Replacing Gas Furnace with Heat Pump vs. Electric Furnace

[Alex Whittow]

I’m in the process of replacing a natural gas furnace with a more climate-friendly option; specifically, an air-source heat pump or electric furnace.

Given the reduced energy needs and minimal environmental impact of a heat pump, this is my ideal choice, however the installation costs almost double the electric furnace. Financing help exists, but it's not great. On the other hand, a heat pump drastically reduces utility costs for tenants and makes the property more resilient for our inevitable climate reality.

An electric furnace seemed like a nice alternative until I learned that its operating costs (i.e., utility bills) are HIGH throughout the winter, and the grid it’s drawing energy from is not yet that clean (this is in Wisconsin). This is the opposite of the heat pump: lower installation costs, but higher utility costs (over double what it is today with gas), which seems a little unfair to offload these increased costs onto existing tenants.

Does anyone have any experience with this type of situation? If so, I’d love to hear why you chose one option over the other, challenges you ran into, financing solutions you came up with, and/or any other helpful insight. 

Thank you!

[Bruce Woodruff]

A couple things to think about: 

1) A heat pump is a good option, (my choice at 1 of 4 locations) but they do not work (efficiently) below about 18 degrees, so you'll need to install a heat strip that will provide the extra heat needed. This requires an additional 50 Amp circuit.

2) You seem to believe that by using electricity over gas, you will get away from gas (fossil fuels). and be more green? But you also kinda realize that we produce electricity by burning gas and coal, and possibly nuclear depending on location? 

3) I would use what is most efficient and least costly for your location. I generally prefer propane if possible, due to it's availability during a power outage. But you do you. It's all the same in the end.....

[Alex Whittow]

Thanks for the response, Bruce! I forgot to mention it, but I am aware of the need for a backup heat strip, so thanks for mentioning. My primary goal is to move as far away from the combustion of fossil fuels as quickly and practically as possible. I realize that's not 100% feasible at the moment, however, by electrifying my properties and simultaneously supporting the transition of our energy grids to more renewable sources, then I can meet this goal quicker.

[Bruce Woodruff]

Quote from @Alex Whittow:

My primary goal is to move as far away from the combustion of fossil fuels as quickly and practically as possible.

If that's really the case, then I would suggest going all Off Grid. I did that with one of our properties and it had a certain satisfaction for sure (although my goals and yours are quite different)

Going all electric IMHO is not as 'Green' as going with NG, Here is an article from your side that supports that.https://www.greenbuildingadvis...

So I would say, don't just run with the 'cool' opinion de jour, actually do the research and get it right. Or better yet, go completely off-grid, ie, put your money where your mouth is......

[Henry T.]

Best thing I ever did was ditch the HeatPump for gas. Elec bill was killing me.  Having A/C for a couple days in the summer was ok, but the heating in winter sucked. Literally sucked money out of my wallet.

[JD Martin]

Don't do it. For the following reasons:

1. Gas heating is way more comfortable for your tenants. 

2. Tenants do not understand the concept of heat pumps. They think they can jack the thermostat down to 62 while they're at work and then up to 75 when they get home, and then wonder why it takes so long to get warm and why their electric bill is 400 dollars. Heat pumps are "set it and forget it". They are most efficient when you leave the temperature in a 1-2 degree window. 

3. Your system will last twice as long - perhaps longer depending on where you are - with a gas furnace/electric AC compressor. You're using the compressor half the amount of time, or maybe less than half if you're in a cool climate. With a heat pump you are using it all the time. 

I've owned my house for almost 30 years. The gas furnace in my house lasted 28 years before it needed to be replaced. The AC compressor was still working fine when I replaced my system. You're never going to get 28 years out of a heat pump. 

As for being green, there are a million other things you can do first that are more "green" than switching from gas furnace to electric. Super insulating the house; eliminating all "ghost" appliances that use electricity; designing the house to take advantage of natural light & passive solar heating; etc. 

I'm all for going easier on the environment but the #1 thing you can do to go green is to reduce your own footprint on the planet, meaning consuming less, living with less, living smaller. Not too many people want to do that (myself included). 

[Bruce Woodruff]

True words  @JD Martin  most people do not realize that a heat pump can take a while to raise/lower the temps inside a house. I am fine with it in our primary residence, but it did take some getting used to!

My decision to get a heat pump for this particular house was the cost of propane vs the cost of electricity in the area. It was purely a financial decision.....

And I like your attitude about our planet...if everyone would just take personal responsibility for their own footprint.....

[Andrew S.]

Quote from @JD Martin:

Don't do it. For the following reasons:

1. Gas heating is way more comfortable for your tenants. 

2. Tenants do not understand the concept of heat pumps. They think they can jack the thermostat down to 62 while they're at work and then up to 75 when they get home, and then wonder why it takes so long to get warm and why their electric bill is 400 dollars. Heat pumps are "set it and forget it". They are most efficient when you leave the temperature in a 1-2 degree window. 

3. Your system will last twice as long - perhaps longer depending on where you are - with a gas furnace/electric AC compressor. You're using the compressor half the amount of time, or maybe less than half if you're in a cool climate. With a heat pump you are using it all the time. 

I've owned my house for almost 30 years. The gas furnace in my house lasted 28 years before it needed to be replaced. The AC compressor was still working fine when I replaced my system. You're never going to get 28 years out of a heat pump. 

As for being green, there are a million other things you can do first that are more "green" than switching from gas furnace to electric. Super insulating the house; eliminating all "ghost" appliances that use electricity; designing the house to take advantage of natural light & passive solar heating; etc. 

I'm all for going easier on the environment but the #1 thing you can do to go green is to reduce your own footprint on the planet, meaning consuming less, living with less, living smaller. Not too many people want to do that (myself included). 

 All very good points!  #2 seems especially difficult to get tenants to understand.  If you ramp up the temperature more than 2 degrees, a heat pump will kick in the “emergency heat strip” to accelerate the process.  That is a VERY expensive way to heat and negates all efficiencies gained by heat pumps.  
Also, while heat pumps have gotten much better over the years, for Wisconsin, I’d think carefully - you have many cold days and even if the heat pump can technically handle 18 degrees, it will be very inefficient in doing so.  
I applaud you for trying to go green, but for the next couple of decades, I agree with others that gah heat will be by far the most economical choice.  Maybe next time you have to replace the system, we will have technology that makes a switch more reasonable, but for now, I’d stay put.  Or, as @Bruce Woodruff suggests, go whole hog and go off grid altogether.

[Alex Whittow]

Thank you, @Bruce Woodruff, @JD Martin, and @Andrew S. for the input! It is very helpful.

As for the tenant misunderstanding piece, I think a bit of education could go a long way in introducing how heat pumps work and how to minimize energy costs, so I don't see that as a non-starter. However I appreciate your thoughts on better insulating the house/making it more energy-efficient first and foremost. As for reducing my own footprint, I actively do this each and every day! To me, my real estate portfolio is an extension of my footprint and it's my ethical duty as an owner to make reductions on this front, too.

What are everyone's thoughts around electric furnaces? I imagine the education needs go away, but they seem to still be relatively inefficient and perhaps not as "green" as we think yet (per Bruce's article).

[Bruce Woodruff]

Quote from @Alex Whittow:

What are everyone's thoughts around electric furnaces? I imagine the education needs go away, but they seem to still be relatively inefficient and perhaps not as "green" as we think yet (per Bruce's article).

 I always think of electric esp all electric as the last way to go. Less efficient means they burn more fossil fuels to produce the same energy, if that is something you really care about....

[JD Martin]

Quote from @Alex Whittow:

Thank you, @Bruce Woodruff, @JD Martin, and @Andrew S. for the input! It is very helpful.

As for the tenant misunderstanding piece, I think a bit of education could go a long way in introducing how heat pumps work and how to minimize energy costs, so I don't see that as a non-starter. However I appreciate your thoughts on better insulating the house/making it more energy-efficient first and foremost. As for reducing my own footprint, I actively do this each and every day! To me, my real estate portfolio is an extension of my footprint and it's my ethical duty as an owner to make reductions on this front, too.

What are everyone's thoughts around electric furnaces? I imagine the education needs go away, but they seem to still be relatively inefficient and perhaps not as "green" as we think yet (per Bruce's article).

 Without meaning to sound too callous or arrogant, you give tenants too much credit. I have information sheets for all of our properties that list emergency cut off locations, filter size, etc. that I send to each tenant. I include a primer on how heat pumps work, for those properties that have them. 75% of the tenants don't even read the sheets. Nevertheless, we do an in person rundown on everything, including how heat pumps work. They still don't understand why they have big electric bills, and when you ask them about thermostat habits they'll tell you "Well I usually put it down to 63 while I'm at work and I only turn it up when I get home to 70, then I lower it to 65 when I go to sleep and only put it back to 72 when I get up in the morning"

[Chris Seveney]

@Alex Whittow

Electric furnaces will cost a fortune on utility bills. Besides going with something like a heat pump you should upgrade your windows, recaulk everything and spray foam insulate the walls and ceiling to attic.. That would also assist in lowering utility bills.

[John Teachout]

In Wisconsin, natural gas would be your best option. Electric heat would be ridiculously expensive there. I've had houses with propane, natural gas, heat pumps and baseboard electric and electric forced air furnaces. If your goal is to have central air then a heat pump isn't that much more expensive for the equipment than a gas furnace with straight AC. However, a natural gas furnace and straight AC would be the best option or a nat gas furnace with window units if that's what you already have. Here in Georgia we try to convert houses to all electric if feasible because tenants like not having a gas bill for 8 months they don''t use it. Newer heat pumps can work down into the single digits but they're much more expensive.