🎯 What is the Economic Balance Point?
The economic balance point is the outdoor temperature at which it costs the same amount
to heat your home with either a heat pump or a gas/propane/oil furnace. Above this temperature, your
heat pump is more economical. Below it, your auxiliary furnace is cheaper to operate.
This is different from the thermal balance point (where the heat pump can no longer meet
heating demand). Most modern heat pumps can operate well below their economic balance point—they
just become more expensive to run than a furnace.
⚡ The Core Concept
Heat pumps and furnaces have fundamentally different efficiency characteristics:
| Heat Pump |
Furnace |
| Efficiency measured by COP (Coefficient of Performance) |
Efficiency measured by AFUE (Annual Fuel Utilization Efficiency) |
| COP varies with outdoor temperature—decreases as it gets colder |
AFUE is relatively constant regardless of temperature |
| Typical COP: 1.5 to 4.5 depending on temperature |
Typical AFUE: 80% to 98% |
Because heat pump efficiency drops in cold weather while fuel prices remain constant, there's a
crossover point where the furnace becomes cheaper. This calculator finds that exact temperature.
🌡️ Understanding COP (Coefficient of Performance)
COP tells you how much heat energy you get for each unit of electrical energy consumed:
A COP of 3.0 means for every 1 kWh of electricity consumed (3,412 BTU), the heat pump delivers
10,236 BTU of heat—3× more heat energy than electric resistance heating.
| Outdoor Temperature |
Typical COP Range |
Effective Efficiency |
| 47°F (8°C) |
3.5 – 4.5 |
350% – 450% |
| 35°F (2°C) |
2.8 – 3.5 |
280% – 350% |
| 17°F (-8°C) |
2.0 – 2.8 |
200% – 280% |
| 5°F (-15°C) |
1.5 – 2.2 |
150% – 220% |
| -5°F (-21°C) |
1.2 – 1.8 |
120% – 180% |
Note: Cold-climate heat pumps (ccASHP) maintain higher COPs at low temperatures
compared to standard models. This calculator uses real performance data from the NEEP cold-climate
heat pump database when specific models are selected.
📊 The Balance Point Formula
To find the balance point, we set the cost per unit of heat equal for both systems and solve for
the COP at which this occurs:
This can be simplified to:
🔢 Step-by-Step Calculation
Example: Finding the Balance Point
Given:
• Electricity: $0.14/kWh
• Natural Gas: $1.20/therm
• Furnace AFUE: 92%
Step 1: Calculate the balance COP
COPbalance = (0.14 × 0.92 × 100,000) ÷ (1.20 × 3,412)
COPbalance = 12,880 ÷ 4,094.4
COPbalance = 3.15
Step 2: Find the temperature where COP = 3.15
Looking up COP = 3.15 on the heat pump's performance curve...
Balance Point Temperature = ≈ 32°F (0°C)
Result:
• Above 32°F → Heat pump is cheaper ✓
• Below 32°F → Gas furnace is cheaper ✓
💰 Cost Per Million BTU Comparison
We express heating costs in $/MMBTU (dollars per million BTU) to compare different fuel sources
on an equal basis:
🛢️ Propane & Heating Oil Calculations
For propane and heating oil, we first convert the price to a "therm equivalent" for consistent calculations:
📚 Data Sources
This calculator uses real-world data from authoritative sources:
🌡️ Heat Pump Performance
NEEP Cold Climate Air Source Heat Pump Database — laboratory-tested COP and capacity data across temperature ranges
⚡ Electricity Rates
OpenEI Utility Rate Database (URDB) — utility-specific rates including Time-of-Use periods
🔥 Natural Gas Prices
US: EIA (Energy Information Administration)
Canada: Provincial utility rates
🛢️ Propane & Oil
US: EIA regional prices
Canada: NRCan weekly retail prices
⚠️ Important Considerations
Thermal vs Economic Balance Point: This calculator determines the economic
balance point (where costs are equal). Your heat pump may have a lower thermal balance
point where it can no longer meet heating demand alone.
Time-of-Use Rates: If your utility has TOU pricing, the balance point shifts
throughout the day. Cheaper overnight electricity means your heat pump is economical at lower
temperatures during those hours.
Variable Speed Systems: Inverter-driven heat pumps maintain better efficiency
at part-load conditions. The rated COP assumes full capacity operation.
Defrost Cycles: Real-world heat pump efficiency may be slightly lower than rated
due to periodic defrost cycles in cold, humid conditions.