Which costs less to run: heat pump or gas furnace?

How do you compare heat pump and gas furnace running costs?

Put both systems on the same footing: the cost of one kilowatt-hour of heat delivered to the house. For a gas furnace, take the gas price per kilowatt-hour of energy and divide it by the furnace efficiency (AFUE) expressed as a decimal. For a heat pump, take the electricity price per kilowatt-hour and divide it by the heat pump's seasonal coefficient of performance, or COP.

COP is the heat delivered divided by the electricity used. A seasonal COP of 3 means three units of heat for each unit of electricity. The seasonal figure is lower than the rating at mild temperatures, because the pump works harder in the cold. The ratings are explained in SEER2 and HSPF2 explained.

What does a worked example look like?

The prices below are assumptions, not current rates, so replace them with the figures from your own bills. Say gas costs 0.35 dollars per cubic metre including delivery charges that vary with use, and a cubic metre holds roughly 10.5 kilowatt-hours of energy. The furnace is 96 percent efficient.

• Heat from one cubic metre: 10.5 x 0.96 is about 10.1 kWh.
• Gas cost per kWh of heat: 0.35 / 10.1 is about 3.5 cents.
• Electricity at 15 cents per kWh with a seasonal COP of 2.5: 15 / 2.5 is 6 cents per kWh of heat.
• With a seasonal COP of 3.2 the same electricity costs about 4.7 cents.

Under these prices gas wins, even with a good heat pump. Break-even is where the electricity price equals the COP times the gas heat cost. With a COP of 3 and 3.5 cents per kWh from gas, electricity would need to cost about 10.5 cents per kWh. Change either price and the answer flips, which is why local rates decide the outcome. The wider picture is in natural gas versus electric heating.

Why do the results differ across Canada?

Electricity and gas prices differ by province and by utility, and many bills split into a per-unit rate and fixed monthly charges. A province with low-cost hydroelectricity tends to favour the heat pump, while a gas-rich province with higher power prices can favour the furnace. Regulated rates change at set dates, so look at a current bill and the utility's rate page. For an Alberta view, see home heating costs in Alberta.

Carbon pricing, rate riders and delivery charges also change over time, and some of them apply only to gas or only to electricity. Quote the all-in price per unit from the bill, not just the headline rate.

Does the weather change the answer?

Yes. The COP falls as the temperature falls, so a heat pump costs more per unit of heat on the coldest days than in spring and fall. A fair comparison uses a seasonal average from the manufacturer's data or a modelled estimate for your climate, rather than the best-case figure. Where backup heat is used, add the cost of that portion at its own price, as covered in heat pump backup heat.

A hybrid arrangement uses the cheaper source at each temperature. The heat pump runs in mild weather, and the furnace takes over when gas becomes cheaper per unit of heat. That setup is described in the dual-fuel heat pump guide.

What else belongs in a total cost comparison?

Running cost is half the story. Equipment price, installation, electrical upgrades, maintenance, expected lifespan and available rebates all change the total over the life of the system. A heat pump also provides cooling in summer, which may replace a separate air conditioner. The side-by-side checklist is in heat pump versus furnace, and the lifespan figures in heating system lifespans help with the long view.

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