Cost to Run Heat Pump vs Gas Furnace: Comparative Guide

Choosing between a heat pump and a gas furnace hinges on operating costs, climate, efficiency, and available incentives. This guide compares the cost to run a heat pump vs gas furnace across climates, explains efficiency metrics, and provides sample calculations to help estimate annual expenses for typical U.S. homes.

Climate	Typical Annual Heating Cost: Heat Pump	Typical Annual Heating Cost: Gas Furnace
Mild (South)	$300–$700	$500–$1,000
Mixed (Mid-Atlantic/Midwest)	$600–$1,200	$800–$1,600
Cold (Northeast/Upper Midwest)	$900–$2,000	$700–$1,500

How Efficiency Is Measured

Understanding efficiency is essential when comparing the cost to run heat pump vs gas furnace. Heat pumps use coefficients like COP (Coefficient Of Performance) and HSPF (Heating Seasonal Performance Factor), while gas furnaces use AFUE (Annual Fuel Utilization Efficiency).

Heat pumps deliver heat by moving energy; a COP of 3 means three units of heat per unit of electricity. HSPF expresses seasonal performance; higher HSPF indicates better efficiency for space heating.

Gas furnace efficiency is shown as AFUE. A furnace with 95% AFUE converts 95% of natural gas into heat. AFUE does not account for distribution losses or standby electrical use.

Energy Prices And Fuel Sources

Operating cost depends on local energy prices. Natural gas is priced per therm or MCF, while electricity is per kilowatt-hour (kWh). National averages fluctuate; using state-specific utility rates yields the most accurate estimates.

As of recent data, U.S. average residential electricity is around $0.15/kWh and natural gas around , but regional variations are large. Fuel price volatility can shift the balance between heat pump and gas furnace running costs.

Basic Cost Comparison Method

To compare the cost to run heat pump vs gas furnace, calculate annual energy use for heating and multiply by local rates.

For a heat pump: Annual Heating Energy (kWh) = Annual Heat Demand (BTU) / (3,412 BTU/kWh * Average COP). For a furnace: Annual Gas Use (therms) = Annual Heat Demand (BTU) / (100,000 BTU/therm * AFUE).

Then multiply kWh by electricity price and therms by gas price. This provides a baseline comparison of the cost to run heat pump vs gas furnace for a specific home.

Sample Calculation Examples

Example assumptions: A 2,000 sq ft well-insulated home with annual heat load ~40 million BTU. Compare a heat pump with average COP 2.5 and a 95% AFUE gas furnace.

Heat Pump: 40,000,000 BTU / (3,412 * 2.5) ≈ 4,700 kWh. At $0.15/kWh = $705 per year.

Gas Furnace: 40,000,000 BTU / (100,000 * 0.95) ≈ 421 therms. At $1.30/therm = $548 per year.

These numbers show that in a cold climate with a moderate COP a gas furnace may be cheaper to run, but small changes in COP, electricity prices, or insulation can reverse the outcome.

Climate Impacts On Running Costs

Climate significantly affects the cost to run heat pump vs gas furnace. Heat pumps perform best in mild to moderate climates where outdoor temperatures remain within a range that supports efficient heat transfer.

In cold climates, traditional air-source heat pumps lose efficiency as temperature drops, reducing COP and increasing electricity use. Cold-climate heat pumps and ground-source (geothermal) units maintain higher COPs at low temperatures, improving cost competitiveness.

Key point: In mild climates, heat pumps usually have lower operating costs. In very cold climates, high-efficiency gas furnaces or geothermal heat pumps may be more economical.

Types Of Heat Pumps And Their Costs

Air-Source Heat Pumps (ASHP): Most common and least expensive to install. Efficiency varies by model and outdoor temperature. Modern cold-climate ASHPs retain useful COPs down to -10°F.

Mini-Split/Ductless Heat Pumps: Highly efficient for zoned heating and cooling. Good for retrofits or homes without ductwork. Running cost depends on number of zones and usage patterns.

Geothermal (Ground-Source) Heat Pumps: Highest COP and most stable efficiency year-round. Higher upfront cost and ground loop installation required, but lowest cost to run over the system life in many climates.

Installation And Lifecycle Costs

Comparing the cost to run heat pump vs gas furnace should include installation and lifecycle costs. Heat pumps tend to have higher upfront costs than basic gas furnaces, but lower energy bills in many areas can offset that over time.

Typical installed costs vary: basic gas furnace $3,000–$6,000, high-efficiency furnaces $5,000–$9,000. Air-source heat pump systems $4,000–$12,000 depending on capacity and ductwork. Geothermal systems often exceed $20,000–$40,000.

Maintenance and expected lifespan matter: gas furnaces usually last 15–20 years, heat pumps 15–25 years for air-source, and 20–30+ years for geothermal systems. Lower operating costs can justify higher initial outlays.

Electrical Backup And Supplementary Heat

Many heat pump installations include supplemental electric resistance heating or a gas backup for extremely cold periods. These can increase the effective cost to run heat pump vs gas furnace during peak cold spells.

If a heat pump frequently relies on backup heat, the operational savings shrink. Choosing a cold-climate heat pump with higher COP at low temperatures reduces reliance on backup heat and lowers annual costs.

Incentives, Rebates, And Net Costs

Federal, state, and utility incentives can materially change the cost calculus between heat pump and gas furnace. Many programs promote heat pump adoption through rebates, tax credits, and low-interest financing.

For example, federal tax credits and state rebates for heat pump installations can lower net purchase price, improving payback versus gas furnaces. Research available local incentives when estimating the cost to run heat pump vs gas furnace.

Environmental And Regulatory Considerations

Operating cost is not the only metric; emissions and regulatory trends influence long-term cost and availability. Heat pumps run on electricity, which may be low-carbon depending on the grid mix and will likely get cleaner over time.

Gas furnaces emit combustion-related CO2 and may face future regulations, carbon pricing, or utility changes that could increase the cost to run gas heating. Long-term energy policy can make heat pumps comparatively more attractive.

Maintenance And Reliability Costs

Routine maintenance affects both systems. Heat pumps require annual checks of refrigerant charge, coils, and electric components. Gas furnaces need inspections for burners, heat exchangers, and venting systems.

Repair costs vary: compressor replacement in a heat pump can be expensive, while furnace heat exchanger replacement is also costly. Regular maintenance extends system life and stabilizes the cost to run heat pump vs gas furnace.

Practical Tips To Reduce Heating Costs

• Improve Insulation And Air Sealing: Reduces annual heat demand regardless of system.
• Use Smart Thermostats: Optimize runtime and avoid wasted energy.
• Right-Size Equipment: Oversized systems cycle inefficiently; undersized systems struggle to heat space.
• Consider Zoned Heating: Heat only occupied spaces to cut usage.
• Evaluate Time-Of-Use Rates: Use heat pump thermal storage or preheat during lower-rate periods if available.

Decision Framework For Choosing Between Heat Pump And Gas Furnace

To determine the lowest cost to run heat pump vs gas furnace, follow a simple framework: estimate annual heat demand, obtain local electricity and gas rates, determine realistic system efficiencies (COP/HSPF and AFUE), and include maintenance, incentives, and expected system lifetimes.

Run a multi-year total cost comparison (lifecycle cost) including installation, operating costs, maintenance, and replacement. This produces a clearer picture than comparing annual energy bills alone.

Resources And Tools

Homeowners can use energy calculators, local utility rate pages, and HVAC contractor load calculations to refine estimates. For precise results, request a Manual J heat load calculation and quotes for specific heat pump and gas furnace models.

State energy offices, the U.S. Department of Energy, and utility programs provide data on incentives, typical performance metrics, and regional fuel price histories useful for comparing the cost to run heat pump vs gas furnace.

Action	Why It Helps
Get Manual J Load Calculation	Right-sizes equipment to reduce inefficiencies
Compare Local Incentives	Can substantially lower upfront heat pump cost
Check Time-Of-Use Rates	May reduce electricity cost for heat pump operation

Key Takeaways

Heat Pump Advantages: Lower operating costs in mild climates, cooling and heating in one system, improving grid decarbonization benefits.

Gas Furnace Advantages: Often lower operating cost in very cold climates with moderate gas prices, lower upfront cost for basic units.

The cost to run heat pump vs gas furnace depends on local energy prices, climate, equipment efficiency, and incentives. A careful lifecycle analysis and local quotes produce the most reliable estimate for a specific home.