Heat Pump vs. Furnace: Which Should You Choose?

After 20 years of reliable service in your Arizona home, your gas furnace is rattling and clanking and about to break down. 

You are ready to replace it, possibly with a heat pump, but worry changing to another form of heating may be complicated. 

It may seem that way, but installing a heat pump is not substantially more complex or disruptive than installing another furnace. 

We sell furnaces and heat pumps at Desert Diamond Air and have replaced furnaces with heat pumps throughout Greater Phoenix. Both systems rely on ductwork to distribute warm air, making the switch from one to the other easy. 

Heat Pumps Love Mild Weather

Furnaces are not as necessary in Phoenix, AZ as in Anchorage, AK, or Duluth, MN. Our mild winter temperatures, which typically stay well above freezing, are perfect for heat pumps.  

Furnaces can quickly heat your home and typically cost less than heat pumps. Heat pumps are more versatile than furnaces because they heat and cool, enabling you to replace your furnace and air conditioner with just one unit that works year-round. 

Should you ditch your old furnace for a heat pump?

Our Desert Diamond Air professionals cannot decide for you, but we can recommend heating options to achieve your comfort goals and stay within your budget.

Compare Heat Pumps and Furnaces

We have compiled a list of heat pump and furnace comparisons to help you evaluate the two heating systems. Each topic will help inform your decision and may spark additional questions our experts are happy to answer. 

Environmentally Friendly

Natural gas furnaces emit carbon dioxide and other greenhouse gases that contribute to pollution. Electric heat pumps do not emit pollutants and are cleaner for the environment. Adding a renewable energy source, such as solar panels, can generate electricity to run your heat pump, making it even more environmentally friendly. 

Fuel Costs

Fuel costs may not be a deciding factor when purchasing a furnace or heat pump, but they are worth noting because they contribute to operational expenses. Personal finance website Wallet Hub compared energy costs state by state in July and ranked Arizona 22nd highest in average monthly electricity cost and 50th for natural gas. It figured the average monthly cost of electricity at $151.96 and $68.83 for natural gas.

Does the cost of electricity outweigh other heat pump advantages? Not necessarily. 

Operational cost also depends on how much energy your heating system consumes. 

Efficiency

You can have the lowest energy cost but may pay more for heating if your system consumes fuel excessively. A highly efficient unit that uses costlier fuel may come out ahead by comparison. 

The U.S. Department of Energy (DOE) says a properly installed air-source heat pump can deliver two to four times more heat energy to a home than the electricity it consumes. It notes that heat pumps are highly efficiency because they transfer heat instead of creating it from fuel like furnaces and other combustion systems do. 

Even the most efficient furnaces cannot turn all fuel into heat. The top high-efficiency furnaces have an annualized fuel utilization efficiency (AFUE) rating of 98.7 percent, meaning they can convert 98.7 percent of the fuel burned into heat for your home. 

Other factors can affect equipment efficiency and savings on utility bills: 

1. Climate: Consistently high or low temperatures can cause your equipment to kick on more frequently and work longer, causing it to wear faster. 

2. Weatherizing:  If your home has drafty, old windows, cracks in its envelope, and little insulation, your heating and cooling system will work harder and less efficiently. 

3. Equipment Quality: An incorrectly installed or poorly maintained system may work harder to maintain the desired temperature in your home. 

Furnace vs. Heat Pump Safety

The combustion process creates carbon monoxide (CO), which is one reason why an annual furnace inspection is essential for safety and health. You want to be sure your gas furnace is safe and not leaking carbon monoxide or natural gas. 

Electric heat pumps do not use combustion. They transfer heat from outdoor air to the indoors via refrigerant. If anything were to leak, it would be the refrigerant, which does not contain carbon monoxide. 

Installation

If your home does not have a natural gas line, you must install one for your gas furnace. The cost can range from a few to several thousand dollars, depending on the required length of the line and how far your house is from the gas main. The cost of permits, excavation, and ground conditions also may add to the price. 

If you prefer installing a heat pump, you will not require a gas line but may need to upgrade your electrical panel if it cannot handle the additional power load a heat pump requires. The good news is the Inflation Reduction Act distributed funding to Arizona and other states for home electrification rebates, including electrical panel and wiring upgrades. 

Under the Home Electrification and Appliance Rebate (HEAR) program, qualifying low-income residents can receive a point-of-sale rebate for the total cost of a new electric panel and wiring. Moderate-income residents can get half the price of a new panel rebated. In both cases, the rebate maximum is $4,000 for the panel and $2,500 for wiring.

The HEAR program also includes heat pump rebates of up to $8,000. 

Financial Incentives

In addition to HEAR, the Home Efficiency Rebates (HOMES) program offers rebates based on a combination of energy-efficient products and building materials that must save at least 20 percent of your household energy use. There is no specified list of eligible products. The program, which is open to everyone regardless of income, requires that all space heating and cooling equipment be certified by ENERGY STAR^®. 

Visit the Arizona Governor’s Office of Resiliency for links to other local and utility rebate programs.

Through 2032, you can claim a 30 percent federal tax credit of up to $600 for a gas furnace or up to $2,000 for a heat pump. For more details, visit ENERGY STAR.

Choose a Furnace or Heat Pump Today!

Now that you have read the pros and cons, let Desert Diamond Air help you select the best heating system for your Phoenix, AZ, home. Call us at 602-362-4599 or request service online.