Heat Pump Savings Calculator (vs Gas or Oil)
Compare the annual heating cost of a heat pump against a gas or oil furnace using your heat demand, the heat pump's COP, furnace efficiency, and both fuel prices. Useful before buying a heat pump or filing for electrification rebates.
Last updated: June 2026
Annual heating savings
435.29 $/yr
$200-600/yr is the common range versus gas at moderate rates. The $435 example (COP 3, $0.07 fuel) recoups a typical $4-6k cost premium in roughly 10-14 years.
Savings compare delivered-heat fuel cost against heat-pump electricity cost; a positive number means the heat pump is cheaper to run, driven mainly by COP versus furnace efficiency and the electricity-to-fuel price ratio.
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About this calculator
A furnace consumes fuel energy equal to heatDemand / (furnaceEfficiency / 100) to deliver a given amount of useful heat, because no combustion appliance is perfectly efficient. A heat pump moves rather than generates heat, so it delivers more energy than it consumes — its Coefficient of Performance (COP) is the ratio of heat output to electricity input. The annual savings formula is: savings = (heatDemand / (furnaceEfficiency / 100)) × fuelPrice − (heatDemand / COP) × electricityPrice. A positive result means the heat pump is cheaper to run. Seasonal COP varies by climate: cold-climate heat pumps reach COP 2.5–3.5 in moderate winters, but output drops in extreme cold. Fuel prices must be expressed in equivalent $/kWh units (1 therm of gas ≈ 29.3 kWh; 1 litre of heating oil ≈ 10.35 kWh).
How to use
A home needs 15,000 kWh of heat per year. The existing gas furnace is 80% efficient; gas costs $0.034/kWh (≈$1.00/therm). The replacement heat pump has a seasonal COP of 3.0; electricity costs $0.14/kWh. Gas cost = (15,000 / 0.80) × $0.034 = 18,750 × $0.034 = $637.50/yr. Heat pump cost = (15,000 / 3.0) × $0.14 = 5,000 × $0.14 = $700/yr. Savings = $637.50 − $700 = −$62.50. At these prices the gas furnace is marginally cheaper. If electricity drops to $0.12/kWh, the heat pump saves $100/yr — illustrating how sensitive the result is to local energy prices.
Frequently asked questions
How does the COP of a heat pump compare to the efficiency of a gas furnace?
A gas furnace's efficiency (AFUE) is always below 100% — even a high-efficiency condensing furnace tops out at about 98%, meaning at least 2% of fuel energy is lost. A heat pump's COP is typically 2.5–4.0, meaning it delivers 250–400% of the electricity it consumes as useful heat by extracting thermal energy from outdoor air. This is not a violation of thermodynamics — the heat pump is moving heat, not creating it. In moderate climates, a COP of 3 is equivalent to a 300% 'efficiency', making heat pumps far more energy-efficient than any combustion appliance.
What fuel price should I enter when comparing a heat pump to a gas or oil furnace?
The calculator requires fuel price expressed in $/kWh equivalent, so you need to convert your local fuel price. For natural gas: divide your price per therm by 29.3 kWh/therm (e.g., $1.20/therm ÷ 29.3 = $0.041/kWh). For heating oil: divide your price per litre by 10.35 kWh/L, or price per gallon by 39.2 kWh/gallon. For propane: divide price per gallon by 27.0 kWh/gallon. Using the wrong unit is the most common error in this calculation and can make the heat pump appear far more or less economic than it really is.
When does switching to a heat pump not save money on heating costs?
A heat pump may not save money if electricity prices in your area are high relative to gas prices — particularly in regions where natural gas remains very cheap and the grid is powered largely by fossil fuels. In very cold climates (below −15 °C), standard heat pump efficiency drops significantly, and some units require backup resistance heating that further increases electricity consumption. The economics also depend on the upfront cost difference and available rebates (e.g., the US Inflation Reduction Act offers up to $2,000 in federal tax credits for heat pumps). Run the calculator with your current utility rates and revisit annually as energy prices change.