Heat Pump Heating Costs: What Drives Your Bill and How to Save

Meta Description: Learn how heat pump heating costs are calculated, what affects the cost to run a heat pump, and ways to cut winter bills across U.S. climates.

Heat pumps can be inexpensive to run—or not—depending on climate, equipment, and energy prices. This guide explains how to estimate heat pump heating costs, compare them with gas, propane, and oil, and lower monthly bills without sacrificing comfort. It uses practical formulas, current price ranges, and proven strategies tailored to U.S. homes and utilities.

What “Heat Pump Heating Costs” Really Means

“Heat pump heating costs” usually refers to operating cost, not installed price. Operating cost equals electricity consumed multiplied by your utility rate. How much electricity a heat pump uses depends on equipment efficiency, size, and weather.

The key metric is COP (Coefficient of Performance), the ratio of heat delivered to electricity used. A COP of 3 means 3 units of heat output per 1 unit of electricity input. COP falls as outdoor temperatures drop, so climate matters.

Seasonal ratings also help. HSPF2 (new U.S. heating rating) expresses seasonal efficiency; higher is better. SEER2 covers cooling, but winter cost is driven by COP and HSPF2. For cold climates, look for cold climate heat pumps with certified low-temperature performance.

Other drivers include the cost of electricity (¢/kWh), use of supplemental electric resistance heat, duct losses, thermostat settings, and home insulation and air sealing.

The Cost Math: From kWh To Dollars

A heat pump’s cost to run can be estimated with one simple relationship: electricity cost per unit of useful heat.

Rule of thumb: $/MMBtu ≈ (Electric Rate $/kWh × 293.07) ÷ COP. One MMBtu is 1,000,000 BTU. The factor 293.07 converts between kWh and BTU.

Typical COPs vary by temperature and model: 47°F: 3–4+; 35°F: 2.5–3.5; 17°F: 1.8–2.7; 0–5°F (cold climate units): 1.5–2.2. Seasonal averages (SCOP) are commonly 2.5–3.2 in moderate climates, 2.0–2.8 in colder zones.

For comparison, furnaces and boilers deliver heat from fuel: $/MMBtu ≈ (Fuel Price ÷ Equipment Efficiency) × Energy Content. For natural gas, use therms (100,000 BTU). For oil and propane, use per-gallon energy contents.

Quick Reference Table: Cost Per MMBtu For Heat Pumps

Takeaway: At 12¢/kWh with a COP near 3, heat pumps deliver heat for roughly $12 per MMBtu—excellent. At 24¢/kWh and COP 2.5, costs approach $28 per MMBtu—still competitive versus propane or oil, but often higher than efficient natural gas in many markets.

Break-Even Electricity Price Versus Natural Gas

The break-even electricity rate is the price at which a heat pump’s cost per MMBtu matches a 95% AFUE gas furnace at a given gas price.

How to use this: If the home’s winter-season COP averages around 3 and gas costs $1.50/therm, a heat pump becomes cheaper to run when electricity is ≤16.2¢/kWh. If gas is high or the heat pump’s COP is higher, the break-even rate rises.

Heat Pump Vs Gas, Propane, And Oil: Real-World Scenarios

Against natural gas: Where gas is inexpensive (about $1.00–$1.50/therm) and electricity is high (≥18¢/kWh), a 95% AFUE gas furnace often has lower operating cost than a standard heat pump. In regions with lower electric rates (10–14¢) or higher average COPs, heat pumps can be less expensive.

Against propane: Propane at $3/gal equates to roughly $3.28/therm. At 95% efficiency, that is about $34.5/MMBtu. A heat pump at 16¢/kWh and COP 2.5 costs ~$18.8/MMBtu, usually half the cost. Heat pumps overwhelmingly beat propane on running cost.

Against heating oil: Oil at $4/gal (~0.72 therm/gal) with 85% efficiency yields ~$34/MMBtu. Heat pumps generally undercut oil, even at moderate electricity prices and COP.

Regional examples:

• Northeast: Electric ~18–24¢/kWh; gas ~ $1.60–$2.20/therm; oil common in rural areas. Cold climate heat pumps with COP ~2.2–2.7 can still beat oil and propane and approach gas where rates are favorable or on time-of-use plans.
• Midwest: Electric ~12–16¢; gas ~ $0.90–$1.40/therm. Heat pumps can match or beat gas in electric-coop territories and are strong versus propane in rural homes.
• South: Electric ~11–14¢; limited gas in some areas. Mild winters mean COP ~3+. Heat pumps are typically the lowest-cost heating option.
• West: Electric ~16–28¢; some areas have TOU with low off-peak rates. With smart controls and preheating, heat pumps can be competitive, especially vs propane or where gas is unavailable.

How To Estimate Your Home’s Heat Pump Heating Cost

There are two practical ways: use degree days for a season-wide estimate or use rated capacity/efficiency to estimate hourly costs at design temperatures.

Fast Seasonal Estimate With Degree Days

1. Find your Heating Degree Days (HDD): Use a zip code tool such as DegreeDays.net with base 65°F.
2. Estimate your heat loss: A typical 2,000 sq ft, average-insulated home might need 20–30 BTU/hr per sq ft at 30°F. For a rough seasonal load, many homes fall between 25–60 MMBtu per year, but verify with prior bills if available.
3. Pick an expected seasonal COP: 2.5–3.2 in mild climates; 2.0–2.8 in cold climates with a cold climate heat pump.
4. Compute season cost: Cost ≈ (Seasonal Load in MMBtu) × (Electric Rate × 293.07 ÷ COP).

Example: Seasonal load 35 MMBtu, electric rate 16¢/kWh, COP 2.7. Cost = 35 × (0.16×293.07 ÷ 2.7) = 35 × 17.37 ≈ $608 for the heating season.

Hourly Check At A Cold Snap

1. Look up your unit’s capacity and power at temperature: Use manufacturer performance tables at 17°F and 47°F.
2. Find COP at that condition: COP = Heat Output (BTU/hr) ÷ (Power kW × 3,412).
3. Compute hourly cost: Hourly Cost = Power kW × Electric Rate. Avoid auxiliary resistance heat if possible; it has COP ~1 and raises costs.

Example: A cold climate 3-ton unit delivers 28,000 BTU/hr at 17°F drawing 2.6 kW. COP = 28,000 ÷ (2.6×3,412) ≈ 3.15. At 16¢/kWh, hourly cost ≈ 2.6×$0.16 = $0.42/hour when not using strips.

Equipment Choices That Affect Cost

Cold climate heat pumps maintain capacity and COP at low temperatures. Look for products listed by NEEP’s cold climate database, with meaningful capacity at 5°F and tested COP at low temps.

Variable-speed, inverter-driven compressors modulate output to match load, improving part-load efficiency and comfort. As cycling is reduced, average COP rises.

HSPF2 correlates with seasonal efficiency. While it is not a direct COP, higher HSPF2 generally means lower cost to run under similar conditions. ENERGY STAR heat pumps must meet higher efficiency thresholds.

Avoid undersizing or oversizing. Undersized systems may trigger frequent auxiliary heat use; oversizing can increase cycling and reduce efficiency. Use Manual J load calculations to right-size.

Ducted Vs. Ductless And Zoning

Ductless mini-splits can be highly efficient because they avoid duct losses and offer room-by-room zoning. They excel in retrofits and additions, especially where ducts are leaky or uninsulated.

Ducted heat pumps serve whole homes. Cost to run depends on duct design. Seal and insulate ducts in attics or crawlspaces to prevent 10–30% energy loss. Keep static pressure within manufacturer limits for better efficiency.

Multi-zone systems can save energy if most zones run at low fan speeds. Avoid oversizing outdoor units or installing many small indoor heads on one condenser when loads are modest.

Controls And Settings That Lower The Cost To Run A Heat Pump

Limit auxiliary heat: Electric resistance strips are 3–4× more expensive per unit of heat than a high-COP heat pump. In the thermostat, increase the “temperature differential” or “stage-up” delay so strips engage later.

Balance point and lockouts: Program an outdoor lockout to restrict strip heat above a chosen temperature. For dual-fuel setups, choose a smart switchover temperature based on real prices and COP to minimize cost.

Set modest setbacks: Large overnight setbacks can trigger strip heat during morning recovery. Use mild setbacks (2–4°F) or adaptive recovery that avoids strips.

Fan auto vs on: Use Auto. Leaving the fan On can push cool air during off cycles and raise energy use by recirculating air through a cold coil in winter.

Preheating on time-of-use rates: If your utility offers off-peak pricing, preheat the home before peak hours, then maintain with smaller temperature drift. Some smart thermostats automate this.

Keep filters clean: Dirty filters increase static pressure, reduce airflow, and lower COP. Replace or wash regularly.

Home And Rate Factors You Can Change

Air sealing and insulation offer the biggest long-term reduction in heat pump heating costs. Sealing top plates and attic hatches and adding attic insulation can cut winter loads by 10–30%.

Reduce infiltration: Weatherstrip doors, caulk window frames, and seal duct boots. Lower infiltration raises indoor coil temperatures slightly and improves COP.

Windows and shades: Tight, double-pane windows and nighttime insulating shades reduce heat loss. Daytime solar gain can lower run time on sunny winter days.

Water heater choice: A heat pump water heater can shift significant winter kWh from resistance to heat pump technology, often cutting hot water energy use by 50–70%.

Rate plans: Ask your utility about time-of-use or electric-heat rates. Pair low off-peak pricing with preheating. Enroll in demand response if incentives align.

Whole-home monitoring: Smart energy monitors or submetering show when strips engage or defrost cycles spike usage, helping you fine-tune settings.

Incentives, Rebates, And Credits That Cut Net Cost

Federal tax credit (25C): Qualifying heat pumps can earn a 30% tax credit up to $2,000 per year for equipment and labor. See ENERGY STAR federal tax credits for details and eligibility.

State and utility rebates: Many utilities offer $300–$2,000+ per system for high-efficiency or cold climate units. Some states are rolling out electrification rebates and income-based programs; availability varies by year and location.

Weatherization assistance: Income-qualified programs fund air sealing, insulation, and duct sealing that lower heat pump run costs. These measures often pay back faster than equipment upgrades alone.

Find current offers on DSIRE, your utility’s website, and state energy offices. Stack rebates with the 25C credit where rules allow.

Common Cost Myths And Pitfalls

“Heat pumps don’t work in cold climates.” Modern cold climate heat pumps heat effectively below 0°F with documented low-temp capacity and COP. The right model selection is key.

“Always set the fan to On for better heat.” This often raises energy use and reduces comfort. Use Auto to avoid pushing air through a cold coil between cycles.

“Big setbacks save money in winter.” Large setbacks can trigger strip heat during recovery. Use smaller setbacks or adaptive thermostats to preserve savings.

“Oversizing is safe.” Oversized systems short-cycle, reduce average COP, and may be noisier. Proper sizing from a Manual J load calculation lowers cost and improves comfort.

“All HSPF2 ratings are equal across climates.” HSPF2 is a lab test; field performance depends on duct design, installation quality, and outdoor temperatures. Ask for low-temp performance data.

Buying Checklist For Lower Operating Cost

• Request a Manual J and duct assessment to right-size equipment and minimize strip heat.
• Specify cold climate models if winter design temps are below 20°F; review 5°F capacity and COP tables.
• Choose variable-speed systems with efficient, right-sized indoor coils and matched components.
• Seal and insulate ducts, especially in attics or crawlspaces; target ≤10% leakage.
• Program thermostat lockouts for auxiliary heat and consider outdoor temperature-based controls.
• Discuss TOU strategies and preheating if your utility offers off-peak rates.
• Verify commissioning: airflow set, refrigerant charge confirmed, static pressure measured, and controls tested.

Fuel Cost Benchmarks And Conversions

These conversions help compare the cost to run a heat pump with other heating fuels. Actual prices vary by region and season. Use your bills for precise numbers.

Insight: Heat pumps generally beat propane and oil on operating costs, and they can beat gas where electricity is affordable or COP stays high.

Defrost Cycles, Humidity, And Real-World Efficiency

Defrost cycles are normal. When the outdoor coil frosts, the unit reverses briefly to melt ice, causing short cool-air bursts inside. This reduces seasonal COP slightly. Proper sizing and controls minimize impact.

Humidity and comfort: Heat pumps deliver steadier, lower-temperature supply air than furnaces. In dry winter climates, consider a humidifier to maintain comfort at lower setpoints, which can save energy.

Filtration and airflow: High-MERV filters raise static pressure if ducts are marginal. Balance filtration and airflow to preserve COP.

Dual-Fuel Strategies: When To Switch To Gas

In dual-fuel homes, the heat pump handles moderate weather and a gas furnace covers deep cold. The best switchover temperature depends on real-time energy prices and the heat pump’s low-temp COP.

Method: Calculate electricity $/MMBtu at a few outdoor temperatures using the unit’s COP table. Calculate gas $/MMBtu with your furnace’s AFUE and gas price. Set the switchover where costs are equal, with a small comfort buffer.

Tip: Revisit the switchover if rates change. On TOU plans, stay on heat pump longer during off-peak and switch earlier during peak pricing.

Low-Temperature Performance: What To Look For

Capacity retention: Check the percentage of rated capacity the outdoor unit can deliver at 5°F or 17°F. Higher retention reduces strip heat use and lowers cost.

Rated COP at low temps: Ask for AHRI or manufacturer COP values at 47°F, 17°F, and 5°F. Cold climate models often maintain COP ≥2 near 5–17°F.

Crankcase heaters: Some units use small heaters to protect compressors in cold weather. They draw power even when off. Proper controls and insulation reduce standby consumption.

Maintenance That Protects Your Efficiency

Outdoor unit care: Keep coils clean and clear of snow, leaves, and shrubs. Maintain 12–24 inches of clearance around the unit. Install a snow stand in heavy-snow regions.

Refrigerant charge and airflow: Annual checks verify charge, superheat/subcooling, and airflow. Deviations can cut COP by 5–20%.

Thermostat and firmware updates: Manufacturers often improve defrost and staging logic. Keep controls updated to maintain efficiency.

Practical Example: Whole-Home Cost Snapshot

Home: 2,100 sq ft, mixed-humid climate, fair insulation. Seasonal load estimated at 30 MMBtu. Electricity at 14¢/kWh on TOU, average effective rate 12.5¢ after preheating. Cold climate 3-ton heat pump, seasonal COP ≈ 3.1.

Seasonal cost: 30 × (0.125×293.07 ÷ 3.1) ≈ 30 × 11.82 ≈ $355. Previous propane furnace at $3.20/gal (95% AFUE) cost ≈ $36.8/MMBtu × 30 = $1,104. Net savings ≈ $749 for the season.

What made the difference: Zoning two ductless heads for main areas, attic air sealing, insulated ducts, and TOU preheating kept COP high and rates low.

Glossary

• COP: Heat out ÷ electric in. Higher means cheaper heat.
• HSPF2: New U.S. heating efficiency rating; higher is better. Not directly interchangeable with COP.
• SEER2: Cooling efficiency; not a winter cost metric.
• Therm: 100,000 BTU. Used for natural gas billing.
• kWh: Kilowatt-hour, the unit for electric billing.
• MMBtu: One million BTU; handy for fuel comparisons.
• Ton: 12,000 BTU/hr of heating or cooling capacity.
• Auxiliary heat: Electric resistance (heat strips) that kicks in at low temps or big setbacks; COP ≈ 1.
• Dual-fuel: Heat pump plus gas furnace with a temperature-based switchover.

Sources And Tools

• U.S. EIA Electricity Monthly Update for average residential ¢/kWh by state.
• EIA Residential Natural Gas Prices to convert to $/therm.
• NEEP Cold Climate Air-Source Heat Pump List for low-temperature performance data.
• ENERGY STAR for qualified products and 25C tax credit information.
• DSIRE for state and utility rebates.
• DegreeDays.net for HDD-based load estimates.

Key Takeaways For Bing Searches On Heat Pump Heating Costs

• Cost to run a heat pump depends on COP, outdoor temperature, and your ¢/kWh.
• Heat pump vs gas furnace cost hinges on local rates; break-even is often 11–17¢/kWh at COP ≈ 2.5–3 with gas at $1.00–$1.50/therm.
• Cold climate heat pumps maintain output in deep cold and usually beat propane and oil.
• Weatherization and controls reduce auxiliary heat use and keep COP high.
• Rebates and tax credits can cut upfront cost; TOU plans can cut operating cost.