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Heat Pumps vs Gas in Massachusetts: Real Numbers for a 1,500-Sq-Ft Home

If you’re deciding between a heat pump and a gas furnace in Massachusetts, you’ll hear plenty of claims that one is automatically cheaper than the other.

The real answer is more complicated.

A heat pump can deliver several units of heat for each unit of electricity it consumes, while even a very efficient gas furnace cannot convert more energy into heat than the fuel contains. But Massachusetts electricity is relatively expensive, and natural gas rates vary by utility.

So higher efficiency does not automatically mean a lower utility bill.

Let’s put real numbers behind the comparison.

Heat Pump Efficiency vs. Gas Furnace Efficiency

A high-efficiency gas furnace might have an Annual Fuel Utilization Efficiency, or AFUE, of approximately 95%.

That means roughly 95% of the fuel’s energy is converted into usable heat under the rating methodology.

Heat pumps work differently.

Rather than creating heat through combustion, a heat pump transfers heat from outside the home to the inside. Because it is moving heat, it can deliver more heat energy than the electrical energy consumed.

The U.S. Department of Energy explains that modern air-source heat pumps can provide highly efficient heating even in colder regions. Read more in the Department of Energy guide to heat pump systems.

Heat-pump efficiency is commonly expressed as a coefficient of performance, or COP.

For example:

  • COP 2 = 2 units of heat for each unit of electricity
  • COP 3 = 3 units of heat for each unit of electricity
  • COP 4 = 4 units of heat for each unit of electricity

COP changes with outdoor temperature, equipment output, system design, and operating conditions, so there is no single COP that applies every hour of the year.

For this example, we’ll use a seasonal average COP of 3.0 simply to demonstrate the math.

Our Example: A 1,500-Square-Foot Massachusetts Home

Every house is different, so square footage alone cannot predict energy use.

Insulation, air leakage, thermostat settings, windows, orientation, household behavior, and winter weather all matter.

For this comparison, we’ll model a 1,500-square-foot home that currently uses:

650 therms of natural gas per year for space heating

We’ll assume:

  • Gas furnace efficiency: 95% AFUE
  • Heat-pump seasonal COP: 3.0
  • Natural gas price: $2.03 per therm
  • Electricity price: $0.35 per kWh

The energy prices come from the Massachusetts Department of Energy Resources’ 2025–2026 winter outlook. DOER projected a statewide residential natural-gas price of approximately $2.03 per therm and an average electric utility rate of approximately $0.35 per kWh for the winter season.

You can review the state’s current methodology and pricing information in the Massachusetts household heating cost report.

These are statewide estimates—not Cape Cod utility quotes—and actual bills can differ substantially.

Scenario 1: Heating With a 95% Gas Furnace

At 650 therms per year:

650 therms × $2.03 = approximately $1,320 per year

That is our simplified annual gas heating cost.

It does not attempt to model every customer charge, rate adjustment, or household appliance that may also use gas.

Now let’s determine how much useful heat the furnace provides.

One therm contains approximately 100,000 BTU.

650 therms therefore contain:

65,000,000 BTU

At 95% furnace efficiency:

65,000,000 × 0.95 = 61,750,000 BTU

So our example house requires roughly 61.75 million BTU of delivered space heat.

Scenario 2: Producing the Same Heat With a Heat Pump

Now we’ll ask how much electricity a heat pump with an average COP of 3.0 would need to provide the same 61.75 million BTU.

One kilowatt-hour of electricity is approximately 3,412 BTU.

At COP 3:

61,750,000 ÷ (3 × 3,412) ≈ 6,034 kWh

At $0.35 per kWh:

6,034 × $0.35 ≈ $2,112 per year

Under these particular assumptions:

System Illustrative Annual Space-Heating Cost
95% gas furnace ~$1,320
Heat pump, COP 3.0 ~$2,112

So at the statewide prices used in this example, a modern high-efficiency gas furnace would cost less to operate for space heating alone.

That may not be the result you expected—but it is precisely why heating comparisons should use real energy prices rather than simply comparing “95% efficiency” with “300% efficiency.”

Massachusetts itself cautions homeowners that fuel comparisons vary based on the home, equipment, weather, and actual utility rates and that switching fuels should not automatically be assumed to reduce heating costs.

The Heat Pump Rate Changes the Calculation

There is another important factor for Massachusetts homeowners.

Beginning with the 2025–2026 heating season, Massachusetts’ major investor-owned electric utilities introduced seasonal heat-pump delivery rates.

Eligible heat-pump customers receive reduced winter delivery charges from November through April.

The Massachusetts Department of Public Utilities explains the current heat-pump rate structure in its Massachusetts winter utility bill and heat-pump rate guide.

DOER estimated that an eligible household could save roughly $540 over the winter heating season, although the actual amount depends on the utility and electricity usage.

For homeowners considering electrification, this rate should be included when comparing actual utility bills.

What Electricity Price Makes the Heat Pump Competitive?

We can also calculate a rough break-even electricity price.

Using:

  • $2.03 per therm natural gas
  • 95% AFUE furnace
  • COP 3.0 heat pump

The approximate break-even electricity rate is:

$0.22 per kWh

Below that level, the heat pump would begin to beat the gas furnace on the simplified fuel-cost comparison.

But change the assumptions and the answer changes quickly.

For example:

  • A higher heat-pump COP improves the heat-pump result.
  • An older, less-efficient furnace makes gas less competitive.
  • Higher gas prices favor the heat pump.
  • Lower electricity rates favor the heat pump.
  • A poorly sized or poorly installed heat pump can perform worse than expected.
  • Weatherization can reduce the heating demand of either system.

This is why your own utility bills are more useful than a generic national cost comparison.

Mass Save also provides a heating-system comparison calculator to help Massachusetts homeowners compare heating options.

Don’t Forget That a Heat Pump Also Provides Air Conditioning

Operating cost is only one part of the decision.

A gas furnace provides heat.

A heat pump provides heating and air conditioning from the same system.

If your furnace and central air conditioner both need replacement, comparing the cost of a heat pump only with the cost of a furnace is incomplete. The better comparison may be:

Heat pump

vs.

Gas furnace + central air-conditioning system

This can be especially important in older Cape Cod homes that do not currently have central cooling.

Ductless and small-duct heat-pump systems can also make it possible to add air conditioning without installing a conventional whole-house duct system.

2026 Mass Save Heat Pump Rebates Matter Too

Installation cost also changes the economics.

For qualifying installations in 2026, Mass Save currently lists:

  • Whole-home: $2,650 per ton, up to $8,500
  • Partial-home: $1,125 per ton, up to $8,500
  • Basic: $250 per ton, up to $2,500
  • Income-based enhanced incentives: up to $16,000 or potentially no-cost installation through qualifying programs

Eligibility varies by existing heating fuel, utility sponsor, equipment, project type, weatherization, and other program requirements.

Homeowners should always verify current terms using the official 2026 Mass Save air-source heat pump requirements before making a financial decision.

The former federal Section 25C heat-pump tax credit expired for equipment placed in service after December 31, 2025, so homeowners planning a 2026 project should not include that former credit in their calculations.

So, Is a Heat Pump or Gas Furnace Cheaper in Massachusetts?

There isn’t one answer for every Massachusetts home.

If you already have a newer 95% gas furnace and your primary concern is the lowest possible space-heating fuel cost, natural gas may remain less expensive under some current rate combinations.

A heat pump becomes more attractive when factors such as these apply:

  • Your existing furnace or boiler is inefficient or approaching replacement
  • You also need a new air-conditioning system
  • Your electricity rate is favorable
  • You qualify for the seasonal heat-pump rate
  • You qualify for substantial installation incentives
  • You want to eliminate or reduce fossil-fuel use
  • Your home is well weatherized
  • You are replacing oil, propane, electric resistance heat, or another expensive heating source

The best way to compare systems is to use your actual annual fuel consumption, actual utility rates, the proposed equipment’s cold-weather performance, and a professional heating-load calculation.

Upper Cape Heating & Cooling designs and installs ducted, ductless, and central heat-pump systems for homes throughout Bourne, Falmouth, Mashpee, Sandwich, and surrounding communities.

Learn more about professional heat pump installation Cape Cod options and get a system recommendation based on your home rather than a generic square-footage estimate.