Heat Pump Operating Cost Calculator: Heat Pump vs. Gas, Oil & Propane Furnace
A heat pump costs about $733 a year to run at typical inputs (50 million BTU, COP 3.0, $0.15/kWh) — against $815 for a gas furnace, $1,378 for oil, and $1,633 for propane. Operating cost only; installation price is not included.
This heat pump operating cost calculator doubles as an annual heating cost calculator, pricing heat pump vs. gas furnace, oil furnace, and propane furnace running costs side by side. Your result turns on climate zone, insulation quality, local fuel and electricity prices, and your rate structure.
Compare Heat Pump Operating Cost Against Your Fuel
Annual running costs at the default inputs below — 50 million BTU a year, a COP 3.0 heat pump, $0.15/kWh electricity. Running costs only — installation price is not included. Pick your fuel for the full comparison, or enter your own numbers to price your home.
Heat pump vs gas furnace
$815 vs $733 a year
Heat pump saves about $83 a year
$1.50/therm gas, 92% AFUE furnace
Heat pump vs oil furnace
$1,378 vs $733 a year
Heat pump saves about $646 a year
$3.25/gallon oil, 85% AFUE furnace
Heat pump vs propane furnace
$1,633 vs $733 a year
Heat pump saves about $901 a year
$2.75/gallon propane, 92% AFUE furnace
Two inputs move every one of these results: your heat load and your true electricity rate. The Insulation Savings Calculator estimates how far insulation work would cut the BTU figure, and the Bill Breakdown Calculator works out the all-in cents per kWh to enter here. For the full background on fuel-price and rate-structure sensitivity, see our heat pump vs gas heating guide.
Who This Calculator Is For
- Homeowners thinking about switching from gas or oil heating
- Anyone comparing heating system operating costs
- People exploring electrification incentives and rebates
Before You Start
For accurate heating cost comparison:
- Annual heating BTU: Your home BTU needs (40-60M BTU for typical 2,000 sq ft home)
- Current fuel type and price: Natural gas (therms), oil (gallons), propane (gallons) with local prices
- Electricity rate: Cost per kWh for heat pump operating cost
- Climate zone: Heat pumps work in all climates but may need backup below 0°F
Real-World Examples
Gas Furnace to Heat Pump (Northeast)
Northeastern home with $2.50/therm gas and $0.13/kWh electricity saves $335/year switching to heat pump. Cold climate reduces heat pump efficiency to COP 2.5, but still beats 92% efficient gas furnace. Heat pump also provides cooling, saving $200/year in AC costs. Total savings: $535/year.
Propane to Heat Pump (Rural)
Rural homes on expensive propane see dramatic savings. At $3.50/gallon propane, heating costs $2,200/year. Heat pump with mild climate efficiency (COP 3.0) costs just $1,050/year. Savings of $1,150/year pays for $12,000 heat pump installation in 10 years, plus added cooling and home value.
Heating System Comparison
| Feature | Heat PumpHighlighted | Gas Furnace | Oil Furnace | Propane |
|---|---|---|---|---|
| Installation Cost | $8,000-$15,000 | $3,500-$6,000 | $4,500-$7,000 | $3,000-$5,500 |
| Annual Operating Cost | $800-$1,200 | $900-$1,400 | $1,500-$2,200 | $1,800-$2,800 |
| Efficiency | 300%+ (COP 3.0) | 90-95% | 80-90% | 85-92% |
| Climate Zones | All (w/ backup) | All | All | All |
| Also Cools in Summer | ||||
| Greenhouse Emissions | Low | Medium | High | High |
Heat PumpHighlighted
Gas Furnace
Oil Furnace
Propane
Based on 2,000 sq ft home, 50 million BTU annual heating load
Heat Pump vs Gas, Oil, and Propane: Direct Answers
The numbers below are annual operating costs at this calculator's defaults: 50 million BTU of heat a year, a COP 3.0 air-source heat pump, and electricity at $0.15/kWh. That combination draws 4,885 kWh and costs $732.71 a year to run. Change the heat load, COP, electricity rate, fuel price, or furnace efficiency above and every comparison re-prices for your home.
Heat pump vs gas furnace: which costs less to run?
At the default inputs the gas furnace costs $815.22 a year against $732.71 for the heat pump — the heat pump wins by about $83 a year, the narrowest of the three comparisons. Delivering 50 million BTU through a 92% AFUE furnace burns 543 therms, and at $1.50/therm that is $815.22. Gas is the toughest fuel for a heat pump to beat because natural gas is cheap per BTU: as a rule of thumb the heat pump loses on running cost once your electricity rate passes roughly three times your gas rate per equivalent BTU. Below about $1.35/therm at $0.15/kWh the furnace becomes the cheaper system to operate, and a higher COP or a cheaper off-peak electricity rate swings it back. Because the margin is thin, enter your real gas price and your real all-in electricity rate rather than trusting a national average — the Bill Breakdown Calculator shows what you actually pay per kWh once delivery charges and fixed fees are included. Our heat pump vs gas heating guide walks through how fuel price and rate structure move this result.
Heat pump vs oil furnace: which costs less to run?
The oil furnace costs $1,378.35 a year against $732.71 for the heat pump — a saving of about $646 a year, roughly 47% off the heating bill. A gallon of heating oil carries 138,700 BTU, so an 85% efficient oil furnace needs 424 gallons to deliver 50 million BTU; at $3.25/gallon that is $1,378.35. Oil shows a wide margin because it is expensive per delivered BTU and oil furnaces are typically less efficient than modern gas or propane units. The gap holds unless oil drops below about $1.73/gallon at $0.15/kWh, though it narrows in extreme cold, where a heat pump's COP falls toward 2.0 unless it is a cold-climate model. If your oil bills look high, cutting the load helps both systems — the Insulation Savings Calculator estimates how much of that 50 million BTU insulation work would remove.
Heat pump vs propane furnace: which costs less to run?
Propane is the most expensive of the three to run: $1,633.40 a year against $732.71 for the heat pump, a saving of about $901 a year, or roughly 55%. Propane holds only 91,500 BTU per gallon — a third less than heating oil — so even a 92% efficient propane furnace burns 594 gallons to deliver 50 million BTU, and at $2.75/gallon that is $1,633.40. The heat pump stays ahead until propane falls below about $1.23/gallon at $0.15/kWh, which is why homes off the natural-gas grid usually see the largest operating-cost reduction from switching. Propane prices also swing seasonally, so run the comparison with your winter-delivery price rather than a summer fill rate.
What these fuel comparisons do and do not include
Every figure on this page is an annual operating cost — fuel and electricity to deliver the heat load you enter. Installation price, equipment, ductwork, electrical upgrades, maintenance, and rebates are not part of the calculation, so a heat pump that saves $83 a year against gas is not the same thing as a heat pump that pays for itself against gas. Pair the running-cost figure above with a contractor quote and any incentives you qualify for to judge the whole investment.
How It Works
BTU Conversion from Fuel Types
Heating Oil: 138,700 BTU/gallon
Propane: 91,500 BTU/gallon
BTU (British Thermal Unit) is the standard measure of heating energy. Different fuels contain different amounts of energy per unit. One therm of natural gas provides 100,000 BTU, while a gallon of heating oil provides 138,700 BTU. These are DOE/NREL standard values used to compare heating fuels on an equal energy basis.
Heat Pump kWh Formula Using COP
Heat pumps move heat rather than generate it, measured by COP (Coefficient of Performance). A COP of 3.0 means the heat pump produces 3 units of heat for every 1 unit of electricity. We divide by 3,412 to convert BTU to kWh (1 kWh = 3,412 BTU). So if you need 50 million BTU/year with a COP of 3.0, that's 4,877 kWh annually.
Fuel Consumption Formula with Furnace Efficiency
Furnaces waste energy through exhaust and heat loss. An 80% efficient furnace only delivers 80,000 BTU per therm of gas burned — the other 20% goes up the chimney. So to deliver 50 million BTU, you need 625 therms at 80% efficiency (50M ÷ 100k ÷ 0.80). Old furnaces can be 60-70% efficient; new high-efficiency models reach 90-95%.
Why Heat Pumps Are 2-4x More Efficient Than Furnaces
Furnaces create heat by burning fuel (thermodynamically limited to ~95% efficiency max). Heat pumps move existing heat from outside air into your home using a refrigeration cycle. With a COP of 3.0, a heat pump delivers 3 kWh of heat for every 1 kWh of electricity — effectively 300% efficiency. Even at COP 2.0 (cold weather), that's still 200% vs 80-90% for furnaces. This is why heat pumps can cost less to run even when electricity is 3x the price of gas per energy unit.
Winner Highlighting Logic
The calculator highlights the cheaper option with a colored border and trending icon. Green border with downward arrow means the heat pump saves money vs your current fuel. Blue border with upward arrow means your current fuel is still cheaper. The savings amount shows how much you'd save (or lose) annually by switching to the heat pump. Consider upfront costs ($4k-$12k for heat pump installation) and incentives (up to $2k federal tax credit) when evaluating total value.
Next Steps
Analyze Your Electricity Bill
Understand your electricity rate structure before switching to electric heating.
Break Down Your BillCalculate Home Energy Use
See how heat pump heating fits into your total home energy consumption.
Calculate Home EnergyCheck Solar ROI
Solar panels can offset heat pump electricity costs for maximum savings.
Calculate Solar ROIWhat Determines Heat Pump Operating Cost vs. Gas
| Feature | Factor | Favours Heat Pump | Neutral / Depends | Favours Gas |
|---|---|---|---|---|
| Electricity rate (vs gas per BTU) | Electricity < 2× gas rate | Electricity ≈ 2–3× gas rate | Electricity > 3× gas rate | |
| Fuel price (gas, oil, or propane) | High local fuel price | Mid-range local fuel price | Low local fuel price (e.g. cheap natural gas) | |
| Rate structure | Off-peak TOU or flat low rate | Tiered rate near average usage | Peak-heavy TOU without load shifting | |
| Insulation quality | Well insulated (low heat load) | Average insulation | Poorly insulated (high heat load) | |
| Climate zone | Mild to moderate winters | Cold winters with cold-climate HP | Extreme cold without cold-climate HP | |
| Equipment COP | COP 3.5+ (modern variable-speed) | COP 2.5–3.5 | COP below 2.0 (older units) |
Run the calculator with your local electricity and fuel rates, then use the Insulation Savings Calculator to estimate how improved insulation would reduce your heat load — and the TOU Savings Calculator to model which rate plan gives you the lowest effective per-kWh heating cost.
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