How Much Can You Save by Switching From Oil or Gas Heating to an Electric Heat Pump System? 

Electric heat pumps are very efficient, and they improve the comfort levels in your home. But can they help you save money on your home heating bills? How much money can you save when you switch to a heat pump? Ultimately, the answer varies depending on fuel prices and how you heat your home now. 

To help you out, this guide compares the costs of heating with oil or natural gas to the cost of heating with an electric heat pump. It also looks at the other points to consider when looking for the most efficient way to heat your home. 

How to Compare Heating Costs Between Oil/Gas and Electric Heat Pumps

The easiest way to compare the potential savings of switching to a heat pump is to use an energy calculator. Many of the big electric utility subsidiaries like NYSEG have energy cost calculators on their websites. Or you can check out the Home Energy Saver calculator from the US Department of Energy. Alternatively, a heat pump installer can help you crunch the numbers and figure out your potential savings. 

When using an energy savings calculator, you’ll need to consider the type of fuel you’re using now and the cost of the fuel. As you know with oil and gas, the per-gallon cost can vary a lot. You may want to compare current prices as well as different highs and lows to give you a sense of the savings as prices fluctuate. 

For instance, in mid-2022, the price of heating oil was $4 to $5 per gallon, while three years earlier, it was under $2. These shifts can make a significant difference when you’re using a heating cost comparison calculator. 

Cost of Natural Gas Heat Versus a Heat Pump

The cost differences between heating your home with natural gas versus a heat pump vary. However, to give you an example, we looked at the potential savings on a 2,000-square-foot home heated with an old steam boiler or a radiant floor boiler. The calculator we used allowed you to enter your current energy consumption by dollars or CCF. 

To make it easy, we just looked at the dollar amount on the heating bills. However, since the home also used a gas dryer and stove, we isolated the heating costs by subtracting the summer bills from the winter bills. Then, we entered the numbers into the calculator. 

Based on these calculations, it would cost $250 more per year to heat your home with a heat pump compared to a gas heater. In other words, there were no savings. The homeowner would have to spend about $20 more per month if they switched to a heat pump. 

However, they would reduce their carbon footprint significantly if they made the switch. By switching from a gas boiler to an electric heat pump, they would reduce their carbon emissions by 3.4 metric tons every year. That’s the equivalent of driving 8,000 miles per year. 

Cost of Fuel Oil Heat Versus Heat Pump

We also crunched the numbers on a sample 2,000 square-foot home using fuel oil compared to a heat pump. In this case, we also said that the home was using window ACs which would be replaced by the heat pump’s built-in AC. Based on a $5 per gallon cost for fuel oil, these calculations showed $846 in annual savings and a reduction of 7.6 metric tons of carbon. That’s the amount of carbon generated by driving 18,000 miles.

If you want to see how soon the savings pay for the heat pump, you need to look at the installation costs and rebates. A standard installation for this size of home costs about $12,000 to $16,000. With a $10,000 rebate, the upfront cost drops to between $2,000 and $6,000. When you save $846 per year, the heat pump pays for itself in two to seven years. 

Note that fuel costs, rebates, and savings vary. This is just an example to illustrate the comparison process. 

How to Save More With a Heat Pump

With the right approach, you can save even more when you switch from natural gas or oil to a fuel pump. Here are some tips to help you boost your savings:

• Tighten the envelope of your home — To safeguard the efficiency of your heat pump, make sure that your home isn’t unnecessarily losing warm air or letting in cold air.
• Make sure you buy the right heat pump — For cold climates, you may need hyper heat. This can efficiently heat your home even in sub-zero temperatures. 
• Augment with solar — When you use solar panels, you reduce or eliminate electric costs, helping you to save even more. 
• Choose the right size equipment — Equipment that is too large or too small will waste energy. An HVAC professional can help you identify the correct size for your needs. 
• Use a professional installer — Installation mistakes can reduce efficiency and drive up costs. Make sure to work with a certified heat pump installer. 
• Apply for rebates — There are many different rebates designed to offset the cost of upgrading to a heat pump. Try to find an installer who can help you apply for rebates. 
• Look for financing — You may also be able to spread out the cost over time by setting up financing to buy your heat pump.

When thinking about costs, you also have to consider repair costs, how long the equipment lasts, and future fluctuations in oil or gas costs. A heat pump specialist can help you look at the big picture so that you make the right decision for your home. 

Heat Pumps Vs Oil and Gas Heat

Cost is not the only element to consider when deciding if you want to switch from oil or gas to a heat pump. As explained above, you may also want to think about your carbon footprint. 

Beyond that, you also need to consider your comfort levels. Heat pumps provide a much more consistent heat than gas or oil boilers or furnaces. With gas and oil heating, temperatures tend to fluctuate depending on when the heat powers on or off, but heat pumps provide consistent heat. 

Additionally, if you’re making changes in your home where you are no longer going to use parts of your home, a heat pump allows you to just heat the areas that are in use. This can help you save compared to oil or gas that is always on or off in the whole home and cannot be zoned. 

Contact Jones Services to Learn More

At Jones Services, we have extensive experience with heat pumps, mini splits, and other HVAC equipment. Want to improve the efficiency of your home heating? Then, contact us today.