Independent guide. COP data from NEEP Cold Climate ASHP product list and DOE heat pump research.Verified May 2026

Heat pump vs gas furnace operating cost 2026: COP, AFUE and when each wins

A modern heat pump beats a 95 percent AFUE gas furnace on operating cost in roughly two-thirds of US states. The technical reason is COP: a heat pump delivers 2 to 4 BTU of heat per BTU of electricity consumed, while a gas furnace caps at about 0.95 BTU of heat per BTU of gas. The exceptions are very cold weather and high-electricity-rate states; cold-climate heat pump variants are closing those gaps in 2026.

COP at temperature: where heat pumps win and lose

Outdoor temp	Standard HP COP	Cold-climate HP COP	Furnace AFUE	Cheapest to operate
47F	3.5	4.0	95%	Heat pump (clear)
35F	2.8	3.5	95%	Heat pump
25F	2.1	3.0	95%	Heat pump (close)
17F	1.8	2.6	95%	Depends on rates
5F	1.0 (backup)	2.3	95%	Gas furnace (standard HP)
-10F	n/a (backup)	1.7	95%	Gas furnace

COP figures are typical for representative units; specific products vary 10 to 20 percent in each direction. "Backup" means the standard heat pump has switched to resistance backup heating because the outdoor coil cannot extract enough heat. "Cheapest to operate" assumes US average gas at $1.45 per therm and US average electricity at 18.05c/kWh.

Why heat pumps deliver more heat than electricity consumed

The apparent magic of a heat pump delivering 3 to 4 kWh of heat per 1 kWh of electricity consumed is rooted in thermodynamics. A heat pump does not generate heat from electricity; it moves heat from outside the home to inside the home, using electricity to power the refrigerant cycle that does the moving. The electricity does work to compress refrigerant; the compressed refrigerant absorbs heat from outdoor air (or ground); the heated refrigerant flows indoors and releases the heat. The COP is the ratio of heat moved to electricity consumed, and it can be much greater than 1 because the moved heat was already there.

As outdoor temperature drops, the heat-extraction problem gets harder (less heat to extract, larger temperature differential to overcome) and COP drops. Below the heat pump's balance point (the temperature at which COP equals 1), resistance backup takes over and the operating cost rises sharply. The "right" heat pump for a given climate is one whose balance point falls below the local design temperature (the temperature exceeded only 1 percent of hours in a typical heating season). For mild climates, any standard heat pump works; for cold climates, you need a cold-climate variant.

AFUE vs realistic delivered efficiency

The AFUE rating measures fuel input converted to delivered heat at the furnace plenum, before any duct loss. The DOE testing protocol calculates AFUE as a seasonal weighted average that accounts for cycling losses, pilot light energy (where present) and standby losses. Modern condensing furnaces achieve 90 to 98 percent AFUE; non-condensing furnaces achieve 80 to 85 percent. The federal minimum since 2015 is 80 percent AFUE; ENERGY STAR threshold is 90 percent.

The catch: AFUE measures performance at the plenum, not at the registers. A typical home loses 20 to 35 percent of supply air through duct leakage in unconditioned attic or crawl space, plus an additional 5 to 15 percent through conductive losses through duct walls. Net delivered efficiency for a 95 percent AFUE furnace in a typical home is 55 to 70 percent. The same duct losses apply to a heat pump's supply air, so the comparison is still valid: heat pump COP 3 with duct losses delivers more BTU per kWh than gas furnace 95 percent AFUE with the same duct losses. But the absolute numbers (and thus the dollar cost per BTU delivered) are both about 30 percent worse than the equipment-rated numbers would suggest.

Worked example: 2,200 sq ft home in Boston

A 2,200 square foot home in Boston (climate zone 5/6) has an annual heating load of about 70 MMBtu (70 million BTU per year). At a Boston gas price of $1.85 per therm and 95 percent AFUE furnace, that costs about $1,365 per year for gas heating. At a Boston electricity rate of 28.6 cents per kWh and a cold-climate heat pump averaging COP 2.7 over the season, the same heating load costs about $2,175 per year.

Gas wins by about $810 per year in this specific case. But the equipment economics tell a different story. A new 95 percent AFUE gas furnace install in Boston runs about $6,500. A cold-climate heat pump install runs about $14,000, but after the federal 25C credit ($2,000) and Mass Save heat pump rebate ($10,000 for whole-home conversion), net cost is about $2,000. The heat pump install nets $4,500 less than the gas furnace install, which more than offsets the higher operating cost over the first 5 to 6 years; on a total cost of ownership basis the heat pump still wins in Boston even where operating cost favors gas. This is a deliberate policy design by Massachusetts.

Worked example: 2,200 sq ft home in Atlanta

A 2,200 square foot home in Atlanta (climate zone 3) has an annual heating load of about 25 MMBtu. At an Atlanta gas price of $1.65 per therm and 95 percent AFUE furnace, gas heating costs about $435 per year. At an Atlanta electricity rate of 13.2 cents per kWh and a standard heat pump averaging COP 3.2 over the season, the same heating load costs about $320 per year.

Heat pump wins by about $115 per year on operating cost. Equipment economics also favor the heat pump: an Atlanta-area heat pump install runs about $10,000 (no cold-climate variant required), versus $11,000 for gas furnace + new AC pair. After the 25C credit ($2,000) and Georgia Power efficiency rebate ($500), net heat pump cost is about $7,500 versus $11,000 for gas + AC. The heat pump wins both on operating cost and on install cost, by clear margins. Atlanta is one of the easiest US markets for the heat pump conversion decision.

When gas still wins on a total-cost basis

A handful of scenarios where gas still wins after the operating + install + credit calculation. First, very cold rural Northeast or Midwest with cheap gas and high electricity rates, where the heat pump runs at low COP for many hours and the rebate stack does not fully offset. Second, homes with a relatively new (under 8 years old) high-efficiency gas furnace where the residual life value makes retirement wasteful. Third, off-grid or limited-grid homes where electricity capacity is constrained and the heat pump's higher kW demand would require service upgrade. Fourth, very large homes (5,000+ square feet) where the heat pump's tonnage requirement pushes into commercial pricing.

For everyone else, the heat pump is the right answer in 2026, sometimes by clear margins, sometimes by close margins. The trend is unambiguously toward heat pumps as electricity grids decarbonise (improving lifecycle emissions), as cold-climate equipment matures (reducing the cold-weather penalty), and as state rebate programs deepen (reducing the install premium). Households making a 15 to 25 year equipment decision should weight this trend; gas equipment installed in 2026 will operate through 2040 to 2050 in a steadily worsening relative-cost environment.

Sources and further reading

FAQ

What is COP and how does it change with temperature?

COP (Coefficient of Performance) measures heat output per electrical input. A heat pump at COP 3 delivers 3 kWh of heat per 1 kWh of electricity consumed. COP varies with outdoor temperature: standard heat pumps deliver COP 3 to 4 at 47F outdoor, drop to COP 2 at 17F, and approach COP 1 below 5F. Cold-climate heat pumps (Mitsubishi Hyper-Heat, Bosch IDS Premium) maintain COP 2.5+ down to 5F.

What is AFUE and is the rated value realistic?

AFUE (Annual Fuel Utilization Efficiency) measures the percentage of fuel input that becomes delivered heat. 95 percent AFUE means 95 percent of the gas energy becomes heat in the supply plenum; 5 percent goes up the flue. The rated value is realistic at the equipment, but duct losses (typically 20 to 35 percent) reduce the percentage of input fuel that reaches the registers. A 95 percent AFUE furnace with 30 percent duct loss delivers about 66 percent of the input fuel to the conditioned space; this is the more accurate comparison point versus a heat pump that suffers the same duct loss.

When does gas actually win on operating cost?

Three conditions together: (1) electricity rate above 20 cents per kWh, (2) natural gas price below $1.40 per therm, and (3) a heating season with substantial hours below the heat pump's balance point. The combination occurs in parts of the Northeast and upper Midwest. Even in those regions, modern cold-climate heat pumps narrow the gap to within 10 to 20 percent, and the state-stack rebates often flip the install economics in favor of the heat pump regardless.

How does humidity affect the comparison?

Cold-weather operation of a heat pump requires defrosting the outdoor coil every 30 to 90 minutes when outdoor temperature is below about 40F with high humidity. The defrost cycle temporarily reverses the heat pump (sending warm air to the outdoor coil) and runs the indoor resistance backup. Defrost cycles add 10 to 20 percent to seasonal energy consumption in damp coastal climates. In dry inland climates the defrost penalty is minimal.

What is the install cost of each system?

Modern heat pump (ducted air-source, 3-ton, HSPF2 9.5+): $9,000 to $14,000 installed including new outdoor unit and indoor air handler if replacing an old AC + furnace combo. Add $2,000 to $4,000 for cold-climate variant. Gas furnace (95 percent AFUE, 80,000 BTU): $4,000 to $7,000 installed if replacing existing furnace; add $5,000 to $8,000 for a new AC if needed. For an apples-to-apples replacement of a 25-year-old gas furnace + AC pair, the heat pump install is roughly even with gas furnace + new AC after the 25C credit; meaningfully cheaper after state rebate stack.

What is the dual-fuel option?

Dual-fuel installs a heat pump for primary heating (mild to moderate cold) plus retains the existing gas furnace as backup for the coldest hours of the year. The thermostat switches to gas below a configured outdoor temperature (typically 25 to 35F). Operating cost ends up similar to or slightly worse than a true cold-climate heat pump; capital cost is lower because the existing furnace is retained. Useful for homes with newer furnaces where retiring the furnace would be wasteful, or for homes wanting outage redundancy.

How long do heat pumps last?

Modern heat pumps have similar equipment life to central AC, about 12 to 18 years for the outdoor compressor unit and 18 to 25 years for the indoor air handler. Cold-climate inverter compressors are newer technology and the field data on longevity is still accumulating; manufacturer warranties run 10 to 12 years on the compressor. Gas furnaces typically last 18 to 25 years. Both system types benefit from annual professional maintenance; a heat pump that has its filter changed quarterly and coils cleaned annually will reach the upper end of expected life.

Disclaimer. Operating cost comparison uses 2026 EIA US-average electricity and natural gas prices; substitute state-specific values for accurate per-state estimates. COP varies by equipment, operating conditions, and duct system. Independent resource.