Heat Pump vs. Furnace: Which Home Heating System Is Best?

Home heating contributes to nearly a third of the average U.S. utility bill — more than any other system in a home.

To make matters worse, home heating costs are on the rise. The National Energy Assistance Directors’ Association estimates that consumers will pay 35% more for their heat this winter than they did just two years ago — 75% if they use heating oil and 66% for natural gas (electricity costs have apparently increased the least).

Fortunately, if you use one of the pricier resources, there are some ways to reduce your heat consumption and lower those energy bills. In some cases, you may even be able to change your home’s heating system — ideally to one with a lower-cost power source.

Are you looking to get a handle on your home’s heating costs or just make your heating system more efficient? Here’s what you’ll need to know, especially when considering a heat pump or furnace.

[Read: How to Use Less Water and Save on Your Water Bill]

Can You Change Your Home Heating System?

Changing your home heating system may be a possibility, but it depends on a number of factors — including your home’s size, age and construction.

Older homes, for example, may not have the ducting or circuit panels to handle newer systems — at least without significant change to the home’s infrastructure (plus major cash).

“Depending on your existing heating system, an upgrade may or may not be possible,” says Mallory Micetich, home care expert at Angi, a home services platform based in Denver. “If you don’t already have ductwork in place, upgrading to a system that requires ducts will be much more work than upgrading to a different type of furnace that can rely on the existing ductwork.”

Location plays a role, too — and not just in what fuel resources the home has access to. It also determines how powerful a heating system the property requires.

“Smaller houses — those under 2,000 square feet — could benefit by adding a fireplace, either gas or wood burning, for heating compared to a central furnace,” says Tim David, a heating and air conditioning specialist and CEO at Airlucent in Huntsville, Alabama. “But outdoor temperature must always be considered for the best type of heating system for your home. If you’re further north, where temperatures are sub-32 degrees for extended periods of time, you’ll want to invest in a whole house heating system, so either a central furnace or heat pump so that you maintain a warmer indoor temperature that won’t lead to pipes freezing.”

If you’re considering changing heating systems, your best bet is to have a local HVAC professional assess your property. They can make recommendations as to which changes are possible with your specific home.

[READ:Radiant Heat in Your Home: Is It Worth It?]

Heating System Options

If you are able to change your home’s heating system, you have many options to choose from. Some require natural gas or propane, while others use air, oil or geothermal energy.

Here’s a look at the options you might consider:

Furnace and Boiler Systems

The U.S. Energy Department says furnaces and boilers are the most common heating systems in the country. According to David, they’re also the most economical — at least those powered by natural gas.

“Natural gas is still the least costly form of energy in most of the country,” David says. “Plus, furnaces will cost less than a central heating system and should last many years longer.”

Furnaces, which work by heating air and distributing it throughout the home via ductwork, can be powered by gas, geothermal energy, electricity or heating oil. Keep in mind that pure heating oil is a fossil fuel, which can pollute the air and contribute to climate change. If spilled, it can also contaminate water sources and endanger wildlife. Some companies offer oil blended with biodiesel, which can make these oils more environmentally friendly.

Boilers operate similarly to furnaces, though the distribution method is different.

“A central boiler circulates steam or water, depending on the unit, through pipes to radiator units,” says Lane Dixon, vice president of operations at Aire Serv, a nationwide HVAC servicing company based in Waco, Texas. “Boilers aren’t as efficient for heating large areas of a home. They can be powered by natural gas, propane, fuel oil, biodiesel blends or electricity.”

Installing a furnace can cost anywhere from $2,000 to $17,000, depending on the type, according to home improvement network and information company Angi. Geothermal furnaces, which use ground heat to warm your home’s air, are the most expensive. Boilers are slightly more affordable at $1,800 to $16,000.

Heat Pumps

Heat pumps are another potential heating option. These collect heat from the air, water or the ground and are powered using electricity. The Energy Department estimates that heat pumps reduce a home’s heated-related electricity needs by about 50% compared with furnaces. They also lessen your environmental footprint.

“Electric heating systems use electricity to produce and circulate heat throughout your home instead of relying on natural gas,” says Darcy Lee, senior product manager for Trane Residential, which offers heating and cooling systems nationwide. “That means, when you choose an electric heating option, like a heat pump or hybrid system, you’re reducing the amount of greenhouse gas emissions coming from your home.”

In addition to electric heat pumps, there are also dual-fuel heat pump systems, which pair an outdoor heat pump with a gas furnace.

“Much like a hybrid car that runs on electricity as often as possible and switches to gas as needed, a hybrid HVAC system runs the electric heat pump system as often as possible and switches to the gas furnace when it’s needed,” Lee says. “Not only do hybrid systems maximize system efficiency, but they can help offset the costs of installing a traditional heat pump.”

Another option is a geothermal heat pump, which extracts heat from the ground around your home. These systems can reduce energy use by up to 60% and cut water heating costs by around 50% in the winter.

The one downside is that geothermal systems tend to be expensive to install. Angi’s data shows they range anywhere from $4,100 to nearly $24,000 in cost, depending on the size of the home.

“It’s environmentally friendly and extremely efficient,” Micetich says. “But it’s also more expensive to install and repair, ranging in cost from $4,000 to $20,000. Mallory

Supplemental Systems

There are also supplemental heating systems and devices you can use to heat single spaces or small properties. Installing a fireplace, as David mentioned, might be enough to heat a more compact property, and space heaters are a viable option, too.

“Depending on the people in the home, you may only need to heat one room to stay comfortable, and that could be done with a space heater,” David says.

Wood- and pellet-burning stoves can help warm a home. These may “emit large quantities of air pollutants,” though, according to the Energy Department, and some municipalities even restrict or ban them completely.

[Read: How Much Do Energy Efficient Windows Cost?]

Summary: Heat Pump vs. Furnace

Here are the main points to consider when deciding between a heat pump or furnace.

Furnace and Boiler Pros and Cons

— A furnace or boiler will last longer than a central HVAC system.

— Furnaces and boilers powered by natural gas offer some of the cheapest forms of energy for heating.

— Furnaces cost $2,000 to $17,000 to install, while boilers cost $1,800 to $16,000.

— Furnaces that burn pure heating oil aren’t environmentally friendly, while boilers use water or steam.

— Boilers aren’t as good as furnaces for heating large areas.

Heat Pump Pros and Cons

— Heat pumps collect heat from the air, water or ground and are powered by electricity.

— Heat pumps can reduce electric heating activity by 50% compared with furnaces.

— Heat pumps are more environmentally friendly than furnaces.

— Geothermal heat pumps can drastically reduce energy use by 60% and water heating costs by 50% in the winter.

— Geothermal heat pumps are expensive, costing $4,000 to $24,000 to install.

Get Help With Your Heating Upgrade Costs

If you decide to update your heating system, you might be eligible for tax incentives that can help offset the cost. As part of the Inflation Reduction Act, consumers can now get valuable tax credits toward certain energy-efficient home improvements. In 2023, the credit amounts to 30% of the cost of updates, up to $1,200.

You can also opt for an ENERGY STAR-certified system. These may qualify you for rebates from your municipality or utility provider and can save on your energy bills. An ENERGY STAR heat pump, for example, can save you nearly $5,000 over its lifetime.

More from U.S. News

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Heat Pump vs. Furnace: Which Home Heating System Is Best? originally appeared on usnews.com

Update 03/10/23: This story was published at an earlier date and has been updated with new information.

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