Heat Pump Savings Calculator

How heat pumps save money:

Heat pumps do not generate heat. They move it from the outside air or the ground into your home. This makes them 2 to 5 times more efficient than furnaces or electric heaters that create heat by burning fuel or running current through resistance coils.

Coefficient of Performance (COP):

COP = Heat delivered (kWh) / Electricity consumed (kWh)

A COP of 3.0 means for every 1 kWh of electricity used, the heat pump delivers 3 kWh of heat into your home. By comparison, a gas furnace with 90% efficiency only delivers 0.9 kWh of heat per 1 kWh equivalent of gas.

How this calculator works: It works backwards from your bill to how much heat your home actually needs, then forwards again to what a heat pump would cost to deliver the same heat.

Annual Heat Demand = (Annual Bill / Fuel Price per kWh) × Current System Efficiency Heat Pump Cost = (Heat Demand / COP) × Electricity Rate

Converting your fuel price to a price per kWh That first division is the whole calculation, and it needs your actual fuel price rather than a national average, so the calculator asks for it. Divide the unit price by the energy in a unit:

Gas at 1.60 a therm is 1.60 ÷ 29.3 = 0.055 per kWh. Oil at 4.20 a US gallon is 4.20 ÷ 40.6 = 0.103. Propane at 3.00 a gallon is 0.112. Electricity is already priced per kWh, so if you heat with resistance electric the calculator uses your electricity rate for both sides.

The break-even rule, in one line A heat pump beats your current system whenever your electricity price is less than (COP ÷ current efficiency) times your fuel price per kWh. With a COP of 3.0 against a 90% gas furnace that ratio is 3.3, so electricity has to cost under 3.3 times what gas does. In much of the US it does. In places with cheap gas and expensive electricity it does not, and the calculator will tell you so rather than assuming the answer.

Typical COP values by system type:

Practical Example: You spend 1,800 a year heating with natural gas at 0.055 per kWh, and your furnace is 90% efficient. That works out to 1,800 ÷ 0.055 × 0.90 = 29,455 kWh of heat delivered into the house. An air-source heat pump at COP 3.0 needs 9,818 kWh of electricity for the same heat, which at 0.17 per kWh costs 1,669 a year. So the saving is about 131 a year, and against a 8,000 quote that is a payback measured in decades rather than years.

That is a deliberately unflattering example, and it is the honest one for a household with cheap gas. Run the same house on heating oil at 0.103 per kWh, where an 85% efficient burner turns that 1,800 bill into only 14,854 kWh of heat, and the picture inverts completely: the heat pump needs 4,951 kWh costing 842, and the saving is 958 a year. The lesson is not that heat pumps do or do not pay. It is that the answer turns almost entirely on what you currently burn and what the two fuels cost where you live, which is why this page asks for both rather than assuming them.

When heat pumps save the most:

• Moderate climates where extreme cold is rare (COP drops in very cold weather)
• Replacing expensive fuels like oil, propane, or electric resistance heating
• Regions with low electricity rates relative to gas prices
• Heat pumps also provide air conditioning in summer, replacing a separate AC unit

Tips:

• Federal tax credits and local utility rebates can reduce installation costs by 30% or more
• Ground-source systems cost more upfront but have higher COP and last 20-25 years
• In very cold climates (below -10F / -23C), a dual-fuel system that pairs a heat pump with a gas furnace backup is often the most cost-effective solution