Heat Pump vs Gas Furnace

First, the part that's true

A gas furnace makes heat by burning fuel. About 20% of the energy in that gas leaves through the flue instead of warming your rooms — that's what 80% AFUE means. A high-efficiency condensing furnace recovers most of that and reaches roughly 96%. Neither can ever pass 100%, because you can't get more heat out of a flame than the fuel contains.

A heat pump doesn't burn anything. It moves heat. Even cold outdoor air holds heat energy, and the outdoor unit collects it and carries it inside — the same trick your refrigerator uses to move heat out of your kitchen. Because it's moving heat instead of creating it, each unit of electricity can put about 3 units of heat into your house.

Now the catch: energy isn't priced equally

This is where the 3.75× number gets misused. Efficiency tells you how much heat you get per unit of energy. Your bill depends on that, multiplied by what the energy costs.

A unit of electricity costs far more than a unit of gas. At PG&E residential rates — about $0.41 per kWh of electricity against roughly $2.80 per therm of gas — electricity runs about 4.3× more per unit of energy. The heat pump's efficiency advantage is 3.75×. The two very nearly cancel out.

The one number that decides it

You don't have to guess. The comparison flips at a specific electricity price:

But PG&E's standard rate isn't necessarily your rate, and this is where heat pumps start winning:

• ✓Rooftop solar. Once your panels cover the load, the marginal cost of a kWh is close to nothing — and the heat pump wins by a wide margin.
• ✓A municipal utility. Some Bay Area cities sell power well below PG&E's rates, which moves you under the line.
• ✓Replacing an old, inefficient furnace. The comparison above uses a furnace rated at 80%. An older unit running at 60–70% makes the heat pump look considerably better.
• ✓Time-of-use scheduling. Off-peak power is around $0.38/kWh — within a few cents of the 80% furnace line. Peak is about $0.55/kWh, which is not.

What a heat pump gives you that a furnace can't

Running cost is one column of the spreadsheet. The others matter too:

• ✓It's also your air conditioner. One system, both seasons. If you were facing a furnace and an aging AC, the heat pump replaces both — which changes the comparison completely.
• ✓No combustion inside your house. No flame, no flue, no carbon monoxide risk, and nothing to service on the gas side.
• ✓Room-by-room control. A ductless heat pump heats the rooms you actually use instead of the whole house — and with no duct losses, all the heat you pay for arrives where you want it.
• ✓No on-site emissions. Nothing burns in your home. The emissions question moves to the power grid, which in California gets cleaner every year.

Where it isn't the answer

We'd rather tell you this up front than sell you a system you don't need:

• —If your furnace is young and passes inspection, repairing it is almost always cheaper than replacing it.
• —If you have good ducts and want even heat in every room, a ducted heat pump — or a dual-fuel setup that keeps the furnace as backup — may suit you better than wall-mounted heads.
• —If your electrical panel can't carry the load, a new dedicated circuit is a real cost before you start.

How to decide for your house

Two steps, and you can skip the sales pitch entirely:

1. Find your actual rates on your last two utility bills — the real per-kWh and per-therm numbers, not an average from a blog post.
2. Run them through our operating cost calculator to see what your system costs to run per day and per month.

If the numbers favor gas in your house, we'll tell you so. If you want to see what a heat pump would cost installed — with equipment, labor, permit and HERS testing itemized — that's on our multi-zone heat pump pricing page. And if you'd rather just talk it through, we'll look at your bill with you.