Heat Pump Savings Calculator
This heat pump savings calculator compares the estimated annual cost of your current heating system with the estimated cost of running a heat pump, based on your own fuel prices, electricity rate, and heat pump efficiency. It's built for homeowners who want a transparent, editable estimate rather than a generic national average, and it shows every step of the calculation so you can see exactly where the numbers come from.
Advanced options: fuel energy content, system efficiency, installation cost
How this estimate was calculated
How the Heat Pump Savings Calculator Works
The calculator estimates two separate annual costs and compares them. First, it works out what your current heating system costs to run each year, either from the fuel usage and price you enter, or from a known annual cost. Second, it estimates what a heat pump would cost to run to deliver that same amount of heat, using your electricity price and the heat pump's efficiency (COP). The difference between the two is your estimated annual savings, shown at the top of the results along with a full breakdown of every step underneath.
How to Calculate Heat Pump Savings
Estimate Your Current Heating Cost
If you already know your annual heating cost from adding up bills, the calculator works backward and divides that cost by your fuel price to estimate your usage in units, so both calculation paths end up consistent.
Example: a home using 700 therms of natural gas per year at $1.20 per therm:
700 × $1.20 = $840 estimated annual heating cost
Estimate Heat Pump Operating Cost
To estimate a heat pump's operating cost, the calculator first works out how much actual heat energy your current system delivers, then figures out how much electricity a heat pump would need to deliver that same amount of heat.
Continuing the example above: 700 therms, at 29.3 kWh of energy per therm, with an 80 percent efficient furnace:
700 × 29.3 × 0.80 = 16,408 kWh of heat delivered per year
With a heat pump COP of 3.0: 16,408 ÷ 3.0 = 5,469 kWh of electricity needed
At $0.18 per kWh: 5,469 × $0.18 = $984 estimated heat pump operating cost
In this example the heat pump would actually cost slightly more to run than the gas furnace, which shows why it's worth running your own numbers rather than assuming a heat pump always wins on price.
Calculate Annual Savings
A positive number means the heat pump is estimated to cost less to run each year under the assumptions entered. A negative number means the current system comes out cheaper under those same assumptions, which does happen, particularly with low-cost natural gas or a heat pump with a lower COP operating in a cold climate.
Calculate Payback Period
Net installation cost is your estimated installation cost minus any rebates or incentives you expect to receive. If annual savings are zero or negative, payback period isn't meaningful since the heat pump wouldn't be saving you money to begin with, and the calculator will show this clearly rather than displaying a misleading number.
What Affects Heat Pump Savings?
Heat Pump vs Gas Heating Cost
Whether a heat pump beats natural gas on cost depends heavily on local gas and electricity prices. In regions with cheap natural gas and relatively expensive electricity, a heat pump can sometimes cost more to run day to day, even though it's more efficient at converting energy into heat. In regions with higher gas prices or cheaper electricity, heat pumps often come out ahead. Run your own local prices through the calculator above rather than relying on a national average, since the gap between gas and electricity pricing varies enormously by location.
Heat Pump vs Oil Heating Cost
Heating oil is typically one of the more expensive fuels per unit of heat delivered, which is why heat pumps frequently show meaningful savings for homes switching away from oil, especially in areas with moderate electricity prices. Oil prices can also swing significantly year to year, so it's worth checking a recent price rather than an older bill.
Heat Pump vs Propane Heating Cost
Propane tends to sit between natural gas and heating oil in cost per unit of heat, and like oil, it's commonly used in homes without access to a natural gas line. Because propane is often relatively expensive, heat pumps frequently offer solid savings for propane-heated homes, though your actual result depends on your local propane price and electricity rate.
Heat Pump vs Electric Resistance Heating
This is usually the clearest case for savings. Electric resistance heating (baseboard heaters or an electric furnace) converts electricity to heat at close to 100 percent efficiency, while a heat pump with a COP of 3.0 delivers roughly three times as much heat for the same amount of electricity. Homes switching from electric resistance heat to a heat pump commonly see the largest percentage savings of any comparison in this calculator.
How Accurate Is a Heat Pump Savings Estimate?
This calculator gives a reasonable estimate based on the numbers you provide, but it can't account for everything that affects a real installation. Actual results depend on factors like outdoor temperature swings throughout the year, how well your home retains heat, correct sizing and installation quality, how often backup heating kicks in during extreme cold, and changes to fuel or electricity prices after you switch. Treat the result as a solid starting point for your decision, not a guaranteed number.
Frequently Asked Questions
How much money can you save with a heat pump?
It depends entirely on your local fuel and electricity prices, your current system's efficiency, and the heat pump's COP. Some homes save several hundred dollars a year, others see minimal savings or even higher costs. Enter your own numbers above for a realistic estimate rather than relying on a generic figure.
How do you calculate heat pump savings?
Estimate your current annual heating cost, estimate what a heat pump would cost to deliver the same amount of heat using your electricity price and the heat pump's COP, then subtract the heat pump cost from your current cost. The calculator above does each of these steps and shows the full breakdown.
How much electricity does a heat pump use?
This depends on how much heat your home needs and the heat pump's COP. A higher COP means less electricity is needed to deliver the same amount of heat. The calculator estimates your specific annual electricity use based on your current heating usage and the efficiency values you enter.
Is a heat pump cheaper than gas?
Sometimes, but not always. It depends heavily on the price gap between electricity and natural gas in your area. In places with cheap gas and pricier electricity, a heat pump can cost more to run; in other areas it comes out ahead. Compare your own local rates using the calculator above.
Is a heat pump cheaper than oil?
Usually, since heating oil tends to be one of the more expensive fuels per unit of heat. Most homes switching from oil to a heat pump see meaningful savings, though your exact result depends on your local oil and electricity prices.
How long does a heat pump take to pay for itself?
Payback period is your net installation cost (after any rebates) divided by your estimated annual savings. If annual savings are small, payback can take many years; if savings are strong and rebates are available, payback can happen in just a few years. The calculator shows this figure directly once you enter your installation cost and any expected rebates.
What affects heat pump operating costs?
Electricity price, the heat pump's COP, outdoor climate, home insulation, correct system sizing, and how often backup heat is used all affect real-world operating cost. Two identical heat pumps can have noticeably different running costs in different homes and climates.
Are heat pumps cheaper to run than electric resistance heating?
In almost every case, yes. Electric resistance heat converts electricity to heat at close to 100 percent efficiency, while a heat pump with a COP of 3.0 delivers around three times as much heat per unit of electricity, which typically makes it substantially cheaper to run for the same heating need.
If you want to check the running cost of a specific appliance rather than your whole heating system, you can estimate appliance electricity costs with our Energy Cost Calculator. And if you'd rather work from your actual meter readings or a known monthly usage figure to see your full electricity bill, you can calculate an estimated electricity bill with our Electricity Bill Calculator.
This calculator provides an estimate based on the information you enter. It does not account for every factor that affects real-world heating costs, and your actual savings may differ due to weather, insulation, system sizing, installation quality, maintenance, and local utility rates. It is not a guarantee of savings or of any specific payback period.