Gas Furnace vs Heat Pump

by Don Marshall – February 2022

It is my understanding, that is established over 35 years as a HVAC estimator, that Bay Area homeowners are concerned with several factors when considering gas furnaces or heat pump system. They include overall indoor comfort, total life cycle cost of a system and environmental impact of gas vs electric. Each homeowner has one or more of these priorities.

One of the driving factors to consider a heat pump installation is global warming. Since global warming is linked to greenhouse gas emission the move toward electrification seems natural and eminent.  Cities like Berkeley and San Jose are now requiring all electric in new construction. That can make a lot sense when the building can be designed for all electric use, including the utilities, solar components, insulation, and tightened construction. It is less practical when retrofitting to existing homes that may be anywhere from 40 to over 100-year-old.  In 2020 the California Energy Commission reported that about 67% of the electricity consumed was generated by fossil fuels and about 3% was from coal, the dirtiest fossil fuel. Only a few of the natural gas fired turbines are the most efficient type and of course they are used the most. As electric use ramps up the older less efficient gas turbines systems come online, and at peak times electricity is imported a long way including some from coal fired electric plants. This energy tends to be the dirtiest and has the most transmission lost because of the distance. Even though California is leading the nation in renewable energy, we have not been able to lower the total electricity needed. Renewable does not mean unlimited. We cannot just build another Shasta Dam, Oroville Dam or new geothermal plant next year. It takes years of planning, environmental reviews, and huge amount of investment to add more renewables. Electric vehicles are already adding to the electric consumption, was it not for LED lights, the electric grid would be in more trouble.  Bottom line if you are not producing your own electricity, going all electric is partly trading where emissions are made. This will change over time as investment is made, technology advances, and heat pump system become more efficient.

Heating and Air Conditioning are done much different in Buffalo New York as compared Tampa Bay Florida, Washington State or Montana. Even within the State of California there is considerable diversity. The needs of resident of the San Francisco Bay area is different from Lake Tahoe, Red Bluff, Palm Springs, Santa Barbara, Fresno or Crescent City. Each areas has specific climate and electric rates or even the income available to be spend on highly efficient HVAC systems. Most of the information found on the web or in consumer magazines are written to a national audience or a specific local market. It is hard to find anything relevant to the Bay Area.

Gas furnace’s have dominated the heating field in urban areas of California. This especially true for the San Francisco Bay area where the climate is moderate and there has traditionally been little need for air conditioning. Historically gas furnaces are gravity type or forced air and single speed. Modern Gas Central Heating Furnaces come in a variety of types and sizes ranging in efficiencies from 80% AFUE to 98% AFUE and capacities to heat homes from 800 Sq Ft on up.  They come in single speed single stage, two speed two stage, two stage variable speed blower, and fully modulating, in both mid-efficient and high efficient.

Gas furnace’s have been historically preferred for three big reasons: low cost to the initial install or replacement, low-cost natural gas prices, and simpler and relatively low cost of maintenance and repairs. Though the quality of heat varies from the type of forced air furnace it is generally very good. Most properly sized systems have fast recovery and high certified temperature rise, the difference between the temperature of the air going into the furnace and temperature of the air going out. Modulating furnaces have the highest certified temperature rise at 55 degree, and the lowest air flows meaning quiet and comfortable feeling to the heat. This makes them an ideal replacement for gravity type systems. The lower airflow on modulating furnaces also enhances the air cleaning system ability to trap smaller particles. That is a real plus with the recent wildfire events and lingering smoke in the Bay Area. Gas furnaces are heating only unless other components are installed. The cost to add air conditioning when added to the furnace can equal or exceed that of a straight heat pump and close to Hybrid heating install.

Heat Pumps are air conditioners that can operate in reverse. Air Conditioners absorb heat from indoor and discharge the heat to outside, they are one way. Heat pumps takes heat from the outside and brings it inside or can reverse to bring heat from inside to outside. Heat pumps are two way.There are three type of heat pumps, air to air, water source, and Geothermal. Traditionally air to air heat pumps have been used in areas of California where there is a need for both heating and cooling and there is not access to natural gas. That would include large rural areas of the state. The urban areas water source heat pumps are used in large commercial building in combination with chillers and boilers. Geothermal are the least common systems. The newest uses of heat pump in the U.S. is mini-ductless systems and water heating.  Another use of heat pump is Hybrid Heating. This is a gas furnace system with the heat pump combination. The Hybrid system can be controlled numerous ways to achieve optimal efficiencies. 

Heat pump systems are all electric and can both heat and cool. Heat pump come in variety sizes and types for residential use. There is single stage ducted, two stage ducted, inverter driven ducted, ductless system, combination of ductless and ducted and hybrid heating. Heat Pumps with inverter driven compressors are the highest efficient and provide the best quality of heat. There are some draw backs with heat pumps. Heat pumps have a higher air flow to heat ratio making the certified temperature at around 28 degrees. This makes the air feel draftier especially during the morning warm up when the temperature has been set back at night. In most retrofit installation, ducting needs to be upgraded for use with heat pump. This increases the cost of installation.  More airflow also means more air noise. There is also noise from the outdoor unit anytime there is heating or cooling on. The outdoor units are between 60-75 decibels with inverter drive compressors and higher in single speed or two speed units that use reciprocating compressors. The decibel level varies by size, type, and manufacture. The smaller ductless systems for room use is much quieter mostly below 60 decibels and some below 50 decibels.  At night when the white background noise is at a minimum there may be unwanted noise from the outdoor section. This makes the placement of the outdoor unit important to both the indoor environment and neighborhood.

Most articles and experts consider heat pumps to be highly efficient. This is true when compared to resistance electric heating which uses at least twice as much electricity to put out the same amount of heat. Resistance heating is not even legal in our area, so that type of comparison is not meaningful. Small resistance heaters can be used as supplemental heat. User beware of the cost. So how does a heat pump compare to gas heating? That is where there is a real gap in the information. Californians pays the highest rates in the nation except for Hawaii for a kilowatt of electricity and a therm of gas. In most cases we are two to three times higher for electricity and almost double for gas. So, what might be done in Arizona, Washington, or Virginia, will be different than California. The bottom line is gas heating in California costs about ½ the price of heat pump heating at 2022 prices. This will vary by system and type and this gap will shrink if gas prices edge up faster that electricity.


Electric heat pumps have a higher equipment and installation cost than a gas furnace and electric is more expensive per BTU than gas. Highly efficient gas furnaces have a lower life cycle cost for homes without air conditioning. However, homes that are considering adding air conditioning should consider heat pump or Hybrid Heating as an alternative. For homeowners considering solar system, this would be the only way to truly reduce carbon emissions from your home. Until electric and gas rates change, new technologies and substantial renewable energy come online, high efficient gas furnaces will be the best way to reduce carbon emissions and heat your homes.

Sources: PGE Residential Rate Plan Pricing Jan. 2022, California Energy Commission 2018, 2019, 2020 Total System Electric Generation, U.S. Energy Information Administration FAQ, American Council of an Energy Efficient Economy.