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Everything You Need to Know About Heat Pumps vs. Furnaces

Katy Willis
Written by Katy Willis
Updated November 11, 2021
A young couple covered in a blanket enjoying their morning coffee
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The perfect winter day is cold and frosty outside, and wonderfully warm inside. But only if your heating system is efficient enough to warm your home comfortably—otherwise, you might need your woolly hat, gloves, and scarf in your living room, too. 

Explore the differences between the two heating systems and find out which is best for your home.

Heat Pump vs. Furnace: What's the Difference?

Heat pumps use electricity and refrigerant to generate heat, while furnaces burn fuel to supply heat. As part of a heating and cooling system, heat pumps use air from outside the home or the constant temperature of the earth to generate heating or cooling. A furnace, on the other hand, burns fuel to warm the air in your home.

Types of Heat Pumps

There are two main types of heat pumps. The most common is the air-source heat pump. Less common (but more efficient, and therefore more expensive), is the geothermal heat pump. 

Air-Source Heat Pumps

Heat pumps can provide both heating and cooling. They work by transferring hot air either into your home to warm it or drawing it out of your home to cool it. 

This type of system uses a thermodynamic principle known as heat transfer. Using electricity as a power source, these units take air from the outside and pass it over a series of refrigerant-filled coils. The refrigerant coils absorb the heat from the air (even if the air is cold) and, as the liquid refrigerant starts to warm up, it evaporates and, in its gaseous form, is passed to a compressor. 

In the compressor, the gas is placed under high pressure, which increases the temperature dramatically. The heated refrigerant then moves to the second series of coils where the heat is transferred from the gas into the air where it warms your home. The refrigerant travels back to the outer coils to start the cycle all over again. 

In summer, the cycle is reversed to provide cold air rather than hot.

Geothermal Heat Pumps

Geothermal heat pumps work on the same heat transfer principle, but they use the ground outside or a body of water such as a lake or a well as their heat source. 

Geothermal heat pumps are more efficient in colder climates and provide more heat in very cold areas. This is because the temperature of the earth is relatively constant, as is the temperature of deep water, whereas air-source heat pumps are at the mercy of the air temperature and weather conditions, which impact efficiency and heat output.

Types of Furnaces

All furnaces, regardless of what fuel type they use, work on a forced-air system. They burn fuel to generate heat that's passed into the air which is dispersed through your home's ductwork by blower fans. 

Furnaces are one of the oldest forms of residential heating system. Originally, they burned coal or wood. However, today they're cleaner and more efficient, burning gas or oil or using electricity as a heat source.

Gas Furnaces

Whether natural gas or propane, gas furnaces use a pilot light. When engaged, the pilot light ignites burners to generate heat inside a combustion chamber. The heat moves into the heat exchanger where it raises the temperature of the air to the value set by the thermostat. The blower fans then take the heated air and disperses it through the ductwork to heat your home.

Oil Furnaces

While the heat transfer principle is basically the same, an oil furnace uses a fuel pump to move oil from a fuel storage tank into the combustion chamber. Here, it's sprayed as a mist onto the burner to generate heat. As the air from the home is pulled over the burner, the heat transfers into the air which is pushed out of the ducts by the blowers where it raises the room temperature.

Electric Furnaces

Electric furnaces are the cleanest furnaces, assuming you have a green energy or carbon-neutral electricity supplier, because they don't burn fuel. Instead, they have an electric ignition that activates heating coils and elements to high temperatures. The cool air moves over the coils and the heat transfers into the air, which then moves through the ducts and back into your home.

Which Is More Efficient, a Heat Pump or a Furnace?

Close-up of a professional repairing a heat pump
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Under perfect conditions, heat pumps are more efficient than furnaces. A high-quality geothermal heat pump is 300% efficient, meaning it transfers 300% more energy (aka heat) than it consumes. 

A high-end furnace, on the other hand, is only up to 98% efficient, meaning it only produces 98% heat energy compared to the fuel it consumes. 

However, in reality, a furnace is considered more efficient in colder climates. Heat pumps, unless they're geothermal models, struggle to produce enough heat in areas where the air temperature regularly falls below freezing. 

To combat this, homeowners often install a supplemental heating system that they can turn on when the heat pump just isn't keeping the house warm. But these supplemental systems are inefficient and use a lot of energy, which offsets the energy efficiency that makes the heat pump so attractive to begin with. 

Plus, it's common for heat pump coils to freeze in cold weather, in which case a defrost cycle starts and an auxiliary heating element engages to help ensure the air passing into your home stays moderately warm until the coils thaw. This again increases energy consumption, particularly if it repeatedly cycles on and off throughout the day or night.

Furnaces, whether gas, oil, or electric, are not at the mercy of the weather. They use fuel to generate heat, so are not impacted by the exterior air temperature. They more reliably provide adequately warm air. 

Best for Cold Climates: Furnace

Best for Temperate Climates: Heat Pump

Heat Pump vs. Furnace Costs

Installation costs vary by location as well as by system type. Let's take a look at how much it costs to install a furnace compared with the cost to install a heat pump. These prices include parts and labor.

When looking at prices for heat pumps and furnaces, bear in mind that heat pumps provide both heating and cooling, so you'll only need to install one product for winter and sumer. If, however, you opt for a furnace and you live in areas with hot summers, you'll also need to budget for the cost of installing an A/C unit.

Cost of Running Heat Pumps vs. Furnaces

Heat pumps cost less to run annually than furnaces. Burning to create heat consumes a lot of fuel, which is what a furnace does to warm the air. In comparison, heat pumps only consume a small amount of electricity: just enough to circulate refrigerant and run the fans. 

While it's hard to give accurate running costs because it depends on the cost of utilities locally and your climate, it is possible to provide a national average. In a typical winter season, it costs up to $1,550 to run a furnace and as little as $500 to run a heat pump.

Least expensive to run: Heat pump

Lifespan and Maintenance

Gas furnaces last up to 30 years with regular maintenance, but poorly maintained models may only last 10 years. Oil furnaces also generally only last 10 to 15 years because of the fuel inefficiency and the extra wear this places on the internal working of the furnace.

Heat pumps last up to 20 years, with an average lifespan of 15 years. In coastal areas, due to the presence and corrosive nature of salt, heat pumps tend to last only 7 to 10 years.

Heat pump and furnace maintenance is crucial to the efficiency and longevity of your heating system. Make sure you get your heat pump or furnace serviced every fall so you're less likely to experience a breakdown and loss of heat during winter. Just contact a local furnace maintenance service or a nearby heating and cooling contractor to book an inspection or service.

Longest lasting: Natural gas furnace

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