If you live in a temperate or cool climate and you’re looking to reduce your CO2 footprint, replacing your furnace or boiler with a heat pump is a great way to start. But heat pump operating costs are a concern many people have when they start looking at the tradeoffs.

I didn’t worry too much about this when I replaced my natural gas appliances – furnace, water heater, clothes dryer – with heat pump versions in late 2020. I knew that in the long term, heat pump operating costs would drop below those for natural gas appliances, given how efficient heat pump based appliances have become, and given the Federal carbon tax we pay in Ontario.

For the record I’m completely in favor of the Federal carbon tax. It sends a signal about the importance of cutting our use of fossil fuels. As of 2021, we’re paying $40 per tonne of CO2 emissions. Your natural gas bill, in Ontario at least, is measured in cubic meters or m3; the $40 per tonne carbon tax corresponds to 3.91 cents, or $0.0391, per m3. In 2023 that will jump to $65 per tonne or $0.13 per m3 and by 2030 it jumps all the way to $170 a tonne or $0.33 per m3;. That on its own is a pretty strong incentive to get off natural gas even if in 2021 heat pump operating costs might seem higher than natural gas furnace operating costs.

The other factor to consider when looking at what it costs to operate a heat pump is the maintenance. Most installers recommend regular annual maintenance for gas furnaces to prevent corrosion of the burners and to keep them burning at peak efficiency. I used to pay $120 for my annual maintenance fee. For my forced air central heat pump system, there’s been no need for any professional maintenance.

Let’s look at the overall energy costs for my Toronto home before and after I replaced my gas furnace/electric air conditioner, gas water heater, and gas dryer for an all-electric heat pump heating/cooling system, a heat pump water heater, and a heat pump dryer.

Before I do that though, a brief note on these three systems, since while many people have heard of heat pumps for home heating, not that many people, in North America at least, are familiar with heat pump water heaters or heat pump clothes dryers.

Heat pump home heating/cooling sytsem: I have a forced air HVAC setup – air ducts and cold air returns as in many North American houses. My heat pump is a Carrier Infinity Heat Pump system, with an interior unit in the basement and a compressor unit outside. The interior unit was a swap-out / swap-in replacement for my Carrier natural gas furnace. The exterior unit, likewise, replaced the air conditioning compressor unit I had before. The heat pump heats the house in cold weather, and cools it in really hot weather.

Heat pump water heater: I have a Rheem heat pump hot water heater, purchased from Home Depot, and installed by the same installers who installed my heat pump. The water heater takes air in through an 8 inch circular vent at the top, and pumps air out through a similar vent on the side. In the summer, these vents draw warm basement air in, extract heat from it to pump into the water, and blow cold air out the exhaust vent. So whenever I’m heating water in summer, I’m also cooling my basement. In the fall I attach 8″ ducts to the vents that vent to the out of doors, so in winter I’m drawing cold outdoor air in, extracting heat from it, and pumping out even colder air back to the outdoors. Believe it or not this unit can take 0C air from outside, draw heat out of it to heat water to 46C, and expel air at -5C or -6C back outside!

Heat pump dryer: I have a Whirlpool heat pump electric dryer. Unlike a gas or electric dryer, which vents the damp air from inside the dryer to the out of doors, thereby sucking valuable warm air from your interior space and spewing it outside, my heat pump dryer does not have an exhaust. It’s a closed loop – the only output is water, which condenses on the heat pump coils (hidden away inside – you never see them) and which then goes down the same drain the washing machine drains into. So no more sucking warm household air outdoors in cold weather – and the heat pump is more efficient than an electric dryer. (Heat pump dryers are very common in Europe and Asia but very new in North America.)

Okay, now let’s get back to heat pump operating costs. While I can’t give you exactly how much energy my home heating/cooling consumes, I can fairly easily compute the overall change in my home energy bills between when I was doing all the heating on natural gas, and now that I’ve gone all electric.

The last year I had a natural gas powered furnace, hot water heater, and clothes dryer, I spent $862 on natural gas, and $1,248 on electricity. That’s a total of $2,110 we spent on home energy when we used both natural gas and electricity.

It’s now been over a year since I replaced all my natural gas devices and had my gas line disconnected. My total electric bill for the past 12 months was $1,968, which is less than I spent the previous year on electricity and natural gas combined. If you subtract the $1,248 I spent on electricity before I got rid of my gas appliances, that means the net heat pump operating costs are $720 per year. And that’s in Toronto which while not exactly as chilly as Winnipeg or Ottawa is still a reasonably cold place in winter. And that’s for three heat pumps, not one.

My annual natural gas consumption, in m3, in the year before I started switching off my natural gas appliances, was around 137 m3 per month. In 2020 carbon tax dollars, that’s $97 per year in carbon tax. By 2030, that climbs to a whopping $547 in carbon tax I don’t have to pay. Add to that the $120 a year in furnace service I’m not paying, and I think my heat pump operating costs are pretty reasonable.

Here’s a table that lays it all out:

Heat Pump Operating Costs – some figures

Measure Details
137 m3 natural gas used per month before
1644 m3 natural gas used per year
1.83 kg per m3 CO2 equivalent (CO2e) emissions
3.00852 tonnes CO2e emissions
$862 gas cost per year, 2020
$120 annual maintenance fee
$982 total gas operating costs per year, 2020
$450 additional costs per year, 2030, JUST for carbon tax increase
$1,432 total gas operating costs per year, 2030 (assuming NO increase in natural gas prices)
$1,248 spent on electricity per year before installing heat pumps
$2,110 total energy costs, 2020
$2,230 total costs including energy + maintenance, 2020
$1,968 spent on electricity per year after installing heat pumps
This is total energy costs, 2021 and is also inclusive o maintenance!
$262 Savings in 2021
$712 Savings in 2030 by factoring in the carbon tax on natural gas

So there you have it. I didn’t even expect this myself until I started doing the math for this article – I figured I was paying slightly more for heat pump operating costs than I was before for my natural gas appliances, but I was willing to pay a little more for the peace of mind of knowing my house was carbon free (other than the CO2 emitted from the small fraction of my electricty that comes from fossil fuels – in Ontario that’s only 6% of the total energy mix – plus, I have a bunch of solar panels on my roof feeding electricity into the grid, so I figure I’m ahead!). And as it turns out, my heat pump operating costs are not only lower than what I was paying for my gas furnace, gas water heater and gras dryer, but they will be a lot lower as the true cost of burning fossil fuels is more and more incorporated into energy costs through the carbon tax.

Go figure. Everyone’s afraid a heat pump is going to cost more to operate than a furnace. I’m already saving $260 a year, and by 2030 I should be saving something like $700. That’s a good deal!

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