Categories
Heating and Cooling

Heat Pump Prices

(Jump directly to our heat pump price data)

Heat pumps are exploding in popularity, so a key question everyone is asking is: how much do they cost?

When we looked online, unfortunately all we saw was article after article giving ranges, typically around $2000 – $8000. But these ranges in heat pump prices aren’t helpful.

First, the ranges are too wide. There’s a big difference between $2000 and $8000. What people want to know is how much would the right heat pump for me cost?

Second, the cost of a heat pump varies significantly by these three factors:

  1. The type of heat pump: mini-split or ducted (almost no one buys geothermal).
  2. The size of heat pump (dictated by the size of room or home you’re heating and cooling)
  3. The efficiency rating (SEER for cooling)

To help, we created this page with the latest heat pump pricing data that we gathered ourselves, online. Below we show how heat pump prices vary as a function of type, size, and SEER ratings (jump to here).

But to really understand how much a heat pump will cost you, you need to understand what type of heat pump you need. So before the price data, we explain some basics of how a heat pump works, what the different types are and which one is right for which situations, give a rough guide of what size you may need, and explain what heat pump efficiency is and how to decide on that. All of this will help you better understand where on the heat pump price curves below you may fall.

Contents

Understanding What Heat Pump You Need

Heat Pump Price Data

What is a heat pump?

We have a couple articles discussing this in depth, including one comparing heat pumps versus furnaces and another discussing heat pumps relative to air conditioners.

But in short, a heat pump is essentially a two way air conditioner. In fact, we think they should probably be re-named “two way air conditioners” because people are already familiar and comfortable with air conditioners and because heat pumps are identical to an air-conditioner and are used as air conditioners in the summer. The only difference is that heat pumps can also run in reverse. In this mode (heating), they suck heat out of the outdoors and throw it in your room (air conditioners suck heat out of your room and throw it outside) — hence the name heat pump, they pump heat from one place to another.

They do this by moving a refrigerant (a liquid that can get very cold) around coils of pipes and by blowing air, via a fan, through the coils. In “heating mode” the refrigerant is cooled to very low temperatures and sent outdoors, where it picks up some heat from the outside (because it’s colder than the outside air), and then compressed to heat up and sent through coils inside, where a blower fan (“air handler”) blows air through it, which heats up the air, and that air is sent via vents throughout your home or building.

Heat Pumps Consume No Fuel

Because heat pumps move heat by heating and cooling a refrigerant, they consumes no fuel — just like an air conditioner, or for that matter, your fridge. This is what makes heat pumps a climate friendly or zero-carbon option. It’s also what makes them safer than furnaces, there’s no natural gas that can cause a carbon monoxide leak, or a gas explosion. All it uses is electricity to compress and expand the refrigerant and cycle it around (and of course a blower fan to blow hot or cold air around your house, like any HVAC system). Electricity of course can be produced in a net-zero-carbon way (with solar, wind, nuclear, hydro, etc.), while burning natural gas or oil in a furnace obviously burns fossil fuels every time you turn on your heater.

But doesn’t producing electricity also burn fossil fuels? Yes it can, but the point is it doesn’t need to, whereas burning natural gas in a gas furnace ensures you are burning fossil fuels (and releasing carbon into the atmosphere). In fact many states already have 90%+ of their electricity produced in a carbon-free method.

This lack of fuel consumption is also why it may be cheaper (depending on the relative cost of electricity vs gas in your area, and other factors) to use a heat pump for your heating and cooling vs a typical gas furnace for your heating and a separate air conditioner for your cooling.

So that takes us to the issue of price. How much does a heat pump cost?

Types of Heat Pumps

The first thing to note is that there are many different types of heat pumps and the price of a heat pump can vary significantly depending on the type of heat pump you choose.

There are three main types of heat pumps you should think about:

1. mini split

2. ducted (some call these “air source” but that’s a bit of a misnomer because mini-splits are also air-source)

3. ground source (also called “geothermal”)

Ground Source Heat Pumps: Not Common in Residential

First let’s get ground source heat pumps out of the way since the vast majority of residential consumers are not in the market for a ground source heat pump. Ground source heat pumps, also known as geothermal heat pumps, use the earth or ground water as a heat source or sink. They work by circulating a fluid through a loop of underground pipes, which absorbs or releases heat from the ground. They can be very efficient, but they are almost never used by typical homeowners because they are more expensive to install and require a large area for the underground loop. In addition, ground source heat pumps are not suitable for all climates and may not be an option in areas with a high water table or rocky soil.

Most residential consumers when they are looking at “buying a heat pump” are thinking about standard ducted heat pumps or mini-split, both of which are air source heat pumps.

Mini Split vs. Ducted Heat Pumps: Which Do You Need?

Mini split heat pumps consist of an outdoor unit that is connected to one or more indoor units by small, refrigerant lines. Think of a single room with a single outdoor unit connected with a small refrigerant line (like a small tube) to an indoor unit that is mounted to the wall like a heating/AC unit you see in hotels or motels — like this photo of a Pioneer brand mini-split heat pump from Home Depot that we profile in our price data below:

In contrast, a ducted heat pump is like the air conditioners that single family homes have outside their house that’s connected to the ventilation system. It’s literally exactly like that, except it can also heat your home in the winter.

Here’s a photo from a YouTube video of a Goodman ducted heat pump (many of which are in our pricing data below):

Which heat pump is right for you?

Simple: if you have vents and ducts in your home and you want to replace a furnace and/or A/C unit that heats and cools the whole home, through those vents, you need a ducted heat pump.

In contrast, if you want to heat or cool a single room that’s not connected to vents or ducts, a mini split heat pump is what you’re looking for.

Obviously mini-splits are cheaper and ducted heat pumps more expensive. But within those categories there are big differences in price. Next we’ll discuss why.

The Two Big Factors in Heat Pump Prices

There are two things that affect heat pump prices the most:

  1. Size of the heat pump (e.g. how big of a space it can heat and cool)
  2. The efficiency of a heat pump (how much electricity it takes to produce a given mount of hot or cold air)

(Note: Both of these are exactly analogous to how air conditioners are priced.)

As you can guess, the bigger the heat pump, the more it costs, and the more efficient the heat pump the more it costs. We have data on how heat pump prices differ by both size and SEER rating (cooling efficiency) below.

The latter (efficiency) is worth pausing on: paying more for a more efficient heat pump is really just a matter of paying now (at the time of purchase) versus later (every month in electricity bills).

The average electricity cost in the US is $0.13/kWh at the time of writing (2023). So if you live in a place where electricity is significantly more expensive than this (e.g. norther California, where it’s $0.29 – $0.40+ per kWh), it likely makes sense to pay more upfront for a more efficient heat pump because your electricity costs are going to be much higher than someone living in say, Boise, Idaho (~$0.08/kWh). So you’ll “make up” that higher up front cost faster in San Francisco than in Boise.

In contrast, if you live in a place with cheap electricity (less than $0.13/kWh) and you don’t want to spend as much upfront, a lower SEER rating heat pump could make sense for you.

How Big of a Heat Pump Do I Need? A Rule of Thumb (And Its Shortcomings)

It’ll be hard to figure out how much a heat pump will cost for you if you don’t know what size you need. This section should help.

Heat pumps are typically sized in BTUs or tons with 1 ton = 12,000 BTUs

Different sources site different sizes but they generally converge on a rule of thumb of 2 tons per 1000 square feet of space. That gives us this handy table:

Square Feet Heat Pump Size in TonsHeat Pump Size in BTUs
10002 tons24,000 BTUs
15003 tons36,000 BTUs
20004 tons48,000 BTUs
25005 tons60,000 BTUs
30006 tons72,000 BTUs
35007 tons84,000 BTUs

Shortcomings of the Rule of Thumb

But, the nice blog Carbon Switch makes a compelling argument on how this rule of thumb may not be accurate — in fact it could be way off.

In short, these rules of thumb don’t account for the level of insulation or leakiness in your home — nor do they account for the height of your ceilings or number of windows, all of which will affect your heating requirements.

Using published actual heating load data of homes in Massachusetts, they compared what heat pump sizes those homes would actually need versus what these rules of thumb would suggest, and found that for almost all homes, the rules of thumb grossly over or under estimated the heat pump size.

Over estimate your heat pump size and you waste money. Under estimate it and you have uncomfortable winters. Neither is good.

So the best solution to sizing your heat pump is to call a contractor and have them do a blower door test to more accurately determine your actual heating requirement.

But using the above table and our data below, you can at least get a range of prices.

The Latest Heat Pump Prices (Last Updated January 2023)

Below are the latest prices we have found (as of February 2023) of heat pumps sold online. These are the listed costs of the heat pumps only, they do not include installation cost. You’ll need to talk to local HVAC installers for that. Later we’ll do a survey of HVAC companies in different cities and states and publish their installation costs.

Mini Split Heat Pumps and Their Costs in 2023

Here is a sampling of some single zone mini split heat pump prices found online in February of 2023:

Size (BTU)SEER ratingCostBrand, Store
9,000 18$649Blueridge, AlpineHomeAir
9,00017$910LG, ecomfort.com
12,000 20$878Pioneer, HomeDepot
12,00019$954LG, ecomfort.com
15,00021.6$2106Mitsubishi, AC Wholesalers
15,00025$2104Fujitsu, HVAC Direct
15,00018$1753Mitsubishi, ecomfort.com
18,00016.8$899Blueridge, Alpine Home Air
18,000 20$1699Mr. Cool, HomeDepot
24,000 17$1447LG, ecomfort.com
24,000 18$1438Pioneer, HomeDepot
24,000 20$2192Mr. Cool, HVAC Direct
Note: By the time you read this the above product links may have expired. These are not meant to be a shopping directory but rather a sampling of price ranges at a moment in time.

You can see our two factors in action reliably in this data. First, size: the larger the heat pump, the higher the cost. That said, the total spread of prices isn’t enormous: roughly $1000. The majority of the heat pumps are between $1000 and $2000.

For example, you can get an 18,000 BTU heat pump, nominally big enough for a 750 square foot space for around $1000, which is not that much more than a 9,000 BTU heat pump, which is good for small rooms (~300 sqft).

That leads us to the other factor: why is there such a high spread in price for the same size heat pump? Efficiency. Namely in this case we recorded the cooling efficiency (SEER) for each. The higher the SEER rating, the more expensive the heat pump. The two 18,000 BTU heat pumps above with very different prices have very different SEER ratings: 16.8 vs. 20.

Remember the rule of thumb is 24,000 BTUs covers around 1,000 square feet, so since single zone mini splits are meant to heat or cool one room, it’s not common to buy greater than 24,000 BTU single zone units, so $2000 is about as much as you can expect to pay for a single zone mini split heat pump.

If you want mini-split heat pumps to heat and cool more than one room, you can get a 2-zone (or more zones) mini-splits. As you can imagine, costs increase a bit for 2-zone heat pumps. Here is a sampling of some 2-zone mini split heat pump prices found online in 2023:

ZonesSize (BTU)SEER ratingCostBrand, Store, Link
218,000 22.5$2310LG, ecomfort.com
218,00021$2666Pioneer, HomeDepot.com
224,00022.5$2868LG, ecomfort.com
228,00023.8$2300Senville
Note: By the time you read this the above product links may have expired. These are not meant to be a shopping directory but rather a sampling of price ranges.

Ducted Air Source Heat Pump Costs

Here is a similar sampling of price data of ducted air source heat pumps sold online (including air handlers):

Size (BTU)SEER RatingPriceBrand, Store
24,00014$2250Goodman, AC Wholesalers
24,00020$2479Blueridge, Alpine Home & Air
30,00015.5$2523Mr. Cool, Lowes
30,00014$1826Goodman, AC Wholesalers
36,00018$3450Mr. Cool, HVAC Direct
36,00018$4844LG, AC Wholesalers
36,00018$3208Pioneer, Home Depot
42,00014$2849Mr. Cool, Lowes
42,00014$3288Goodman, The AC Outlet
42,00016$3476Goodman, HVAC Direct
56,00014$3590Blueridge, Alpine Home & Air
56,00017$4533Mr. Cool, Lowes
56,00017.5$4128Pioneer, Home Depot
56,00018$4227Goodman, Alpine Home & Air
57,00015$4225Mr. Cool, Home Depot

Here are a few observations on these prices.

  • The smallest ducted heat pumps that are commonly sold online are 24,000 BTUs or 2 tons. This is consistent with the BTUs per square feet table above. 24,000 BTUs is nominally good for a 1,000 square foot home. Smaller than that and you can probably do just fine with a mini-split.
  • Just like mini-split prices, the majority of ducted heat pumps are within $1000 of each other (roughly). Look at the difference in prices between 24,000 BTU heat pumps and 42,000 BTU heat pumps, it’s between the $2,000s and the $3,000s

Categories
Heating and Cooling

Heat Pump vs Air Conditioner: Why They’re More Similar Than You Think

You may have heard that heat pumps can replace a typical gas or oil burning furnace as an extremely efficient way to heat your home. But did you know that a heat pump doesn’t just heat your home, it can cool it too? 

That’s right. 

A heat pump can do the job of a gas furnace and an air conditioner, in one super-efficient solution that could save you money upfront and long term on energy bills. 

If you’ve done any preliminary research into heat pumps and air conditioners, you’ll likely come away with a bunch of questions, such as:

  • What is a heat pump and how does it work?
  • How does an air conditioner work?
  • What are the similarities and differences between heat pumps and air conditioners?
  • What heating/cooling system is best for me?
  • What about efficiency?
  • What is the SEER system?
  • Why is a heat pump better for the environment?
  • How much does a heat pump cost vs an air conditioner and a furnace?
  • How do I find out more/get specific information for my situation?

We’re here to demystify all the above. 

In this article, we’ll explain exactly how a heat pump works versus an air conditioner. And then we’ll discuss why, in many cases, having just a heat pump can be a good solution for home-owners who want a more efficient way to heat and cool their homes that can save money. Specifically, here’s why:

  • Heat pumps are convenient – they heat and cool your home so they replace your gas furnace and your AC unit with one appliance.
  • You can replace just your AC unit with a heat pump. It will cool your home and work as a back-up for your existing furnace (and can replace it over time).
  • Heat pumps can mean saving on your utility bills because:
    • Heat pumps are much more efficient than a furnace for heating (300% efficiency vs 95% at best for a furnace).
    • High efficiency heat pumps cost less to run than an air conditioner. This is because they dehumidify air better and use less energy.
  • Heat pumps don’t have the risk of carbon monoxide poisoning or gas explosion that gas furnaces do.

We’ve researched the cost implications of buying a heat pump vs an air conditioner with a gas furnace. Plus, we’ve linked to a ton of sources and videos that you’ll find useful if you want to take an even deeper dive into the topic. 

If you’ve read what we’ve written so far, and you’re already convinced that heat pumps are worth considering, we suggest you contact 2 – 3 local HVAC companies (using Home Advisor, Yelp, or similar sites to find companies near you), and ask them these questions:

  • How much would an installed heat pump cost vs an air conditioner?
  • How much would the running costs be in our area for each?
  • What’s the best/most cost-effective way to heat and cool my home bearing in mind what appliances I already have (e.g. gas furnace)?
  • Are there any incentive schemes or rebates in our area for installing a heat pump?

What is a Heat Pump?

In basic terms, a heat pump works in the same way as an air conditioner. So, while an air conditioner moves heat from your home to the outside and blows cool air back in, a heat pump does the opposite. We’ll get into the details of how heat pumps and air conditioners work below, but the key piece of information is that both devices run on electricity and not gas

Why is this important?

Because most people in the US use gas (or oil) furnaces to heat their homes and this is not necessarily the most cost-effective or efficient way. Let’s dip into that briefly.

How Do Gas Furnaces Work?

Furnaces burn fuel to create heat. Once the heat is created, it is sent through a network of metal tubes known as a heat exchanger. Then, an “air handler” system blows air through the hot tubes, creating a stream of warm air that’s blown into your house to heat the rooms.

Image: AMRE

The most common fuel used in the U.S. is natural gas because it’s the cheapest. Other, less common furnaces run on oil, propane and electricity. 

Here’s a 5 minute You Tube video by AMRE Supply that explains how a furnace works.

How a Furnace Works / Repair and Replace

Without delving too deeply into the mechanics of gas furnaces here, the key takeaways of using a gas furnace to heat your home are:

  • Gas furnaces are by far the biggest contributing cost to your gas bill. Unless you live in a warm climate and don’t switch on your heating much, your gas furnace uses a lot of gas – for more than your stove (smaller fire, a lot less heat, far less usage). And, if you live in a colder climate, you’re going to have your furnace running even more.
  • Gas furnaces only heat your home, they don’t cool it. So, if you live in a warmer climate where you need air conditioning, you’re going to have to buy a separate AC unit. This means two different devices to buy and maintain, and find space to house.
  • Burning gas comes with safety risks such as carbon monoxide poisoning and even gas explosion.
  • Gas furnaces are typically only around 85% efficient (in contrast to a heat pump which is 300% efficient). This is because they can’t collect all the heat from the gas they burn.

Aside from the points above, it’s important to note that the only reason gas furnaces compete with heat pumps at all is because of the relatively low cost of gas in the United States, compared with electricity. 

You can read more about how heat pumps measure up to furnaces in this in-depth piece: Heat Pumps vs. Furnaces

Let’s get back to heat pumps and air conditioners.

How Do Air Conditioners and Heat Pumps Work?

A heat pump works exactly like an air conditioning unit, but it can also operate in reverse. This means it can be used to cool your home and heat it. 

We’ll discuss how an air conditioning unit works first.

What is Air Conditioning?

An air conditioner is an electrical unit that extracts the heat from your home and moves it outdoors, making your home cooler. It does a great job of cooling your home but that’s all it does. If you want to heat your home, you need a separate HVAC appliance to do that. 

How Does Air Conditioning Work?

AC units use a “refrigerant”, which is just a fluid that is cooled down so that it absorbs heat from inside your home or room and cycles it across a network of piping to a coil in a unit outside, where that heat is released. It then is cooled back down, sent into your home, and the cycle starts again. So ACs simply cycle a refrigerant around pipes to grab heat from inside your house and transfer it outside, cooling your home. The key feature here is that ACs don’t consume a fuel. They don’t burn gas or use oil. They just use electricity to cycle the refrigerant, compressor or expand it to heat or cool it, and run the fans. This is also true of heat pumps (which are just ACs that run in both directions) and is a key reason why they can save money compared to furnaces for heating. 

Most AC units operate as “split systems” — a hot, condensing side (which includes a condensing coil, compressor and fan) which lives outside your house, and a cold unit that sits inside your home. 

This diagram from Energy Star provides a good “at a glance” explanation. 

Here’s a useful video from The Engineering Mindset that explains in more detail how an AC system works: 

Air Conditioning System Basics hvacr how does it work

And this article from Jacobs explains more about the different types of air conditioners and how to choose one. 

The Obvious Drawback of Air Conditioners: They Only Cool, They Don’t Heat

We’re stating the obvious, but AC units do a great job of cooling your home in the warmer months, as well as filtering air, but they don’t heat.

And that’s fine if you only need an AC system. But that’s rare. Even if you live in one of the warmer states like Hawaii or Florida, you’re still going to want some form of heating during the cooler months. 

The chart below shows the average monthly temperature in Florida. Most people living there would want heating during at least three months of the year (Dec – Feb), maybe even four or five (Nov – Mar). 

Image: Current Results

So, this means you need to invest in two sets of equipment – AC and some kind of heating system. As we’ve discussed, most people in the US tend to have gas furnaces. But, as we’ve mentioned already, a heat pump can do both jobs — cool your home and heat it. 

We’ll take a deep dive into heat pumps next, and then we’ll consider the cost implications of having a heat pump versus an air conditioning unit with a gas furnace.

How Heat Pumps Work

A heat pump works exactly like an air conditioning unit, cycling a refrigerant from inside to outside to move heat from one place to another.  The only difference is that a heat pump can also operate in reverse. This means it can be used in place of an AC unit and a furnace to cool your home and heat it.

When a heat pump is used to heat your home, instead of absorbing heat from inside your home and dumping it outside like an air conditioner, the refrigerant absorbs heat from the outside and dumps it into your home as warm air. It can do this because, via an expansion valve, it cools down the refrigerant to such low temperatures that it’s colder than the air outside., So,so when that outside air passes over the refrigerant, the refrigerant heats up a little —, heat that will eventually be dumped into your home. Specifically, using a compressor, the refrigerant is turned into a high pressure vapor. The pressured gas increases in temperature and its hot vapor flows through the heat exchanger. A fan then blows warm air through it and this is transferred into your house via your air ducts. 

The result is the same as a furnace which also blows warm air through the air vents in your house. The difference is that, just like an AC as we mentioned above, heat pumps don’t burn fuel (e.g. gas), they just use the refrigerant to move heat from one place to another. 

This is also why they can have energy-in/energy-out efficiencies as high as 300%, unlike furnaces which top out at around 95% efficiency because at best you can capture 100% of the heat in a fuel (and you never will capture 100% in real life). A heat pump only needs electricity to run the compressor (which heats the refrigerant), cycle the refrigerant around, and run the fans, but the actual heating and cooling effect is done by grabbing heat and moving it, which is a lot more efficient than burning a fuel. 

The diagram below from Energy Star illustrates the process of a heat pump. 

Here’s a video from This Old House which explains the basics of how a heat pump works: 

How a Heat Pump Works | This Old House

Or if you want a more in-depth look, here’s another video from The Engineering Mindset

Different Types of Heat Pumps

Before we dive into the different types of air source heat pumps (which we’re talking about in this article), it’s worth noting that there are also ground source heat pumps. These pipe the refrigerant into the ground outside your house (instead of to the air outside, like the far more common air-source heat pumps we’ll be discussing in the rest of this article) and the refrigerant exchanges heat with the ground. They are much more expensive, are not typically used in the US and are more commonly used in really cold countries where the ground has more heat than the outside air.

Back to air source heat pumps.

There are two main types of air source heat pump — ducted (split) or mini-split (ductless) heat pumps. The ducted configuration operates via a single unit which sits outside your home and is connected to ducts in your home through which the warm or cooled air flows – many look just like an AC unit that sits outside a home. Mini-split heat pump units, on the other hand also have the outdoor unit but inside, instead of connecting to ducts, they have individual wall units that release the hot or cold air into the room, like the wall units you see in hotel rooms.

Image of ducted heat pump: Energy.gov

Benefits of a Heat Pump

The key advantage of a heat pump is that it does the job of your gas furnace and your air conditioner — it produces heat and cools the air. This, in itself, is a huge benefit, and there are others too:

  • It doesn’t use gas, so your gas bill will be reduced significantly if you’re not using a gas furnace which typically guzzles the most gas in your home.
  • It’s super energy-efficient — up to 300% energy efficient meaning that for each unit of energy it uses, it generates 3 units of heat. This is huge compared to a gas furnace which is only 85% efficient (or 95% at best). 
  • Increased efficiency saves you money. We’ll get into the costs below, but for many homes and climates, using an efficient heat pump saves money every month once you break even on the upfront cost. 
  • There’s no risk of carbon monoxide poisoning from a heat pump because it runs on electricity. (Note: if you use other gas appliances such as a stove you will still have a risk from those). 

FAQs About Heat Pumps

Do heat pumps work in really cold temperatures?

Yes, they do!

This question is a common myth about heat pumps that dates from the 1980s when heat pumps didn’t work too well in extreme temperatures. These days, heat pumps work extremely well in the coldest of climates (think Norway). This is because their components have been refined to do just that. In particular, modern compressors (which heat up the refrigerant) now operate at variable speeds instead of just on or off so this allows them to work super-hard in cold temperatures.

If you need proof that heat pumps work well in really cold climates, ask any Scandinavian. Norway, Finland and Sweden have the most heat pumps per capita in the world and they are the coldest countries in Europe. 

In the US, the third coldest state (by average temperature), Minnesota, is promoting heat pump installations. Minnesota Power offers a program promoting heat pumps, including rebates and savings which demonstrates its endorsement of this efficient technology. The coldest state, Alaska, also has multiple heat pump incentives. 

How do heat pumps work even when it’s below freezing outside?

The refrigerant used in a heat pump is crucial to how it performs in cold conditions. Because heat always travels from hot to cold, if the refrigerant is even colder than the outside temperature, even if the outside temperature is below freezing, heat will still travel from the outside air to the refrigerant. Typical refrigerants used in heat pumps can get down to -37F. This means most modern heat pumps can operate in temperatures right down to -13F which pretty much covers almost all inhabitable cities with decently sized populations.

This article from Sealed explains how heat pumps work in super-cold temperatures which should dispel any lingering worries.

Again, if Finland, Norway, Minnesota and Alaska are promoting heat pump installations, you should be fine. 

Do I need a heat pump, a furnace and/or an air conditioner?

In many cases, a heat pump alone will be enough to heat and cool your home. However, everybody’s situation is different and there are several factors to consider:

  • The climate where you live
  • The cost of gas where you live
  • The cost of electricity where you live
  • The size of your house
  • What heating/cooling arrangement you currently have (existing furnace, ducts, etc.)
  • How warm/cool you like your house

To get a definitive answer, you need to ask a local HVAC company (or, even better, three companies) to work this out for you. They will estimate how much a heat pump would cost to install and run based on the electricity costs in your area, versus having a furnace and an air conditioner, or, whether it’s more cost effective and efficient for you to just have a heat pump.

If you already have a furnace and you’re just looking to replace your air conditioner, it’s definitely worth considering replacing your AC unit with a heat pump and using that to cool your home. Depending on the relative cost of gas vs. electricity in your area (or whether you have rooftop solar), you can use your heat pump just like an AC in the summer for cooling and either the heat pump or a gas furnace in winter for heating.  It’s worth considering that the upfront costs of an AC unit are less than a heat pump — we’ll get further into the all important costs below.

In time, when your existing furnace needs replacing, you’ve already got a heat pump so you can switch to that as your source of heating and cooling without needing to spend any capital on a new furnace.

What Industry Standards to Look For (Heat Pumps & AC)

Before we get into costings, there’s some industry jargon around measuring the efficiency of air conditioning and heat pump systems that’s helpful to understand — SEER, EER, HPSF and the Energy Star label.

What Are SEER and EER Ratings?

SEER stands for seasonal energy efficiency ratio. It’s a standard used in the US heating and cooling industry to measure how well a system (AC unit or heat pump) cools a space and the amount of electricity it uses. According to the Department of Energy Guide, the SEER equals the cooling output of a system (in BTUs*) divided by its overall power consumption (in watt-hours) during the cooling season. This measure is specific to the temperate climate in the middle of the US. 

EER is similar except it measures efficiency when the outdoor temperature is at 95℉ specifically rather than the whole season.

The higher the SEER and EER ratings, the more energy-efficient the system. 

Air conditioning units that are 15 years old typically have low SEER ratings of 8-10. Since 2006 all AC units sold in the US must have a SEER rating of at least 13 and most modern units are rated between 13 and 21. 

Importantly, upgrading from, say a SEER rating of 9 to 14 can reduce your energy consumption by 35%. Of course, there’s the initial outlay for the equipment (which we’ll talk about in more detail later), but, if you’re paying $100 per month to run your AC unit, this cost will come down to $65.

SEER ratings are also used for air source heat pumps which can heat and cool your home. The Department of Energy recommends you look for an Energy Star qualified heat pump (more on this below) with at least a SEER rating of 14.

*BTU – British Thermal Units

What is HPSF?

The other term to consider for heat pumps specifically is its HPSF – the Heating Seasonal Performance Factor. The HPSF is the ratio of the total heat output (in BTUs) during a normal heating season divided by the total energy (in watt-hours) consumed during the same period. It’s basically the SEER rating for heating.

As with the SEER and EER ratings, the higher the HPSF rating, the more efficient the heat pump.

Energy Star qualified heat pumps have a HPSF of at least 8. 

What is the Energy Star Label?

Energy Star is the performance label which meets the US Environmental Protection Agency requirements. 

AC systems and air source heat pumps that have the Energy Star label must have a SEER rating of at least 14. Heat pumps must also have a HPSF of at least 8.

Buying a HVAC system with the Energy Star label ensures you are investing in a system that meets high efficiency standards.

At a Glance Essentials and Benefits of Industry Ratings

To summarize, if you’re buying a new AC unit and/or air source heat pump, systems should have:

  • ASEER rating of at least 13 (going up to 33). 
  • An EER rating of at least 10 (going up to 14).
  • A HPSF rating of at least 8 (going up to 14)
  • An Energy Star qualified system (this will mean the SEER rating will be 14 or above).

You will pay more for a system with higher ratings (because they’ll save you on electricity bills during the life of the product) and you should take advice from your local HVAC advisor on the best option for you. However, these are some of the benefits that will offset the initial outlay:

  • Reduction of utility bills: Choosing a system which is more efficient will use less energy and could reduce your electricity bill significantly.
  • Provide more indoor comfort: As well as sweltering heat, humidity can be a problem for people living in the southeast and southwest. An AC unit (or heat pump which you use for cooling) with a higher SEER rating will not only cool your home more efficiently, it will also manage the humidity more effectively too.
  • Kinder to the environment: Choosing a heating/cooling system with a high SEER rating will reduce your carbon footprint. 

You can read more in this article by American Standard who advise that where you live will impact what SEER rating you choose as well as the size of your family and your home. 

What About Costs?

Working out what system is right for you, for example, AC unit plus gas furnace, heat pump plus gas furnace, or just a heat pump that heats and cools your home, ultimately comes down to cost.

As we mentioned above, there are many factors to take into consideration. To recap:

  • The climate where you live
  • The cost of gas where you live
  • The cost of electricity where you live
  • The size of your house (which will have a bearing on what size HVAC equipment you need).
  • What heating/cooling arrangement you currently have (existing furnace, ducts, etc.)
  • How warm/cool you like your house

In addition, there will be variances in cost dependent on what SEER rating (and other ratings) you choose, that will impact the initial outlay and the running costs. 

To get more information and estimated costs for your specific situation you’ll need to contact 2 – 3 local HVAC companies (a good place to start is the Home Advisor site), and ask them these questions:

  • How much would an installed heat pump cost vs an air conditioner?
  • How much would the running costs be in our area for each?
  • What’s the best/most cost-effective way to heat and cool my home bearing in mind what appliances I already have (e.g. gas furnace)?
  • Are there any incentive schemes or rebates in our area for installing a heat pump?

There are two areas of cost to consider — 1) Upfront costs to buy and install your appliance/s and, 2) Ongoing running costs in your area.

We’ve done some research into both and, before we dive into some detail, there are some high level takeaways (with the disclaimer that, of course, prices for each appliance vary hugely). But, broadly speaking, we found the following to be true:

  • Upfront Costs:
    • An AC unit is usually cheaper than a heat pump to buy and install but there are some comparable prices with heat pumps.
    • A gas furnace is cheaper than a heat pump to buy and install.
    • The cost of an AC unit and a gas furnace together is slightly more or comparable to a heat pump to buy and install (and, remember, the heat pump does the job of both appliances).
  • Running Costs:
    • A high efficiency heat pump can be slightly cheaper to run than an AC unit.
    • A heat pump can be slightly cheaper to run than a gas furnace but this depends heavily on the gas vs electricity costs in your region. Again talking to multiple HVAC companies in your area to go over this is advised. 
    • A heat pump is much cheaper than other forms of heating, in particular electrical resistance heating (space heaters, baseboard heaters).
    • The more you spend upfront on a super-efficient heat pump, the more your running costs will reduce (dependent on the gas vs electricity cost in your area).

Let’s delve into some basic numbers so you have an idea of the costs for each appliance as a starting point.

Upfront Costs of AC Unit and Gas Furnace vs Heat Pump

Air Conditioning Units

According to Home Advisor, the cost of a 3 ton – 5 ton AC Unit including installation ranges from $3,800 to $7,500 with the average homeowner spending under $6,000. 

(Info from Home Advisor Nov 22)

This is consistent with this article by Bob Vila which gives a complete lowdown on air conditioners.

Gas Furnaces

Replacing a furnace costs anything from $2,700 to $6,400 and you’ll pay more for high-efficiency models (although these will never exceed 95% efficiency, unlike the 300% efficiency of a heat pump).

AC Unit Plus Gas Furnace

So, bearing those ballpark figures in mind, the approximate cost of an air conditioning unit plus a gas furnace (i.e a complete HVAC system) ranges from $6,500 to $13,900. The lower figure is an absolute minimum and would not have anywhere near the efficiency benefits of a heat pump.

Heat Pump

In comparison, the price of a standard split heat pump (that feeds into your duct system just like a furnace and AC unit) ranges from $5,500 at the basic level up to $13,000 for a super-efficient high SEER rated heat pump with advanced features like variable speed (to control the comfort of the air flow). This is discussed in more detail in this video from HVAC company Fire & Ice

[Note, as we mention below, starting in 2023 and running until 2032, there is a federal 30% tax rebate on heat pumps – a significant reduction in installed price for heat pumps.]

Depending on what type of heat pump you can afford, the price range for a heat pump is comparable to replacing an AC system alone and actually replacing your entire HVAC system of AC and gas furnace. Again, this is something you need to discuss in detail with your local HVAC company. 

Running Costs of AC Unit and Gas Furnace vs Heat Pump

The biggest variable for any HVAC appliance is its running costs. This is the key factor to consider when discussing your needs with an HVAC advisor. Gas is currently relatively cheap in many areas of the US — approximately 2X – 3X cheaper than electricity (per unit energy) — so this has a significant impact on whether you choose appliances that run on gas or electricity.

In general terms, the cost of running an AC unit and a heat pump is comparable, since they both run on electricity. However, a heat pump with a high SEER rating will run more efficiently than an AC unit. This type of heat pump manages humidity more effectively and therefore uses less energy. So, it may be that a heat pump has lower running costs than an AC unit. 

Because heat pumps are 3 – 4 times more efficient than gas furnaces, but gas is 2 – 3 times cheaper than electricity, running a heat pump will generally work out slightly cheaper (or more-or-less the same) as a gas furnace. It’s important to remember though, that this is only because of the current low natural gas prices in the US. And this doesn’t apply to all areas, for example, Hawaii, where gas is as expensive as electricity. 

Here is a map of electricity prices as the time of publication from the EIA: 

In general, if you’re in one of the lighter blue states, your electricity is pretty cheap (compared to the average) and a heat pump is worth considering. If you’re in the darker blue states (in particular California, Massachusetts, etc.), it may be more expensive to heat your home with a heat pump than a gas furnace. 

So, the only reason gas furnaces are able to compete with heat pumps on running costs is because of the low cost of gas. And, of course, this is something that can change.

It’s worth mentioning that, if you have rooftop solar, this will make the running costs of a heat pump (and/or an AC unit) extremely low since you’ll effectively be generating your own electricity, whereas you still have to pay for gas.

Plus, electric appliances need less maintenance compared to combustion (gas, oil) heating systems so repair costs will be less too. 

Depending on your local gas and electricity costs, the more super-efficient your heat pump, the more you’ll save on running costs over time.

Here’s some interesting analytics from Carbon Switch.

AC Units are Cheaper Upfront But Heat Pumps Will Save You Money Over Time

According to an article by Carbon Switch, while AC units may be cheaper to buy and install, a heat pump can save you $10,000 over the lifespan of the unit. So, if you have the money to spend on a heat pump, that’s a significant saving.

Image: Carbon Switch

Note: These upfront costs (in green) are at the high end of the pricing spectrum, so we assume they are based on larger-sized units (3-5 ton) and high SEER ratings. 

The article also says that, as an alternative to using existing ducting or having ducts installed, you can buy a mini-split heat pump system which doesn’t need ducting and is easier to install than ducted HVAC systems. 

Financial Help With Buying a Heat Pump

If the initial outlay for a heat pump is an obstacle, many states offer rebates and incentives which can make a big difference. In particular the 2022 Inflation Reduction Act has implemented a 30% federal tax rebate for buying a heat pump (up to $2000). This tax rebate starts in 2023 and is slated to last until 2032. Thirty percent is a big deal. That means a fully installed heat pump at $8,000 would only cost you $5,600 after the rebate. This can significantly tilt the scales of heat pump vs. air conditioner + furnace in favor of a heat pump.  You can go to the DSIRE database to check if there’s a scheme in your region. 

Again, discuss this with your HVAC advisor when you ask for quotes.

Heat Pumps are the Carbon-Friendly Choice and a Necessary Part of Reaching Net Zero Carbon Emissions

Aside from the benefits of heat pumps we’ve already discussed — primarily that they do the job of two HVAC appliances, heating and cooling your home, plus they can reduce your utility bills over time — the other key benefit is that heat pumps are the carbon-friendly choice.

This is because they run purely on electricity (which can be generated from non-carbon emitting sources) and don’t use gas (which is a fossil fuel and will release CO2 when burned). Experts agree that, to avert the climate crisis, we need to move away from natural gas in order to hit net-zero emissions, and heat pumps are part of how we’ll achieve this. 

Heat pumps are more than three times more efficient than gas furnaces in terms of the energy they use to create heat. So, even if your electricity comes from fossil fuels (which some does), you’ll use far less of it to heat your home. 

Electricity also has a good chance of being produced with a renewable source whereas gas doesn’t. In 2020, 20% of US electricity generation was from renewable sources and many states (California, Vermont and South Dakota, to name a few) are generating most of their electricity from non-GHG sources. 

If you care about solving the climate crisis, note that at some point humans need to stop burning natural gas to get to net zero carbon emissions. As long as homes are heated with natural gas furnaces, that’s impossible. So, even if you get a heat pump and today you’re buying electricity from the grid, some of which is produced by carbon emitting sources, you’re definitely emitting significantly less carbon than by burning gas because of two reasons: (1) heat pumps have 300% energy efficiency vs 95% for a furnace meaning they only need one unit of electricity to generate 3 units of heat, versus 1 to 1 for a furnace, and (2) majority of states in the country now get a sizeable portion of their electricity from non-carbon emitting sources. 

Finally, importantly, by getting a heat pump you’re also contributing to the infrastructure change that needs to happen in order to eventually get to net zero carbon emissions.

Next Steps

We’ve discussed that having a heat pump that heats and cools air is the obvious solution for most homeowners who want to make climate-conscious decisions. A heat pump replaces the need to have an AC unit and a gas furnace, it’s convenient, super-efficient and kind to the environment. For an initial capital outlay, heat pumps will likely save you a significant amount of money on your utility bills over time, depending on your local gas and electricity costs.

To get more information and estimated costs for your specific situation contact 2 – 3 local HVAC companies (start with the Home Advisor site), and they’ll work out the installation and running costs of different heat pump vs air conditioners and gas furnaces for you.

Categories
Heating and Cooling

Heat Pump vs. Furnace: Cost, Differences, and Recommendations

We’ve noticed that most discussions about heat pumps vs. gas furnaces are very unsatisfyingly boring: they never tell you what you should get! They just list some pros and cons and say “well it depends on you!”. That’s not very helpful.  

This article is different.  

The more we researched heat pumps, the more we realized that except for a few extremely rare scenarios, heat pumps are likely the better choice for the majority of households. Here’s why:

  • Heat pumps can save a lot of households money on their utility bills (details, exceptions and scenarios below)
  • Heat pumps can heat and cool (so they replace your A/C too)
  • Heat pumps don’t come with any carbon monoxide risk (“the silent killer”)
  • Heat pumps don’t come with any gas explosion risks
  • Heat pumps are more efficient than a furnace (their famous “300% efficiency”)
  • Heat pumps made today can work well down to -13F (very few places where people live get below that), in fact as we show below, Norway is one of the world leaders in heat pump installations per capita – yes, Norway. 

In particular, a heat pump is an absolute no-brainer if:

  • You have solar on your roof because your cost of electricity is very low (or zero most of the time) so a heat pump will save you a bunch of money on avoided gas costs
  • If you also need an A/C (that is, you’re installing a full HVAC system) because a heat pump replaces both things with one device, saving you a decent amount of money upfront
  • If your other option is propane based heating, electric resistant heating (baseboard heater) or other non-efficient heating
  • If you care about your carbon impact, because electricity has green sources while natural gas doesn’t, so a gas furnace guarantees fossil fuel use and carbon emissions.  

So this article makes the case for getting a heat pump, in particular, air source heat pumps. We’ve tried our best to share our research, link to many useful articles and videos, and explain our reasoning for why we think most households are better off getting a heat pump. 

Of course it’s still up to you what to get, but we think taking this clear, line-in-the-sand stance is more useful than throwing up our hands, shrugging, and saying “I don’t know, here are some basic definitions, you decide” (which we feel many articles on this topic do).  

We’ve done our best to link to sources and explain why we believe each claim we’re making, but of course, this is all just our opinion and every homeowner and household and person needs to decide on these purchases themselves. 

If you want to save time from reading this article and are considering getting a heat pump and simply reading the above has convinced you it’s at least worth a serious look, the most effective thing you can do is to call 2 – 3 local HVAC companies in your city and ask them the key questions: 

  • How much would an installed heat pump system vs. gas furnace cost? 
  • What have other customers with heat pumps said about it? Are they saving money? Is it heating enough? 
  • Are there local rebates in our area for installing a heat pump (there are in many places right now)

Contents: 

  • How heat pumps work vs. how furnaces work
  • Why a heat pump is a better choice for most homes
  • The only two reasons a furnace may be better for you

How Heat Pumps Work vs. How Furnaces Work

How Gas Furnaces Work

Furnaces are pretty simple to understand: they burn fuel (e.g. natural gas) to create heat, that heat is sent through a bunch of weaving metal tubes (a heat exchanger) which gets hot, and an “air handler” system blows air through those really hot metal tubes, creating a stream of warm air that’s blown into rooms in your house. Furnaces burn fuel of different types but the cheapest (and therefore most common) fuel in the U.S. is natural gas. There are also electric furnaces and oil furnaces, but they are less common.

Here’s a great diagram from the YouTube video linked below to visualize this:

This, as well as how variations of furnaces work like condenser furnaces, single stage vs. dual state, and more is explained succinctly and well in this 5 min YouTube video by AMRE Supply: 

How a Furnace Works | Repair and Replace

In terms of what matters for you: 

  • Burning gas comes with safety risks (namely, carbon monoxide poisining)
  • It also means you have a gas bill. In fact, gas furnaces are typically the biggest user of gas in a home, way more than gas stoves, and typically more than gas water heaters, meaning it’s the thing most responsible for high gas bills. This is more true the colder your climate is. 
  • Gas furnaces only heat, they don’t cool. So if you live in a place that gets hot, you’ll need a separate A/C unit. 

How Heat Pumps Work 

Most people haven’t heard of heat pumps and have no clue what they are or how they work. We’ll change that. 

Outdoor units of heat pumps sitting outside a building, just like A/C units (from energy.gov

In short, they work basically like an air conditioner that can also work backwards. Yes, that means heat pumps can both heat and cool your home and they can replace both a furnace and an air conditioner. Specifically, a refrigerant (basically a fluid) is cycled through coils that go outside and inside your home. In heating mode, the refrigerant is cooled before it goes outside, then sucks heat from the outdoor air and releases that heat inside and cycles back again. In cooling mode, it does the opposite: it sucks heat from your room (making your room colder) and releases that outside.

In more detail, heat pumps also use heat exchangers (like we discussed above for gas furnaces) to actually transfer the heat from the refrigerant to your home. But instead of burning a fuel to heat up the heat exchanger, in a heat pump, the refrigerant is turned into a high temperature vapor via a compressor, which uses electricity to compress the gas. When gasses compress they get hotter. That hot vapor flows through the heat exchanger, and a blower fan blows air through it. This heated air then circulates through your air ducts, again, just like a furnace.

Types of Heat Pumps

There are two types of heat pumps people talk about: air source heat pumps and ground source heat pumps. 

What we’re talking about throughout this article is air source heat pumps, which means, just like your A/C unit, the refrigerant cycles outside and exchanges heat with the outside air (drawing heat from it in heating mode, or expelling heat to it in cooling mode). 

But there are also ground source heat pumps, where piping takes the refrigerant into the ground outside your home or building and the refrigerant exchanges heat with the ground. They are used in colder climates when the ground has more heat than the outside air, but they are much more expensive to install and a lot less common. And, as we discuss at length below, modern air source heat pumps that you would buy today work really well in cold climates, down to -13F, which most inhabitable places do not reach often, are extremely popular in cold countries like Norway and Finland, and therefore should be fine for you. 

Finally, there are two types of air source heat pump configurations to consider: ducted and mini-split heat pumps. Ducted heat pumps work like the A/C units you see outside most single family homes: a single unit connects to the ducts in your home and pushes cold or hot air throughout the house. Mini-split heat pumps are smaller units with an outside unit that connects through the wall to an indoor unit that is attached to the interior wall of a room (like the wall A/C units you see in many hotel or motel rooms).

Benefits of Heat Pumps

So the end result for you is effectively the same as a furnace: hot air blowing through the vents of your house (for a duct based heat pump). The difference is heat pumps  just don’t need to burn any fuel (like natural gas) to do it, just electricity to run the fans and cycle the refrigerant around and compress it to make it hot and release it again to make it cold. The fact that heat exchangers don’t need to burn a fuel like natural gas to blow hot air through your home gives them their advantages

  • No gas costs, only electricity. For most homes, especially in colder places, the furnace is the biggest source of gas use, so removing it can dramatically cut your gas bill (think of how often your heater is on vs. your stove and how much more gas your heater likely uses, it’s a lot). 
  • No gas means no carbon monoxide risk from the heating system. Of course, if you have other gas appliances like a gas stove or water heater in your home, don’t throw away your carbon monoxide detectors quite yet! But each gas using appliances you remove means one less risk of carbon monoxide poisoning, which is incredibly dangerous and very often fatal. 
  • Because it’s not using a fuel, just cycling a refrigerant around, it’s energy efficiency is really high, commonly 300%. Meaning for each unit of energy a heat exchanger uses to run, it gives you 3 units of heat. 
  • For many homes and climates, the increased efficiency of a heat pump means it can save you money every month on your utility bills (detail below).

Useful Videos and Images To Further Learn How Heat Pumps Work

One of the best videos I’ve found to learn how heat pumps work is from This Old House: 

If you want an even more technical, engineering focused video, you can check this one out from The Engineering Mindset:

Although this diagram looks complicated, it’s one of the best to truly understand how a heat pump works (from the video above): 

Do Heat Pumps Work in Cold Temperatures? 

A resounding yes! This is one of the biggest myths about heat pumps – that they don’t work well in really cold temperatures, but as this article from Sealed explains, this myth is part of an old lingering reputation from how heat pumps were made in the  1980s. It’s no longer true. Modern day heat pumps can work great down to -13F (-25C). 

As Sealed explains, this is due to significant improvements in how key components in heat pumps are made, most importantly the compressor, which compresses the refrigerant to heat it up. These compressors are now variable speed (as opposed to just on and off) which allow them to work extra hard in cold temperatures.

How can a heat pump actually extract heat from the outside when it’s -13F degrees outside? 

Because heat always travels from hot to cold, and heat pumps can make their refrigerants really cold before sending it to the outside air. For example, as the This Old House YouTube video embedded above explains, an expansion valve lets the gas expand, which cools it down, and that can get the refrigerant down to -37 degrees Fahrenheit! So if the refrigerant, sitting at a frigid -37F is exposed to your outside air that’s -13F, the outside air is still hotter than the refrigerant and thus will warm it up. 

Heat Pumps Are Really Popular in Some of the Coldest Countries

If you’re still not convinced, consider that Norway — yes, super cold Norway – is the world leader in per capita heat pump installations. In Europe, the top 3 countries in heat pumps installed per capita are Norway, Sweden, and Finland, the coldest countries in Europe! 

Here’s the full chart of European heat pump installations per capita from resilience.org:

Why are countries with the coldest climates turning more and more to heat pumps? 

First, because, like we said, heat pumps work really well down to and outdoor temperature of -13F, and very few places that humans live get to -13F

For example here average temperatures in January (High/Low) from Oslo and Helsinki as well as two cold cities in the US: Anchorage Alaska and Minneapolis, Minnesota: 

  • Oslo, Norway: 32F/23F
  • Helsinki, Finland: 29F/20F
  • Anchorage, Alaska: 23F/11F
  • Minneapolis, Minnesota: 22/6F

Even Minneapolis, the coldest of those 4 cities, is seeing heat pump installations rise and has a program from their power company, Minnesota Power, promoting heat pumps. Those two facts would only be true if heat pumps worked in Minneapolis, which they do. On that second linked page, Minnesota Power even says what we’re saying in this article: that current heat pump technology has them working fine all the way down to -13F. 

Basically, unless you’re living in a city that’s colder than Minneapolis — or, said another way, a place where the temperature routinely goes lower than -13F — a heat pump can heat your home just fine. 

Second, places where it’s cold turn to heat pumps more because those people spend a lot of money on heating! If you’re in Miami where January’s average low is, I kid you not, 63F, you probably don’t think about your heating costs that much (by the way, you should still get a heat pump in Miami though because heat pumps are also air conditioners). But if you’re in Norway or Minneapolis, you spend a lot on heating, so being efficient saves you money

So if the coldest countries and states are seeing heat pump installations explode, it probably means heat pumps heat homes pretty well.

Efficiency: Why Heat Pumps Are So Much More Efficient

Gas furnaces are typically around 85% efficient with modern high efficiency gas furnaces running around 95% efficiency. Gas furnaces are never 100% efficient because you’re burning the gas and then trying to collect as much of that heat as possible, and you can never capture all of it (for example, you need to send the harmful gas like carbon monoxide away in a flue vent, or risk carbon monoxide poisoning, so that will by definition carry some of the heat with it). 

In contrast, it’s well documented that heat pumps are 300% or 400% efficient. 

How is that possible?

Because heat pumps aren’t burning anything to generate heat, they’re just moving a fluid around and transferring heat. The electricity used is just for moving this fluid around (and compressing it, to get it hot before it transfers that heat to your home) and running the fan that blows the hot (heating mode) or cold (cooling mode) air throughout your home. So you’re just using the refrigerant as a metaphorical conveyer belt, and moving it around in a loop, outside to inside, outside to inside. It doesn’t take that much energy to do that in comparison to burning a fuel. 

So for example, say your home needs 1000 kWh of heating in a winter month (this obviously varies drastically depending on where your home is located, it’s size, how well insulated it is, and what you set your thermostat to, but 1000 is a round number we can work with and in the range of how much heat a 1000 – 1500 square feet home in a mild climate may need). 

To output 1,000 kWh of heat, you’ll need 1,111 kWh of natural gas with a 90% efficient gas furnace. 

In contrast, a 300% efficient heat pump would only require 333 kWh of electricity to generate that 1,000 kWh of heat. 

So simply put, heat pumps are well known to be far more energy efficient than gas furnaces. 

But how does that translate to cost? 

Heat Pump vs. Furnace Cost to Operate

To properly calculate your exact heating costs using a heat pump vs. a gas furnace you need a lot of different inputs: 

  • Your climate zone 
  • The size of your house
  • What temperature you like to set your thermostat to during the day vs at night
  • How often you are home and using the heater
  • Cost of electricity for you
  • Cost of gas for you

Obviously that’s going to get complicated, so to be more helpful, we need to approximate. We’ve done that and here are some high level takeaways. Note that to get your exact cost of operating a heat pump, you need to call a local HVAC company and have them estimate the size of heat pump you need and help you figure out your monthly cost. Most will do this for free and most will give you an honest opinion of heat pumps vs. natural gas furnaces (because they don’t care as long as you go with them to install either one). 

Heat Pumps Are Typically Slightly Cheaper to Operate Than a Natural Gas Furnace

The roughest approximation can be done by noting that natural gas costs are often 2X – 3X cheaper than electricity on a per kWh basis. (You can deduce this by looking up residential natural gas prices on EIA.gov, and translating that cost, which is dollars per thousand cubic feet to dollars per kWh, by dividing by 293). Here is an example of some of the August 2021 prices in $/kWh: 

So if heat pumps are 3X – 4X more efficient than gas furnaces but gas is 2X to 3X cheaper than electricity, depending on where you live, running a heat pump (compared to a gas furnace) will be slightly cheaper or roughly equal to heating your home with a natural gas furnace. 

What’s important to note here is that the only reason natural gas furnaces compete at all with heat pumps on operating cost for heating is because natural gas is extremely cheap in the United States. If you live somewhere where natural gas costs are equal to or more expensive than electricity (I’m looking at you, Hawaii) chances are very high that a heat pump will be much cheaper. And, as the data below shows, if you’re heating your home with any other method (propane, fuel oil, baseboard heaters, etc. a heat pump will likely save you a lot). 

This is consistent by an analysis by Carbon Switch, who used NREL data to approximate how much money you’d save by switching to a heat pump from different existing heat systems: 

You can see that the average annual savings of a heat pump when you’re switching from a natural gas furnace is only $105. So just as we said, you’ll probably save a little bit compared to a natural gas furnace, but it’s roughly equal. 

(Aside: The above table from Carbon Switch also shows you that switching to a heat pump from any other source like a fuel oil furnace, electric furnace, baseboard heaters, or propane furances is bound to save you money. Why? Because all of these other fuel sources cost more than natural gas. Natural gas is cheap in the U.S., that’s the only reason gas furnaces have a shot at being cost competitive with heat pumps (despite 3 – 4X lower efficiency) 

Example of Two Houses: Milder Winters Mean More Potential Savings

Our conclusion of rough cost parity is also consistent with a comparison of two homes in Ohio that Nate the House Whisperer walks through in this video:

First he shows a mild winter year and we see an almost identical cost to operate, with the heat pump home coming in slightly cheaper (but not by much): 

The home on the left has a furnace and the home on the right has a heat pump (only a heat pump, not a dual fuel heating system with a backup furnace). You see the total cost to operate (gas + electric bill) is almost the same after a year. If anything, the heat pump house is slightly cheaper (but that is a negligible difference in the span of the year). He notes in the video that their county has $0.13/kW electricity prices, so right around the U.S. average. 

Then he looks at a milder winter: 

Now the heat pump house (right) is considerably cheaper to operate than the furnace only house ($250 less). The reason for this is that a milder winter means the refrigerant of the heat pump picks up more heat from the outdoor air (since it isn’t as cold outside) so the compressor so the refrigerant can get hotter faster and you don’t have to keep the heat pump on as long. 

Heat Pump vs. Furnace Cost to Install

Just like most of the details in HVAC and home improvement, the details matter in cost, but overall gas furnaces are typically in a slightly lower price range than heat pumps (but many situations may lead to a heat pump being similarly priced). 

How Much Does a Gas Furnace Cost to Buy and Install?

Various sources say that furnace installation costs about $4000 – $8000 for the system plus installation. With some sources saying replacing a gas furnace with another one can be as low as $2000. 

How Much Does a Heat Pump Cost to Buy and Install?

Note: At the time of writing, many utilities are offering rebates on heat pumps. After reading this section, call a few HVAC installers near you, ask about heat pump costs and also ask if there are rebates for installing heat pumps. 

The range for heat pumps is similar, although heat pumps come in different types and levels and some high end heat pumps can cost more than $10,000 installed (but those are often the most efficient as they can tune the amount of pumping they are doing instead of just on and off – like a dimmer switch vs a simple light switch). 

Here we’re only going to talk about standard split heat pumps, meaning they feed into your duct system just like a furnace (as opposed to mini split systems where a single wall unit is installed – like a hotel AC unit – that is connected to an outdoor unit that sits right outside the room or building). 

For example, this HVAC company’s YouTube video says heat pumps run from $5500 – $8,000 for an entry level heat pump (entry level includes well known brands like Trane and Carrier), $7,500 to $11,000 for mid range. You can see how that range has a lot of overlap with the typical gas furnace cost range. So the way to figure out the cost for you is to call several local HVAC companies. 

In that video, they say the difference between mid-range and entry level is mostly around single stage (either on or off) vs. two stage (on, partially on, fully on) so you have more control on how it’s pumping. These two stage heat pumps cost more up front, but because they aren’t just on or off and have a mid-stage, they are more efficient and can save you money during operation. 

This price range is confirmed by HVACDirect who says most families pay $7000 – $10,000 for a heat pump (installed). 

Again, talk to your local HVAC companies about your options and what makes sense for you. Also remember that heat pumps also act as A/C units, so you don’t have to buy an AC unit, which also cost between $3000 – $7000. So if you live in an area that also needs an A/C unit, buying a heat pump instead of a gas furnace and an A/C can save you thousands of dollars up front

Climate and Environment: Heat Pumps Are Definitely the More Carbon Friendly Choice

Finally, if you care about reducing your carbon impact and greenhouse gas emissions, heat pumps also win (hands down) on this front. The first reason is of course because for every unit of gas burned, a gas furnace releases slightly less than a unit of heat. But with heat pumps, for every unit of electricity consumed, they release 3 units of heat. So even if your electricity comes exclusively from fossil fuels (like gas does), a heat pump needs far less of it to heat your home. 

Second, electricity actually has a good chance of being produced with a renewable source. Gas doesn’t. 

For example, in 2020, 20% of US electricity generation was from renewable sources. And many states utilities generate even more carbon-free electricity. For example, Southern California Edison says nearly half its power is renewable and in northern California, PG&E says a whopping 93% of its electricity generation is from non-GHG emitting sources (carbon free). As a result, California as a state has often reached 95% or 97% renewable power generation at certain moments (these numbers vary because renewable power generation from solar and wind vary, but reaching nearly 100% of power generation from renewables is fantastic). 

Other states, like Vermont, South Dakota, Washington, Maine, Idaho and also have extremely high percentages (80% – 99%) of their electricity generated from non-GHG sources (renewables plus nuclear). Here is NEI data on power generation by source and state: 

Finally, of course, rooftop solar is exploding in popularity, and is the cheapest source of residential electricity today, so if you have rooftop solar, replacing a gas furnace with an electric heat pump can make your home heating nearly carbon free (you’ll need to heat at night, so if you don’t have a battery pack attached to your solar, that will draw power from the grid) and extremely low cost (since you’re generating your own electricity for “free”). 

Finally, in a bigger picture climate change perspective, heat pumps have been identified as a key part of the net-zero carbon emissions plan, because, experts agree, we need to move away from natural gas in order to hit net zero emissions. While there are renewable natural gas projects, they are niche and even if we one day maximized them, they’d provide only a small fraction of the US natural gas use. So experts are in agreement that to get to net zero and avoid catastrophic climate change, we need to electrify as much as possible, and keep producing more and more electricity from carbon free sources (renewables plus nuclear). That means moving away from gas furnaces and using heat pumps instead. You can learn more about this in this video from Vox about heat pumps:

Or from the book Electrify: An Optimist’s Playbook for Our Clean Energy Future  MIT Ph.D. Saul Griffith

Or the book Speed & Scale: An Action Plan for Solving Our Climate Crisis Now from famous venture capitalist John Doerr outlining all the ways we need to reduce carbon, including electrifying heating via heat pumps.

Basically if you want to help with climate change and the move to a net-zero carbon economy, choosing a heat pump over a gas furnace is one of the best personal choices about your home you can make. 

Final Thoughts: Which One Should You Buy? 

As we said at the beginning, a heat pump is the better choice for the vast majority of homes. That said, we see 2 situations where you may consider sticking with a gas furnace: 

  1. You are in an extremely cold place that routinely sees temperatures below -13F. Again, the vast majority of humans don’t live in places like this. In that case, you can still enjoy the benefits of a heat pump by getting a “dual fuel” system, basically a heat pump with a gas furnace as a backup. Most of the time, the heat pump will run (even in really cold places, temperatures below -13F are rare, most of the time it won’t get there), but when it gets really cold and you need extra heating, your furnace can help. Ask your local HVAC company if this makes sense for you. 
  2. You are extremely budget constrained, have the ductwork and setup for a gas furnace and need a replacement gas furnace or heating system for the cheapest possible upfront cost. Even then, we recommend first calling HVAC companies near you and asking if they install heat pumps and how much those cost relative to gas furnaces. Like we said above, many heat pump systems cost about the same as gas furnaces. Call HVAC companies and ask, they’ll be able to size out the systems for you.  

In fact, that is the best next step for everyone reading this article or considering whether or not to buy a heat pump: call 2 – 3 local HVAC companies and ask them these questions:

  1. What size heat pump do I need? 
  2. What would the fully installed cost of a heat pump for our home? What about a gas furnace, what’s the difference? 
  3. What have you heard from other customers that have a heat pump in this area? Do they save money? How much? 

Buying a Heat Pump is a No Brainer If You Are In These Situations

That said, if any of the following are true, choosing a heat pump vs a gas furnace is likely a no brainer:

  • You’re building a new home or also considering replacing your A/C unit. As we’ve said, heat pumps both heat and cool your home, so it’s one device that replaces both a gas furnace and an A/C unit, and thus likely to save thousands up front (and more long term). Call 2 or 3 local HVAC companies to ask about the price of: a heat pump install vs. gas furnace plus A/C. 
  • You have solar on your roof. Assuming your system is large enough, you’re generating your own electricity for “free” (free is in quotes because you pay for the solar installation up front, but after a few years, rooftop solar pays back its install cost via savings on your electricity bill, so after that it’s free) during the day, so overall your electricity bill is low and in particular during peak daytime hours, you’re likely generating more than you use, so heating (or cooling) your home during those hours could definitely be done for free. 
  • You are using an old-fashioned electrical heating system like baseboard heaters, space heaters, etc. Those just generate heat by heating up coils with electricity. They are nowhere near as efficient as a heat pump (and they don’t also replace your A/C) which generates 3 units of heat for every unit of electricity it consumes. You will save a lot on your electricity bill by switching to a heat pump.
  • You care about your carbon impact. As we said above, it’s well established that one of the most impactful things you can do to help society move away from fossil fuels and to renewable sources is replace anything that burns gas or fuel based fossil fuels (natural gas, propane, or gasoline) with electricity. We can generate electricity carbon free (see Vermont in the table above, for example) at low cost (often lower cost than fossil fuel based electricity) but we can’t get produce natural gas, gasoline or other liquid fuels from non-carbon sources. 

Again, if you want to see how all of this applies to you, including exactly how much a heat pump vs. a gas furnace would cost for you, the best thing you can do to get clarity is call 2 or 3 local HVAC companies. They’ll tell you what the cost of different heat pumps are, the installation costs, and more.