Ever been curious how to heat your home in a more sustainable way? Or maybe you just want a more efficient system that saves money yearly. Psssst, the answer is a heat pump system. This post compares a heat pump vs. furnace, explains how heat pumps work, cost breakdowns, and our example heating analysis.
We all love to enjoy a comfortable temperature in our homes year-round. If your home has been around for a while, you likely have a traditional gas furnace that will last 15-20 years. If you’re like us and your home’s furnace is on its last leg, you’re beginning to research new options. Well, through our research, we found a heat pump is a better option in most cases both financially in the long run as well as better for the environment.
However, I’ll start with a caveat as you read this article. We don’t sell or install heat pumps or other furnaces as a profession. We are homeowners (as well as an engineer and landscape architect) trying to improve our impact on the planet and save money through energy efficiencies. So this article goes over the heat pump systems from a homeowner’s perspective. It shares the research we did prior to making the decision to switch to a heat pump, the benefits and downsides to the system, and the heating/cooling analysis we did to understand the energy and cost savings.
How Heat Pumps Work
Heat pumps don’t generate heat. They actually transfer it.
What Is A Heat Pump?
Per Energy.gov’s definition, “heat pumps use electricity to transfer heat from a cool space to a warm space, making the cool space cooler and the warm space warmer.”
Heating and Cooling Your Home
Heat pumps are truly a 2-in-1 system as it acts both as a furnace to heat the house as well as an air conditioner to cool the house. It moves heat from your house to the outdoors during the hot months thus cooling the inside of the house. This works the same way as a standard air conditioner. The amazing thing about heat pumps is that they can run in reverse and move heat from the outdoors into your house during the cool months thus warming the inside of the house.
Heat pumps transfer heat rather than generate it to make your house comfortable. This means it uses 3-4 times less energy than an electric heater would use. Less energy use is a great way to help reduce your footprint on the environment and help reduce your energy bills.
Why We Chose A Heat Pump – Heat Pump Vs. Furnace
As a family, we strive to live big while reducing our footprint. A major way we can do this is through home improvement and having more sustainable, energy-efficient systems. We’re slowly improving our home through various methods, but our goal is to electrify the home completely and disconnect from gas to reduce our dependency/need on fossil fuels. We also just want to reduce our utility bills and gas is just becoming more expensive.
One big way we reduced our energy consumption was through our DIY solar panel installation at our home. This has cut our energy bills significantly. It also means switching to a heat pump with an electric backup utilizes our solar panels and does not rely on gas to heat our home.
Below are all the benefits as well as a few downsides we discovered through our heat pump research.
Looking to Go solar, too?
Let us connect you with our contact at GoGreenSolar to help get you started! We used them for our DIY solar installation!
Benefits of A Heat Pump
Heat Pumps Are More Efficient
When a gas furnace burns gas to generate heat, some of the energy from the combustion reaction is lost by creating light instead of heat. For this reason, gas furnaces are usually 80-90% efficient. For an electric furnace, almost no light is made so electric furnaces are generally close to 100% efficient. But typically electric furnaces cost more to run because gas is cheaper than electricity in most areas.
A heat pump, however, doesn’t generate heat with its electricity. Instead, a heat pump only uses electricity to pump refrigerant, and to power fans to blow air over the coils in order to move heat from one location to the other. This brilliant use of thermodynamics allows heat pumps to use 3-4 less electricity than typical electric furnaces.
Heat Pumps Are Better For the Environment
Heat pumps don’t rely on fossil fuels to generate heat, thus reducing emissions when replacing a combustion-based gas furnace. Reducing your home’s reliance on gas overall is better for climate change and the environment. Eliminating gas from your home can also greatly improve your indoor air quality!
Furnaces Can Cost More To Operate
Generating heat rather than transferring heat requires a lot more energy and typically fuel such as gas. Heat pumps don’t generate heat and utilize electricity to circulate the refrigerant through the pressurized lines to transfer air.
That said, exact operating costs will vary depending on the unit’s efficiency, the climate you live in, and the local utility costs. However, we ran our own heating and cooling cost analysis based on our actual energy usage to determine the cost savings between the systems. We save almost $300 a year with the high-efficiency heat pump compared to if we had bought a brand new gas furnace. (See the more detailed analysis breakdown below in the cost comparison section).
Heat Pumps Can Require Less Space
Traditional furnaces indoors can take up quite a large area and typically require a fire safety clearance zone around them regulated by local building codes (typically around 30 inches on all sides). The part of the heat pump inside your home is the air handler. It doesn’t typically have combustible fuel or heat elements, so the additional safety clearances aren’t needed.
The outdoor part of the heat pump is the compressor, which tends to be smaller than the average residential air conditioner. However, the compressor will likely still have a specified clearance zone from the manufacturer to enable airflow and ability to maintenance.
The heat pump’s air handler we purchased honestly took up similar square footage as the old furnace, but that was mainly due to the size of the supply and return ductwork. However, the compressor took up significantly less space on the exterior of our home versus the old air conditioner.
May Qualify For Tax Rebates
Governments and utility companies are incentivizing the conversion to more renewable and green energy. Most states have a variety of tax refunds available for energy-efficient systems like heat pumps. Energy.gov recommends looking at the DSIRE database for specific state incentives. Utility companies sometimes also offer rebates on certain types of systems. You can do your own research or ask the contractors you are getting quotes from.
Moreover, the Inflation Reduction Act included massive tax credits for heat pump systems that will be effective starting in 2023. Depending on your family’s income, you could receive a tax credit between $2000-$8000! And that doesn’t even include additional rebate programs many states and utility companies already offer. Read more about the potential credits and rebates from the Inflation Reduction Act on NRDC.
The Downside To A Heat Pump
Added White Noise
You might notice a little more white noise throughout the house for a while. Heat pumps tend to be quieter than many gas furnaces, but they also generally run longer periods of time at a lower heat output to maintain a more constant temperature at a higher efficiency.
Honestly, after a few months of having the heat pump in our house, I rarely notice the white noise anymore. My brain seems to tune it out now if it’s even making any noise.
Not Always Ideal For Colder Climates
If you’re in a much colder climate, air-sourced heat pumps may not work as well for you. It takes a lot more work for a heat pump to pull warmth from the outside air as it gets colder and colder, which will decrease efficiency. However, many new models of heat pumps are out that can handle temperatures in the negatives. The high-efficiency heat pump we chose states it can heat down to -22°F.
However, a geothermal heat pump may work even better in colder climate conditions as it utilizes the Earth’s ground temperatures rather than the air, which is much more consistent year-round.
Likely Need To Be Professionally Installed
While this might not be a downside to most, for those DIYer like us out there it can be as we don’t like to pay for labor. Not to say you can’t DIY install a heat pump if you have the resources and knowledge, but for your average DIYer this install might be best left to the pros.
Like furnaces, heat pumps typically need a professional technician to measure the volume of air in your home. They also factor in your local climate and budget to determine what size system is needed to appropriately heat and cool your home.
This is especially important with heat pumps as correct sizing is critical. A system that’s too small won’t be able to transfer enough heat to warm the home on cold days making it work overtime, thus likely reducing its lifespan or increasing its need for repairs. The opposite is true with a system that’s too large and oversized. This will cause the heat pump to cycle on and off too frequently leading to fluctuating indoor temperatures.
Heat pump installs typically require electrical wiring as well that need to adhere to local building codes, which may not be in a DIYer’s abilities.
Heat Pump Vs. Furnace Cost Comparison
Now that you’ve absorbed all that information, the big question on your mind is probably how the heat pump cost compares to a typical furnace.
Heat Pump Cost Factors
Just like most home improvement items, costs will vary depending on a few factors.
- Size – heat pump capacity is measured in tons and typically units are between 2 to 5 tons, with half sizes available. Accurately sizing the system is critical. If the unit is too small, then it may run more causing the system to wear out sooner and have higher energy bills.
- Brand – As with most products, there are hundreds of different brands offering a wide range of heat pump types and sizes. Contractors tend to have their preferences, but don’t be afraid to ask which brand and do some of your own research on the product quality and reviews.
- Installation/Contractor – As with any home renovation, it pays to get multiple quotes. Contractor prices can vary wildly, and while it usually doesn’t pay to go with the cheapest option, you don’t want to be significantly overpaying either.
- Seasonal Energy Efficiency Ratio (SEER) – This is basically the manufacturer’s efficiency rating on how efficiently the pump will cool a home. The higher the number the more efficient the pump is, and you typically see between 14 to 24 ratings.
- Heating Seasonal Performance Ratio (HSPF) – This is another efficiency rating, but for how efficiently the pump will heat the home. Again the higher the number the more efficient, and most pumps fall between 8 to 13 for the HSPF rating.
- Current Market & Rebates – As with most products, the market affects the overall pricing of the product itself as well as the installation labor. Additionally, sometimes specific pumps qualify for rebates or tax refunds, which will change from year to year.
Heat Pump Cost Comparison
We got several quotes to compare the initial heat pump vs. furnace purchase and installation cost. Here are the quoted costs and heat pump types including the available rebate at the time (quoted in Missouri in 2022).
Quoted Cost of A Gas Furnace – $8,175
Quoted Heat Pump Cost Comparison
|Heat Pump Total*
|Type of Heat Pump (Brand)
|Air-Source w/ Electric Backup (Bryant 3.5 ton, SEER 14)
|10-year parts warranty
|Air-Source w/ Gas Backup (Bryant 2 Stage 3.5 ton, SEER 14)
|10-year parts warranty
|Air-Source w/ Electric Backup (Unspecified SEER 16, 4 ton)
|10-year manufacturer warranty
|Air-Source w/ Electric Backup (Unspecified SEER 14, 4 ton)
|10-year manufacturer warranty
|Air-Source w/ Electric Backup (GREE FLEXX SEER 20, 3 ton)
|5-7 year manufacturer warranty
|Air-Source w/ Electric Backup (Comfortmaker Perf. SEER 14, 3 ton)
|Warranty not specified
*Rebate already deducted in total number.
It only feels fair to note that the first two quotes were from a company that didn’t seem to believe in heat pumps. We feel they really hiked the prices on the standard SEER 14 heat pump because they didn’t want to install one and wanted to install a gas furnace instead. So always read the vibe and attitude of the people quoting and get other quotes to compare.
Heating Cooling Load Analysis
We decided to go with the fifth quote for the higher-efficiency heat pump GREE FLEXX system. The higher SEER rating was what we really wanted to heat/cool our house as efficiently as possible, and the good rebate we could pair with made it affordable. Standard Heat pumps are 14-16 SEER and the GREE FLEXX is up to 20 SEER, which is what makes up a majority of the cost difference between the other heat pumps quoted.
Okay, the next part is the super nerdy breakdown and analysis that my engineer hubby loves to do. If it overwhelms you, feel free to skip. But I love a good analysis to help with decision-making.
Base Energy Costs
The above unit costs are approximates based on our utility billing history. The unit costs don’t include the baseline costs on utility bills for being connected to the grid. One of our future goals is to disconnect from the gas grid and remove $288/year customer base charge for gas from utility bills. Switching to a high-efficiency heat pump with an electric backup is just one step towards fully electrifying our home and why we DIY installed solar panels.
We looked at our gas bills for the last year to see how much gas we used each month. Since we have a gas water heater, we looked at how much gas we used on average in the summer months and subtracted that from each month. This way we have about how much gas was used purely for heating each month. We also pulled the average temperature data for the last year since temperature affects heat pump efficiency. Then started breaking out the math.
For every CCF of gas used, that meant 103,700 BTU’s of heat was needed to heat the home. To convert these BTU’s to kWh of electricity for a comparable electric furnace, we converted the BTU to kWh by dividing by 3412.
Then we needed to take into account the efficiency difference between a gas furnace, an electric furnace, and different heat pumps. Below are the assumptions on efficiencies we made for each system.
- Gas furnace – 82% efficient
- Electric furnace – 100% efficient.
- Standard heat pump – 362% efficient at temperatures above 35 degrees Fahrenheit and would need backup heat at 100% below that threshold.
- High-efficiency heat pump – 420% efficient at temperatures above 35 degrees Fahrenheit and 270% efficient below that threshold.
With these numbers and a bit of Excel magic, we estimated how many kWh each system would need each month.
Using the above unit costs and approximates for how much energy we used each month, below are the monthly breakdown cost comparisons for heating and cooling with heat pumps vs. furnaces.
|Standard Heat Pump
|High-Efficiency H.P. (GREE)
Cooling Cost Expected yearly Savings (Compared to SEER 14 AC UNIT)
|Standard Heat Pump
|High-Efficiency Heat Pump (GREE)
The savings per year for cooling was one of the reasons we chose a higher-efficiency heat pump with a SEER rating of up to 20. It saves approximately $210 per year cost savings compared to a Standard Heat Pump.
Yearly Cost Difference
|High-Efficiency HP (GREE) vs Standard HP
|High-Efficiency HP (GREE) Vs Gas Furnace
With that analysis, you can then compare the yearly cost difference and saving of a heat pump vs. furnace. In our case, the high-efficiency heat pump will save us almost $300 per year on bills compared to the gas furnace we had.
Because we save $290 per year on the high-efficiency heat pump, it makes up for the initial cost difference between a gas furnace quickly. So by dividing the cost difference by the savings, you’ll see the full payback period is a little over 8 years.
Payback Period = Difference / Yearly Cost Difference
Heat Pump vs. Furnace System Costs
|High-Efficiency HP (GREE)
As I mentioned, costs will vary depending on various factors shown previously, but hopefully, this helps give you an idea of heat pump vs. furnace costs, the savings, and payback periods to help you make an educated decision.
Heat Pump Vs. Furnace FAQs
More Sustainable Living Ideas
I hope this has helped other homeowners understand heat pump systems better and why they make sense both for the environment and financially. Make sure to check out some of our Sustainable Living posts as well as our ever-growing DIY project How-Tos and ideas.
Check out some of our Sustainable Living Reviews:
- The Best 5 Solar Powered Generators For Home
- Is An Electric Composter Right For You? – Honest Vitamix Foodcycler Review
- Earth Breeze Review – Best Eco-friendly Laundry Detergent Sheets
For Makers & DIYers
- Hubby How To – DIY Stacked Rain Barrel System
- Going Solar Series
- The Ultimate Wood Finish? Rubio Monocoat Review & Color Test
Hope the comparisons and analysis help you decide to make the switch to a heat pump system! Let us know what you think of a heat pump vs. furnace or if you have any questions in the comments below!
Disclaimer: This post includes affiliate links, and I will earn a commission if you purchase through these links. Please note that I’ve linked to these products purely because I recommend them and they are from companies I trust. There is no additional cost to you.