Heat pump or gas furnace: when does a heat pump pay off?

Whether a heat pump saves money against gas heating comes down mostly to one comparison. How many times more does a kWh of electricity cost than a kWh of gas? And how many kWh of heat does the heat pump make from one kWh of electricity? That second number is the seasonal COP. When it is higher than the price ratio, heat from the heat pump is cheaper. We ran the heat pump calculator for 9 countries: a home heated with gas, an air-source heat pump feeding radiators with water at 55 °C (131 °F), hot water included.

United States: over 20 years

The example home burns 18,463 kWh of gas a year. That is 17,540 kWh of heat: 14,620 kWh for space heating and 2,920 kWh for hot water. Gas costs $0.06 per kWh including delivery (EIA residential average).

With the weather of a representative year in Kansas City, the heat pump uses 5,799 kWh of electricity, a seasonal COP of 3.0. Electricity costs $0.18 per kWh (EIA residential average), so it is 3.2 times as expensive as gas. A seasonal COP of 3.0 is below the price ratio of 3.2, so heat from the heat pump costs more than from gas.

Gas and electricity together cost $2,990 a year before and $3,044 after, a difference of -$54. The heat pump costs $16,000 installed in the example, before incentives. Payback at typical price trends: over 20 years. Over 20 years the balance is -$16,589.

Countries compared

Country	Electricity / gas per kWh	Seasonal COP	Saving in year 1	Payback
Czechia	1.6 ×	3.3	Kč 22,942	10.0 years
France	1.6 ×	3.8	€1,131	10.8 years
Germany	1.5 ×	3.5	€918	over 20 years
Spain	2.5 ×	3.7	€210	over 20 years
Poland	3.2 ×	3.3	zł 356	over 20 years
Romania	4.6 ×	3.3	-lei 1,447	over 20 years
Hungary	2.9 ×	3.5	Ft 31,435	over 20 years
Ukraine	5.2 ×	2.9	-₴9,581	over 20 years
United States	3.2 ×	3.0	-$54	over 20 years

Within 20 years and at typical price trends, the heat pump pays back in only 2 of the 9 countries. Fastest: Czechia (10.0 years). Where electricity is expensive compared with gas, the heat pump even raises running costs. Elsewhere it saves, but without incentives its price doesn't come back within 20 years.

What improves the result

• Lower water temperature. Underfloor heating or larger radiators at around 35 °C (95 °F) raise the seasonal COP, because the heat pump has less to lift.
• Incentives. The calculator includes none. If you qualify for any, enter the price after them.
• Equipment you would replace anyway. Compare with the difference to a new furnace (and AC), not with the full price.
• Solar panels. Part of the heat pump's electricity can come from the roof, mainly in spring and autumn.
• Insulation. A smaller heat demand shrinks the heat pump and its electricity use.

Enter your own home, gas use and quote in the heat pump payback calculator. How rooftop solar fares is in Do solar panels pay off?.