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.
Last updated: May 2026
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About this calculator
Comparing a heat pump to a fossil furnace fairly means pricing the same amount of delivered heat through two very different machines, which is why four inputs beyond the raw heat demand are required. Heat demand is the useful heat your home actually needs over a season, in kilowatt-hours. A furnace burns fuel to make that heat but wastes some up the flue, so its fuel input equals heat demand divided by its efficiency (an 85% furnace must burn about 1.18 kWh of fuel for every 1 kWh of delivered heat); multiplying that input by the fuel price gives the furnace's annual cost. A heat pump does something fundamentally different: it moves heat rather than making it, delivering 2.5–4 units of heat per unit of electricity. That ratio is the coefficient of performance (COP), so the heat pump's electricity use equals heat demand divided by COP, and multiplying by the electricity price gives its annual cost. Subtracting the heat pump's cost from the furnace's cost yields the annual saving. Because the heat pump cost falls as COP rises and the furnace cost rises as efficiency falls, the gap can swing from large savings to a loss depending on the local spread between electricity and fuel prices — the comparison is genuinely four-dimensional, not a rule of thumb. Express the fuel price in dollars per kWh-equivalent: natural gas at roughly $1.20/therm is about $0.041/kWh, and heating oil near $4.00/gallon is about $0.10/kWh.
How to use
Worked example. Your home needs 15,000 kWh of delivered heat a year. A cold-climate heat pump averages a seasonal COP of 3.0, electricity costs $0.16/kWh, your existing furnace is 85% efficient, and your fuel costs $0.07 per kWh-equivalent. Furnace side: fuel input = 15,000 ÷ 0.85 = 17,647 kWh of fuel; cost = 17,647 × $0.07 = $1,235.29 a year. Heat pump side: electricity = 15,000 ÷ 3.0 = 5,000 kWh; cost = 5,000 × $0.16 = $800 a year. Annual saving = $1,235.29 − $800 = $435.29. Now see the sensitivity: if your COP rose to 3.5 the heat pump cost falls to $686 and savings climb to about $549; if electricity were $0.24/kWh instead, the heat pump would cost $1,200 and the saving nearly vanishes. Pairing the heat pump with solar effectively lowers that electricity price, which is what tips the math decisively in the heat pump's favor.
Frequently asked questions
Is a heat pump cheaper to run than a gas or oil furnace?
Usually, but it hinges on the price spread between electricity and fuel and on the heat pump's efficiency. A heat pump delivers 2.5–4 kWh of heat per kWh of electricity (its COP), so it often beats an 80–90% efficient furnace that wastes part of every unit of fuel. In the worked example a heat pump saves about $435 a year versus an 85% furnace. But where electricity is very expensive and gas very cheap, the furnace can win — which is exactly why you compare with your own four numbers rather than a blanket claim.
What is COP and how does it affect heat pump savings?
COP (coefficient of performance) is how many units of heat a heat pump moves per unit of electricity it consumes. A COP of 3 means 3 kWh of heat for every 1 kWh of power — 300% effective efficiency, impossible for any furnace because a heat pump moves existing heat rather than burning fuel. Higher COP directly cuts the heat pump's running cost: the calculator divides your heat demand by COP to get electricity use. Cold weather lowers COP, so use a seasonal average (often 2.5–3.5 for cold-climate units) rather than the rated best-case number.
How do I convert natural gas or heating oil price to dollars per kWh?
So the comparison is apples-to-apples, put fuel on the same energy basis as electricity. Natural gas: one therm is about 29.3 kWh, so a $1.20/therm price is roughly $0.041 per kWh. Heating oil: one gallon holds about 40.6 kWh, so $4.00/gallon is about $0.099 per kWh. Propane: one gallon is about 26.8 kWh, so $3.00/gallon is about $0.112 per kWh. Enter that per-kWh figure as the fuel price. The calculator then divides by furnace efficiency to account for combustion losses before multiplying by price.