Heating Energy Cost Comparison: Heat Pump and Electric Heating Systems

Factors Affecting Heating Cost Comparisons

As stated earlier, the relative savings you can expect from running a heat pump to provide heating in your home depend on a number of factors, including:

  • The cost of electricity and other fuels in your area.
  • Where your home is located – severity of winter climate.
  • The type and the efficiency of the heat pump you are considering – whether closer to the least energy-efficient or most energy-efficient HSPF or COP.
  • How the heat pump is sized or matched to the home – the balance point below which supplementary heating is required.

Comparison Results

Table 2 shows estimated heating energy costs for eight different heat pumps, an electric furnace, and an oil furnace. Seven locations across Canada have been selected for the purposes of this comparison. Six of these locations are cities, while one, rural central Ontario, is a region. Each has unique electricity costs. Results in other cities in the same climate region may differ, due to variations in electricity costs.

A range of annual energy costs is provided by region for each heating system. This accounts for variations in equipment efficiency, size of house or annual heating requirements, and the ratio of heat pump to house heat loss. According to Table 2, the lowest operating costs for all systems are found in Vancouver, which has the warmest climate. The highest operating costs for most systems are found in rural central Ontario. In all of these estimated cases, heat pump systems have lower annual heating energy costs than electric or oil furnaces. Also note that in all locations, ground water EESs have lower operating costs than closed-loop EESs.

The comparisons shown in Table 2 include only energy costs for space heating. For some heat pumps equipped with a desuperheater, domestic water heating costs can be reduced by 25 to 50 percent. This would increase the savings and improve the payback on investment for these systems. Furthermore, there may be payback and energy savings for those heat pumps, which can be used to meet space cooling requirements.

Table 2:
Heat Pump and Conventional Heating System –
Heating Energy Cost Comparison
(Energy cost range in $/yr.)
(Simple payback period ranges in years shown in italics below energy cost ranges)
Location Furnace
with
Air
Conditioning
Air-
Source
Add-on
to Oil
Furnace
Air-
Source
with Elec.
Resistance
Backup
Ground
Water
ESS
Closed
-Loop
ESS
Electric
100%
AFUE
Oil
78%
AFUE
Standard
Effi-
ciency
High
Effi-
ciency
Standard
Effi-
ciency
High
Effi-
ciency
Standard
Effi-
ciency
High
Effi-
ciency
Standard
Effi-
ciency
High
Effi-
ciency
Vancouver $
405
-
$727
$
441
-
$786
$
139
-
$258
$
125
-
$232
$
138
-
$258
$
125
-
$232
$
170
-
$339
$
141
-
$282
$
197
-
$394
$
165
-
$329
3.6
-
5.2
4.1
-
6.1
4.0
-
5.9
4.6
-
6.9
14.6
-
17.1
14.2
-
17.0
29.7
-
33.8
26.5
-
31.2
Calgary $
1,128
-
$
1,907
$
930
-
$
1,536
$
634
-
$
1,053
$
597
-
$
985
$
689
-
$
1,137
$
650
-
$
1,063
$
432
-
$
863
$
365
-
$
730
$
488
-
$
975
$
410
-
$
820
3.5
-
4.8
3.7
-
5.2
2.2
-
3.2
2.4
-
3.6
4.9
-
5.3
4.9
-
5.3
9.6
-
10.3
8.8
-
9.4
Winnipeg $
1,057
-
$1,776
$
1,290
-
$2,128
$
867
-
$
1,402
$
837
-
$
1,346
$
750
-
$
1,225
$
717
-
$
1,162
$
332
-
$
665
$
281
-
$
562
$
375
-
$
751
$
316
-
$
632
2.3
-
3.4
2.6
-
3.8
3.1
-
4.6
3.3
-
5.1
4.6
-
5.0
4.7
-
5.2
8.7
-
9.3
8.3
-
9.1
Rural
Central
Ontario
(North Bay)
$
1,509
-
$
2,551
$
1,072
-
$
1,764
$
806
-
$
1,34
1
$
758
-
$
1,251
$
935
-
$
1,531
$
882
-
$
1,430
$
453
-
$
905
$
382
-
$
763
$
515
-
$
1,030
$
432
-
$
864
4.4
-
5.8
4.4
-
6.0
1.8
-
2.7
2.0
-
3.0
3.4
-
3.8
3.5
-
3.9
6.4
-
7.0
6.2
-
6.8
Toronto (Etobicoke) $
1,082
-
$
1,854
$
803
-
$
1,338
$
490
-
$
825
$
452
-
$
755
$
529
-
$
873
$
491
-
$
801
$
282
-
$
493
$
235
-
$
411
$
326
-
$
571
$
273
-
$
477
3.8
-
5.2
4.0
-
5.7
2.0
-
3.0
2.2
-
3.4
4.3
-
5.2
4.6
-
5.5
8.0
-
9.6
7.9
-
9.6
Montréal $832
-
$1,417
$716
-
$1,190
$462
-
$766
$433
-
$712
$484
-
$796
$454
-
$738
$314
-
$627
$264
-
$528
$357
-
$713
$299
-
$599
4.3
-5
.9
4.5
-
6.5
2.9
-
4.3
3.2
-
4.9
6.9
-
7.4
6.8
-
7.6
13.5
-
4.1
12.3
-
13.5
Halifax $1,068
-
$1,833
$836
-
$1,397
$452
-
$772
$414
-
$701
$471
-
$791
$432
-
$719
$280
-
$490
$233
-
$409
$324
-
$567
$271
-
$474
2.7
-
3.7
2.9
-
4.1
1.6
-
2.4
1.8
-
2.7
3.8
-
4.6
4.0
-
4.8
7.0
-
8.5
7.0
-
8.4


Notes to Table 2:

  1. Electricity prices are residential runoff rates as of November 2003, as supplied by local utilities. Rates varied from a low of 5.16¢ per kWh in Winnipeg to a high of 8.67¢ per kWh in Toronto.
  2. Oil prices are "typical" prices from local suppliers as of November 2003. Prices varied from 38.9¢ per litre in Montréal to 50¢ per litre in Halifax.
  3. AFUE: Annual Fuel Utilization Efficiency (seasonal efficiency).
  4. Simple payback period (shown in italics) is based on heating cost savings and initial cost. The initial cost for air-source heat pump systems is the additional cost from an air conditioner to the heat pump. The initial cost for EES heat pump systems is the full installed cost of the heat pump.
  5. HVAC Advisor 2.0 software, developed by NRCan, was used for all the cost simulations.
  6. The above costs are for space heating only. EESs are commonly equipped with a desuperheater to facilitate water heating. Desuperheaters can reduce electric water heating bills by $100 to $200 per year. Adding this savings to the space heating operating savings would reduce the payback period of an EES.
  7. The above costs are based on the HSPFs of Figures 7, 14 and 15 and house insulation values of RSI-3.5 (R-20) for walls, RSI-5.3 (R-30) for the roof, RSI-0.39 (R-2.2) for windows and RSI-1.8 (R-10) for the basement.
  8. The cost of equipment for the payback period analysis was derived from the data of RSMeans and other sources. These costs were adjusted to reflect local costs according to the location factors supplied by RSMeans.

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