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Heat Pump Vs. Electric Furnace: Which Is Right For Your Building?

Heat Pump Vs. Electric Furnace: Which Is Right For Your Building?

What's Better: A Heat Pump or an Electric Furnace?

Heat Pumps, Electric Furnaces & Energy Bill Savings

Is your HVAC system driving up your energy bill? About 36% of U.S. households rely on electricity for winter heating, compared with the 47% of households that rely on natural gas. With rising fossil fuel prices, electric heating is the more affordable option for many households.

But not all electric heating technologies offer the same benefits. Although an electric furnace can be up to 100% efficient (compared to gas furnaces that are at best 95% efficient), this is nowhere near as efficient as most heat pumps. The modern heat pump has a heating or cooling output of more than three times the amount of input electricity. Now that’s efficient!

If you’re looking for a way to lower your utility bills and improve your building’s comfort with precise heating and cooling, you’ll want to consider an ENERGY STAR rated heat pump system. 

Upgrading your home’s HVAC? Heat pump technology can save you 20-40% on heating and cooling costs compared to an inefficient system. Tell us about your building to get started.

Choosing Between A Heat Pump Vs. An Electric Furnace

Heat pumps and electric furnaces have a few basic similarities. Both technologies rely on electricity to operate, and neither produces airborne pollutants when operating. Both types of systems can use your property’s existing ductwork to dispense heat, although non-ducted heat pumps can also deliver heat directly through indoor units.

So, is an electric furnace a heat pump with a different name? No—the technologies use completely different processes to heat your building. To understand the differences, we’ll need to review how each system works.

What is the difference between a heat pump and an electric furnace?
An electric furnace contains several heating elements, which are coils of wire engineered to produce a certain amount of heat when electricity passes through them. The heating elements aren’t especially complex; they’re similar to the heating elements found in a toaster or hair dryer.

All-electric furnaces deliver heat through a simple process:

  1. Air is pulled in through a heat exchanger. 
  2. Electricity passes through these heating elements, warming the air. 
  3. A blower motor sends the warm air into your home’s ductwork.

Electric furnaces are efficient at converting electricity into heat energy, with typical annual fuel utilization efficiency (AFUE) rates of 95-100%. However, they rely solely on electric power for heat generation.

All-electric furnaces may have lower installation costs than ducted heat pumps, combustion furnaces, or other systems, but in colder climates, electric furnaces are often the most expensive option. Modern heat pump technology is specifically designed for cold climates and used to heat homes through the winter from Alaska to Maine. 

How Air Source Heat Pumps Work

A typical air source heat pump system consists of an outdoor unit and one or more indoor units. While heat pumps run on electricity, they don’t use that electricity to create heat.

Instead of generating heat from your home’s electrical supply, a heat pump draws heat energy from ambient air. The system uses the same technology as an air conditioner, but a reversing valve allows it to provide both heating and cooling. 

BlocPower customers save an average of 20-40% on their utility bills when replacing less efficient heating systems like electric furnaces, boilers, and baseboard heaters. 

Here’s a quick overview of how heat pumps function:

  1. Ambient air moves across coils in the indoor unit, which heats a refrigerant into a gas.
  2. The outdoor unit provides pressure to the gas, creating a hotter gas.
  3. The refrigerant condenses back into a liquid, which releases heat. 
  4. The stored heat is transferred through the building’s ductwork or delivered directly to the room through the indoor unit.
  5. The refrigerant moves to the outdoor unit, turns cold, and restarts the cycle.

During the cooling season, air source heat pumps reverse this process. That’s right—the same appliance keeping you warm all winter also keeps you cool in the summer. For a more detailed look at heat pump technology, read our article: What Is An Air Source Heat Pump (ASHP)? Your Go-To Guide.

Heat pumps are much less expensive over time.

For building owners, the primary difference between a heat pump and an electric furnace is the overall cost. Electric furnaces constantly pass electricity through their heating elements when operating, and in the winter, they rarely get much downtime. 

Heat pumps move heat from one place to another, but they don’t actively generate heat.

As a result, heat pumps require much less power than electric furnaces.

Heat pumps provide heating and cooling with ultra-efficiency


Some facts to keep in mind:

  • According to the Environmental Protection Agency, air source heat pumps can reduce electricity usage for heating by up to 50% compared to electrical furnaces and baseboard heaters. 
  • When displacing electrical heaters, air-source heat pumps save residential homeowners 3,000 kilowatt hours (kWh) per year on average according to research from the Northeast Energy Partnerships (NEEP)
  • While utility costs vary, a residential homeowner can save an average of around $459 per year by switching from an electric furnace to a heat pump.  

Heat pumps provide excellent long-term savings for all types of properties, and they’re a strong investment for other reasons: All forced-air systems provide uneven heating compared to heat pump mini-split and variable refrigerant flow (VRF) systems. These systems have indoor units that deliver heating (and cooling) directly, with precise temperature control, improving tenant comfort and reducing energy consumption. 

More Advantages of Heat Pumps

Heat pump technology has an extremely low carbon footprint, and most cold-climate heat pumps qualify for energy rebates and other incentives. For some projects, energy programs can cut the cost of installation by tens thousands of dollars. Read more about energy incentive programs here.   

Here are a few other reasons to consider heat pumps when retrofitting your building:

Heat pumps can provide both heating and cooling.

Unlike electric furnaces, heat pumps are a total heating and cooling solution. In the summer, they deliver cool air with the same efficiency as state-of-the-art air conditioners—and in the winter, they offer reliable heating while reducing utility bills. 

By replacing your AC and heating units with heat pumps, you’ll spend less time and money on maintenance. That’s especially true if you’re relying on an older HVAC system that relies on fossil-fuel combustion.

Related: Trying to determine whether to replace an old gas furnace? Here are some of the telltale signs you’re ready for an upgrade.  

Ductless heat pumps provide more comfort for tenants.

Many ductless heat pump systems have individual thermostats for every heated space. Indoor units offer precise control by passing in cool air when the room reaches the set temperature. This isn’t possible with forced-air furnaces.

BlocPower customers who own multi-family homes and commercial buildings often report higher tenant retention rates and fewer complaints.

Ductless heat pumps can purify the air.

Both heat pumps and electric furnaces provide cleaner air than combustion-based HVAC systems, as neither type of system emits flue gasses. However, air source heat pumps can be more effective for maintaining comfortable humidity levels in the winter. In cooling mode, heat pumps are effective dehumidifiers, and in heating mode, they don’t remove moisture from the air.

Additionally, many heat pump systems can be equipped with powerful air filters to remove airborne pollutants.

BlocPower helps building owners enjoy the benefits of eco-friendly heat pump technology at an affordable cost.

If you’re considering a new heating and cooling system, air source heat pumps offer tremendous advantages over electric furnaces and other HVAC technologies.

BlocPower customers save an average of 20-40% on their utility bills when replacing inefficient traditional heating systems like electric furnaces, boilers, and baseboard heaters. With low, predictable payments, our Energy Service Agreements (ESAs) enable building owners to lower their bills immediately—in many cases, with no money down for installation. 

By taking advantage of energy incentive programs and working with experienced contractors, we’re able to deliver modern heating and cooling systems within your budget and with minimal disruption to tenants.

Get started today by answering a few simple questions about your building.