If your furnace is getting up there in years and you’ve started hearing about “all-electric heat pump systems,” you’re not alone. A lot of homeowners are wondering whether it makes sense to replace their natural gas furnace with a heat pump — not for environmental reasons, but for cost and practicality.
Let’s break it down in plain English and simple math.
🔥 Natural Gas Furnace Basics
A gas furnace burns natural gas to make heat. That heat is transferred to the air through a heat exchanger and then pushed through your ductwork.
Efficiency:
Most modern furnaces are rated around 80–96% AFUE (Annual Fuel Utilization Efficiency).
That means for every dollar you spend on gas, 80–96 cents of it becomes usable heat in your home. The rest goes out the flue.
Operating Cost Example (Denver area):
Let’s say natural gas costs $1.30 per therm (a therm = 100,000 BTUs).
A typical 80,000 BTU furnace running at 90% efficiency delivers 72,000 BTUs of heat per hour.
That’s about $1.04 worth of gas for every hour it runs.
⚡ Heat Pump Basics
A heat pump doesn’t make heat — it moves it. In the winter, it pulls heat from outside air (yes, even cold air) and transfers it inside.
Because it’s moving heat instead of burning fuel, it can be 200–400% efficient, depending on outdoor temperature.
That means for every unit of electricity used, it can deliver 2–4 units of heat.
But — and this is important — that efficiency drops as it gets colder. Once outdoor temps fall below the mid-20s, most systems rely on backup electric resistance heat, which is 100% efficient but costly to run.
Operating Cost Example:
Let’s assume:
- Electricity costs $0.14 per kWh
- 1 kWh = 3,412 BTUs
- A heat pump running at 300% efficiency delivers 10,236 BTUs per kWh
To produce the same 72,000 BTUs of heat as our furnace example, you’d need about 7 kWh of electricity.
That’s roughly $0.98 per hour — cheaper than gas, until it gets very cold and efficiency drops.
Once outdoor temps hit the teens and the system falls back to resistance heat, your cost per hour can jump to $3.00+ — roughly three times the cost of gas heat.
📉 Where the Math Balances Out
In moderate climates (think southern states), a heat pump easily beats gas on cost.
But in Colorado’s winters, your heat pump might spend several weeks running at low efficiency or on backup heat.
For Denver, the crossover point is around 25°F. Above that, a heat pump saves money. Below that, gas wins.
Over a full heating season:
- Gas furnace (90% AFUE): ~$700–$900 average operating cost
- Heat pump: ~$600–$950 depending on model and temperature swings
So on paper, the difference isn’t huge — maybe $50–$100 either way per year, depending on how mild or harsh the winter is.
🧾 Installation Costs
- Gas furnace replacement: typically $4,000–$6,500
- Whole-house heat pump retrofit: $10,000–$15,000+, especially if you need upgraded wiring, breaker panel, or new ducting
Even with lower operating costs, it takes many years for the savings to make up the installation difference — especially in colder climates.
🧠 The Practical Takeaway
If your gas lines are already in place and your furnace is working fine, sticking with gas heat usually makes more financial sense in Colorado or similar climates.
If you’re building new, don’t have natural gas service, or are looking for one system to handle both heating and cooling, a heat pump can be a solid choice — just plan for cold-weather performance and possible backup heating costs.
💡 Bottom Line
- Gas furnace: lower upfront cost, steady performance, but tied to gas prices.
- Heat pump: higher upfront cost, cheaper to run above freezing, but can get pricey in deep winter.
If you’re deciding between the two, do the math for your area’s utility rates — and remember, “all-electric” isn’t automatically cheaper. Sometimes, comfort and simplicity still win.