Heat pump vs. furnace: one formula decides the operating-cost battle

Published July 2026 · SolarVerdict methodology series

Strip away the marketing on both sides and the running-cost comparison between a heat pump and a gas furnace reduces to a single number you can compute from your own utility bills in two minutes: the break-even coefficient of performance (COP).

The two costs, in the same units

Put both fuels in dollars per million BTU (MMBtu) of heat delivered into the house:

Where AFUE is your furnace’s efficiency (0.80 for older units, up to ~0.97 for modern condensing furnaces), a therm is 100,000 BTU, and 293 is the number of kilowatt-hours in one MMBtu (1,000,000 / 3,412).

The break-even COP

Set the two equal and solve for the COP at which the heat pump’s operating cost matches the furnace:

If your heat pump’s seasonal average COP exceeds this number, it is cheaper to run than your furnace. Below it, the furnace wins on operating cost.

Worked example (illustrative prices — use your own bills)

This household needs a seasonal COP of about 3 to break even. In a mild climate, a good modern heat pump comfortably exceeds that. In a cold climate, whether a unit averages 3 over the whole winter depends heavily on the model and how it’s sized — see do heat pumps work in cold climates. Note what the formula implies: with expensive electricity and cheap gas the break-even COP can climb above what any current unit delivers in deep winter, and with cheap electricity or expensive fuel (propane, oil, electric resistance) the heat pump wins in almost any climate. There is no universal answer — only your prices.

Use your marginal prices, not averages

Two refinements make the number honest. First, use the marginal price per unit — if dropping gas heating lets you cancel gas service entirely, the fixed monthly gas charge counts as savings; if you keep gas for cooking, it doesn’t. Second, if you have time-of-use electric rates, weight the electricity price toward the hours a heat pump actually runs hard (cold mornings and evenings).

Operating cost is only half the verdict

• Upfront cost difference. The fair comparison is rarely “heat pump vs. nothing” — it’s the incremental cost over the furnace/AC replacement you would eventually do anyway. If your AC is due for replacement, the increment shrinks dramatically because a heat pump replaces both machines.
• Seasonal COP is a modeled number. It depends on your climate’s temperature distribution (weighted by heating demand — this is where weather normalization does real work), the unit’s performance curve, and sizing. An undersized unit leaning on electric-resistance backup strips can quietly destroy the economics.
• Dual-fuel is a legitimate answer. Keeping the furnace as backup below a switchover temperature and letting the heat pump run the mild 80% of hours often beats both pure strategies where winters are cold and gas is cheap.

Bottom line

Compute your break-even COP from your own bills. If a salesperson’s savings claim implies a seasonal COP you can’t find on the unit’s specification sheet at your climate’s design temperatures, the claim is wrong. This calculation — against your actual rates, your climate’s hourly temperature history, and honest equipment curves — is a core module of the SolarVerdict report.