home needs a certain amount of heat each year (the heating load).
• Equipment efficiency determines how much input energy is needed to supply that heat.
• Energy prices convert input energy into annual cost.

Heat pump annual cost

For the heat pump, the calculator assumes a single average COP over the full season. The required electrical input energy is:

where:

• is the annual heating load (kWh of heat delivered).
• is the heat pump coefficient of performance.

The annual cost is then:

where is the electricity price in $/kWh.

Furnace annual cost

For the furnace, efficiency is given as a percentage (for example, 90%). Converting to a decimal efficiency:

Eff = Furnace efficiency (%) / 100

The required fuel input energy is:

The annual cost is:

where is the fuel cost in $ per kWh of fuel energy.

Comparing savings

The calculator reports both annual costs and the difference:

Annual savings = Furnace cost − Heat pump cost

If the result is positive, the heat pump is cheaper to run. If it is negative, the furnace is cheaper.

What to Enter in Each Field

Annual Heating Load (kWh)

This is the amount of heat your home needs over a year. You may get this from:

• A prior energy audit or HVAC load calculation report.
• Modeling software results from an HVAC contractor.
• An estimate based on past bills and typical system efficiency.

If you do not know your exact load, you can:

• Use a rough estimate from online heating load tools based on climate and home size.
• Test several values (for example, low, medium, high) to see how sensitive the results are.

Heat Pump COP

Modern cold-climate air-source heat pumps often have seasonal COP values around 2.5–4 in moderate climates. Ground-source (geothermal) heat pumps can be higher. If you are unsure, you can:

• Check manufacturer literature for “HSPF” or seasonal COP and convert to an approximate COP.
• Use a default of about 3 for a reasonably efficient modern air-source unit in a moderate climate.

Keep in mind that the actual COP varies with outdoor temperature and system design; the calculator uses a single average value as an approximation.

Electricity Cost per kWh

Look at your electric utility bill for your price per kilowatt-hour. You may see separate line items for energy, delivery, taxes, and fees. Using the average $/kWh including delivery usually gives a more realistic comparison.

Furnace Efficiency (%)

Typical seasonal efficiencies for furnaces are:

• Older non-condensing gas or oil furnaces: about 70–82%
• Newer standard-efficiency gas furnaces: about 80–90%
• High-efficiency condensing gas furnaces: about 90–98%

You can usually find your furnace efficiency on a nameplate, in the product manual, or via the model number searched online. If you are unsure, using 80–85% for older equipment and 90–95% for modern high-efficiency units is a reasonable starting point.

Fuel Cost per kWh Equivalent

This field puts different fuels on a common basis. To estimate it, you can:

• Find the typical energy content of your fuel (for example, kWh per cubic meter of gas, kWh per liter of oil, or kWh per gallon of propane).
• Multiply that by your price per unit of fuel to get $ per kWh of fuel energy.

Some energy agencies and utilities publish tables showing typical kWh-equivalent values and costs. Using those published numbers can simplify this step.

Interpreting the Results

After you enter your values and run the calculation, you will typically see:

• Estimated annual heat pump cost – What you might spend on electricity to run the heat pump for space heating.
• Estimated annual furnace cost – What you might spend on fuel to provide the same heat with a furnace.
• Annual savings – How much more or less a heat pump is expected to cost compared with the furnace.

Use these numbers as directional guidance. For example:

• If heat pump cost is much lower than furnace cost, that suggests a strong economic case for electrification, especially if you can access rebates.
• If costs are similar, non-financial factors like comfort, noise, and environmental impact may matter more.
• If heat pump cost is significantly higher, you may want to explore higher-efficiency models, dual-fuel systems, or envelope improvements (insulation, air sealing) before switching.

Worked Example

Consider a home with the following characteristics:

• Annual heating load: 12,000 kWh of heat
• Heat pump COP: 3.0
• Electricity price: $0.15 per kWh
• Furnace efficiency: 90%
• Fuel cost: $0.09 per kWh of fuel energy

Step 1: Heat pump cost

Electrical input required:

E_HP,in = 12,000 kWh / 3.0 = 4,000 kWh

Annual cost:

C_HP = 4,000 kWh × $0.15/kWh = $600

Step 2: Furnace cost

Convert efficiency to decimal:

Eff = 90% ÷ 100 = 0.90

Fuel input required:

E_F,in = 12,000 kWh / 0.90 ≈ 13,333 kWh of fuel

Annual cost:

C_F = 13,333 kWh × $0.09/kWh ≈ $1,200

Step 3: Compare savings

Annual savings = $1,200 − $600 = $600 per year

In this example, the heat pump is roughly half the operating cost of the furnace. If installing a new heat pump instead of a furnace costs, say, $4,000 more up front, a simple payback estimate would be:

Payback ≈ $4,000 ÷ $600/year ≈ 6.7 years

This does not include maintenance, repairs, or financing costs, but it gives a quick sense of how long it might take operating savings to cover the higher initial cost.

Typical Scenarios: Heat Pump vs Furnace

Your own results depend on your exact load, equipment performance, and current tariffs. Use the calculator to plug in your local data for a more accurate comparison.

Beyond Operating Costs: Other Factors to Consider

Upfront installation cost

Heat pumps can cost more than basic furnaces, especially if you are adding ductwork, upgrading electrical service, or installing multiple indoor units. However, rebates and tax incentives in many regions can narrow or even reverse that gap. It often makes sense to:

• Calculate annual operating savings with this tool.
• Ask contractors for itemized quotes for both systems.
• Estimate simple payback using the difference in installed cost divided by annual savings.

Cooling capability and comfort

Most air-source heat pumps provide both heating and cooling with the same equipment, which can add value compared with a heating-only furnace. They may also offer improved comfort through variable-speed operation and zoning options. Furnaces can deliver very warm supply air quickly, which some people prefer, but they do not provide cooling on their own.

Environmental impact

Because heat pumps move heat rather than generating it by burning fuel, they often produce fewer greenhouse gas emissions, especially where the electric grid is relatively clean. A furnace burns fuel on-site and releases combustion products directly. If reducing your carbon footprint is a priority, comparing annual energy use can help quantify the impact of switching.

Assumptions and Limitations

This calculator is intentionally simplified. It is best used for screening and comparison, not for precise bill prediction. Key assumptions include:

• Steady annual load – The heating load you enter is treated as a single annual number, without modeling hour-by-hour weather or thermostat schedules.
• Constant COP and efficiency – The heat pump COP and furnace efficiency are assumed to be constant over the season. In reality, both vary with outdoor temperature, part-load operation, and maintenance.
• Fixed energy prices – Electricity and fuel prices are treated as constant. Future price changes, time-of-use rates, and special tariffs are not modeled.
• No maintenance or repair costs – The calculator focuses on energy use only. Differences in maintenance, repair, and equipment lifespan are excluded.
• No duct or distribution losses – Losses in ductwork, radiators, or distribution systems are not explicitly modeled. Real systems can lose additional heat depending on design and installation quality.
• Single system comparison – Complex setups such as multi-zone systems, hybrid systems with integrated controls, or combinations with solar PV are not explicitly modeled.

Because of these simplifications, your actual bills will differ from the estimates. Use the outputs as a guide and confirm any major investment decision with a qualified HVAC professional.

Next Steps After Using the Calculator

Once you have run a few scenarios and understand whether a heat pump or furnace looks cheaper to operate, consider the following actions:

• Discuss results with an HVAC contractor – Share your assumptions and ask for a professional load calculation and system sizing.
• Request multiple quotes – Get itemized proposals for both options (and possibly dual-fuel systems) to compare installed cost plus energy cost.
• Explore incentives – Check for rebates, tax credits, or low-interest financing that can significantly change the economics of a heat pump.
• Improve the building envelope – Better insulation and air sealing can reduce your heating load, which may make a higher-efficiency system more attractive and allow smaller equipment sizes.
• Test price scenarios – Rerun the calculator with higher or lower future fuel and electricity prices to see how sensitive your decision is to energy cost changes.

Disclaimer

This calculator and explanation are for informational and educational purposes only. The results are estimates based on simplified formulas and user-supplied inputs. They are not engineering designs, guarantees of performance, or financial advice. Always consult a licensed HVAC professional and review current local codes, utility tariffs, and incentive programs before selecting or installing heating equipment.