Decision frame
The alternative is not “do nothing.”
The calculator is designed for a homeowner replacing both heating and central cooling equipment. It compares a heat-pump quote with a comparable furnace plus central-air-conditioner replacement.
Equation 1
Incremental upfront cost
Both quote fields are gross prices before incentives. Each incentive is subtracted exactly once. A negative incremental cost means the heat-pump option costs less upfront.
Equations 2–6
Annual heating energy
The model converts current annual heating spend into fuel units, estimates delivered heat using the existing system efficiency, and models both replacements against that same load.
Seasonal COP is the ratio of useful seasonal heat delivered to electricity consumed. It is not the equipment’s single-temperature laboratory COP. Backup heat is modeled as a share of the same delivered heating load.
| Energy | Conversion used |
|---|---|
| Electricity | 3,412 Btu per kWh |
| Natural gas | 100,000 Btu per therm |
| Heating oil | 138,500 Btu per gallon |
| Propane | 91,452 Btu per gallon |
Equations 7–8
Cooling-cost difference
Both replacement choices serve the same cooling load inferred from today’s cooling cost and existing AC efficiency. This is a ratio model, not an hourly building simulation.
Equations 9–11
Cumulative cash flow, payback, and ROI
Electric and fuel portions escalate separately. Payback is the interpolated point when cumulative cash flow reaches zero and remains nonnegative through the selected period. A temporary crossing that later reverses is not reported as payback.
ROI is shown only when incremental cost is positive. When the heat pump has no upfront premium, the percentage denominator is not meaningful.
Quick mode
Editable starting assumptions
Defaults help a homeowner begin; they are not claims about a specific house. Detailed mode exposes every value.
| Input | Default | Basis |
|---|---|---|
| Residential electricity | $0.173/kWh | 2025 U.S. residential average, EIA |
| Natural gas | $1.50/therm | Rounded from 2025 U.S. residential delivered price, EIA |
| Heating oil | $3.98/gallon | Approximate Oct. 2025–Mar. 2026 U.S. average, EIA |
| Propane | $2.55/gallon | Approximate Oct. 2025–Mar. 2026 U.S. average, EIA |
| Existing heating efficiency | 80% gas/propane; 82% oil | Planning assumption; replace with existing equipment rating |
| Replacement furnace AFUE | 95% gas/propane; 87% oil | Planning assumption; replace with quote specification |
| Seasonal COP | 2.4 cold; 2.8 moderate; 3.2 mild | Planning scenarios, not climate guarantees |
| Backup share | 12% cold; 5% moderate; 2% mild | Planning scenarios; controls and sizing can change this sharply |
| Existing AC efficiency | 10.0 | Planning assumption; replace with existing equipment rating |
| Replacement AC | 13.4 SEER2 | Federal minimum reference for a split-system AC in the North |
| Heat pump | 15.2 SEER2 | ENERGY STAR split-system threshold |
| Gas fixed charge | $180/year | Illustrative $15/month; replace with utility bill |
| Energy escalation | 2.5%/year | Neutral modeling assumption, not a forecast |
| Discount rate | 0% | Produces nominal cash flow unless changed |
Reproducible check
Worked example
Moderate-climate gas home
- Heat pump: $18,000 gross − $2,000 incentives = $16,000 net
- Furnace + AC: $14,000 gross − $0 incentives = $14,000 net
- Incremental upfront cost: $2,000
- Existing heating: $1,400/year at $1.50/therm and 80% efficiency
- Replacement furnace: 95% AFUE
- Current cooling: $450/year at 10.0 existing efficiency; 13.4 replacement AC SEER2 and 15.2 heat-pump SEER2
- Heat pump: 2.8 seasonal COP, 5% electric-resistance backup
- Gas service eliminated: $180/year avoided
Rounded first-year operating cost is about $1,695 for the furnace-plus-AC replacement and $1,770 for the heat pump: roughly $75 higher first-year cost for the heat pump. With both energy prices escalating 2.5%, no discounting, and no maintenance difference, the heat pump does not pay back within 20 years and finishes about $3,900 behind. That unfavorable result is intentional.
Do not overread the output
Limits and exclusions
- No hourly weather, load, thermostat, defrost, or equipment performance-curve simulation.
- No duct leakage, envelope improvement, electrical-panel, financing, tax-basis, or opportunity-cost model.
- No equipment degradation, repair event, mid-period replacement, or resale-value assumption.
- No demand charges, time-of-use rates, or solar interaction.
- Annual heating spend can include non-heating usage or fixed fees unless the homeowner removes them.
- Seasonal COP and backup share are highly sensitive to climate, sizing, controls, and installation quality.
- The cooling ratio assumes unchanged cooling load and behavior.
- Incentive eligibility is never guaranteed by the calculator.
An unfavorable result is valid output. The tool does not clamp savings above zero or force a payback.
Primary references
Sources
- U.S. EIA — Energy units and conversion factors
- U.S. EIA — Average price of electricity to residential customers
- U.S. EIA — Residential natural-gas prices
- U.S. EIA — Residential heating-oil and propane prices
- ENERGY STAR — COP, HSPF2, SEER2, and heat-pump criteria
- U.S. DOE — 2023 central AC and heat-pump minimum standards
Sources and defaults last reviewed July 17, 2026.