Heat pump vs gas furnace: heating cost in every state

The arithmetic in one paragraph

A furnace turns the gas it burns into heat at its AFUE: an 80% furnace delivers 0.8 therms of heat for every therm it buys. A heat pump moves heat from the outdoor air into the house, so it delivers more heat than the electricity it uses. Its HSPF2 rating, on the EnergyGuide label, converts to a seasonal coefficient of performance (COP) by dividing by 3.412: at the ENERGY STAR minimum of HSPF2 7.8, about 2.29 units of heat per unit of electricity. One therm is 29.3 kWh of heat. Put together, an HSPF2 7.8 heat pump matches an 80% furnace when a kWh costs about 9.8¢ for every $1 a therm of gas costs, and a 95% furnace at about 8.2¢. Everything below is that ratio, worked out with each state’s real prices.

How we priced each state

• Heat needed. The typical gas-heated home’s yearly heating gas: EIA’s average residential gas use per customer in the state, times the share that goes to space heating in NREL’s ResStock model of the state’s homes.
• Gas price. The state’s residential average over the last 12 months from EIA, which spreads the gas utility’s fixed charges over the therms.
• Electricity price. Not an average: the heat pump’s kWh are placed in the months and hours that ResStock’s gas-heated homes in the state need heat, added to a typical home’s use, and priced on the cheapest plan open to any household from the state’s largest modeled utility (51 of 51), or the state’s average price as a flat rate where no utility is modeled. The heat pump’s cost is the year’s electric bill with that load minus the bill without it, so tiers, seasons and peak hours all count.
• Equipment. A heat pump rated HSPF2 7.8 (ENERGY STAR minimum) against a furnace at 80% AFUE (today’s federal minimum) and at 95% (the minimum for furnaces made from December 18, 2028).

What the map of results says

The heat pump’s biggest advantage was in Oklahoma: $379 a year against $833 of gas, $454 less. Its biggest disadvantage was in Alaska, where it cost $934 more than the furnace ($2,582 against $1,648). In the median state a kWh of heat-pump electricity cost 3.3 times as much as a kWh’s worth of gas, against a COP of 2.29: the closer the price ratio is to the COP, the closer the race.

States where gas is expensive per therm and electricity moderately priced favor the heat pump; states with cheap gas and expensive electricity favor the furnace, especially a high-efficiency one. The size of the bill matters too: in cold states the home needs more heat, so the same price gap is worth more dollars either way.

What would change the answer for your home

• Your own gas use. Take a year of gas bills and subtract twelve times a summer month (hot water and cooking); what is left is your heating. A drafty or large house uses far more than the typical home, and the dollar gap grows with it.
• The equipment. A better heat pump moves the break-even up in proportion: HSPF2 is printed on the EnergyGuide label, and ENERGY STAR cold-climate ducted units start at 8.1. An older furnace below 80% makes the heat pump look better; a new 95% furnace makes it look worse, as the table shows.
• Very cold weather. HSPF2 is a seasonal rating measured for a reference climate. In the coldest states a heat pump’s real seasonal efficiency is lower than its rating, and in mild ones higher; this comparison uses the rating as is, so in the coldest states the heat pump’s cost here is probably on the low side. Many homes in cold climates keep the furnace as a backup for the coldest hours (a dual-fuel system).
• Your rate plan. Heating load falls mostly in winter mornings and evenings. On a time-of-use plan whose winter peak overlaps those hours, the heat pump pays more; some utilities sell a lower winter price or a heat pump plan. The tiered rates guide shows which plans get cheaper per kWh in winter.
• The gas connection. The gas price here is an all-in average that spreads the gas utility’s monthly charge over the therms. If you keep gas for a water heater, a range or a dryer, that monthly charge stays and the saving per therm is smaller than the table assumes; disconnecting from gas entirely is the case the table describes.

Two things this comparison leaves out: the cost of buying and installing either system, and summer. A heat pump also replaces the air conditioner, usually with a more efficient one; if you would otherwise replace an old AC unit, that is part of the case for it. For the details of the model, see the methodology.