Heat Pump or Furnace? Compare the Cost of Heat

The efficiency difference comes from physics, not marketing.

ENERGY STAR explains that because a heat pump moves heat rather than converting it from fuel, an air-source heat pump can deliver up to three times more heat energy to a home than the electrical energy it consumes. A combustion furnace can never deliver more heat than the fuel it burns. The heat pump also cools in summer, working like a central air conditioner in reverse.

The Department of Energy describes heat pumps in moderate climates as an energy-efficient alternative to furnaces and air conditioners, and lists air-source, geothermal, ductless mini-split, and absorption types.

Convert both fuels to the cost of one million BTU actually delivered to the house.

One kilowatt-hour is 3,412 BTU and one therm of natural gas is 100,000 BTU. With those conversions and each system’s efficiency, the comparison becomes one line of arithmetic. The prices below are illustrative; use the ones on your own bills.

At these prices the two are nearly tied. Raise electricity to $0.25 and the heat pump costs $24.42; drop gas to $1.00 a therm and the furnace costs $10.53. The ratio of your two prices matters more than any brochure.

The three-to-one figure is a best case, and it falls as the outdoor air gets colder.

A heat pump has less heat to collect when the outdoor air is very cold, so its advantage narrows in the coldest hours. ENERGY STAR notes that many newer certified models are designed for strong low-temperature performance using advanced compressors and refrigerants, and advises anyone whose winters regularly dip below freezing to ask the contractor for a unit suited to that climate.

ENERGY STAR also describes dual fuel systems, which pair a heat pump with a gas or oil furnace so each runs when it is cheaper or more suitable. For a home that already has a working furnace, that can be the most practical first step.

The existing ductwork often decides the installation.

A ducted air-source heat pump connects to the forced-air ducts most American homes already have, which can simplify installation. Homes without ducts use ductless mini-split systems, with indoor units in individual rooms. Either way, sizing matters: the BTU sizing guide explains why the load comes first.

Four numbers settle most of it.

1. Your electricity price per kWh and your gas price per therm, from your bills.
2. Your winter climate, and whether a cold-climate model is needed.
3. The age and condition of the existing furnace and air conditioner.
4. The full installed price of each option — without the federal tax credit, which ended for equipment installed after 2025.