If you’ve noticed your heating bills climbing and are wondering whether switching to a heat pump could save you money, you’re not alone. With energy prices shifting and new efficiency incentives popping up, many Calgary homeowners are rethinking how they heat their homes.
The question is simple: Is a heat pump actually cheaper to run than a natural gas furnace in Calgary’s harsh winters? The answer depends on your home, your energy rates, and how often you need heat. In this guide, we’ll break down both systems, compare real operating costs, and show which option makes the most sense for Calgary homes in 2025.
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Calgary’s Heating Reality
Calgary’s heating season lasts roughly 7 to 8 months, with average winter temperatures dipping below –15°C and occasional cold snaps hitting –30°C. That means your heating system isn’t just a comfort feature, it’s survival gear.
In 2025, the average electricity rate in Alberta is around $0.09 per kWh, while natural gas hovers near $4.50 per gigajoule (GJ). Both fluctuate, but the real cost difference often comes down to how efficiently your system converts that energy into heat.
Because furnaces burn gas directly and heat pumps transfer heat instead of generating it, the operating cost gap can shift dramatically depending on the weather.
How Does Each System Work?
Let’s go over each of these systems so that we know which one is the best for you. This also a great way to know some possible DIYs on how to repair the systems.
Natural Gas Furnace
A gas furnace burns fuel to create heat, sending it through your home’s ducts. Modern high-efficiency models can reach 95–98% efficiency, meaning almost all the gas you pay for is turned into usable heat. Furnaces thrive in extreme cold, but they only heat, you’ll still need a separate air conditioner for summer cooling.
Heat Pump System
A heat pump doesn’t generate heat, it moves it. Even in freezing temperatures, it extracts warmth from the air outside and transfers it indoors using electricity. In summer, it reverses to cool your home.
Modern cold-climate heat pumps can operate effectively down to –25°C, which covers most Calgary winter days. When it gets colder, many homes use a dual-fuel setup, where a gas furnace automatically takes over for backup heating.
Comparing Efficiency
Efficiency is where the heat pump shines. A gas furnace is limited to 100% efficiency (and typically runs around 95%), while a heat pump can reach 300–400% efficiency because it transfers more energy than it consumes.
However, as outdoor temperatures drop, heat pump efficiency declines. Below –20°C, the system works harder to extract heat, increasing your power use.
Here’s a simple comparison using 2025 Calgary energy prices:
| Condition | Heat Pump (COP 3.0) | Gas Furnace (95% AFUE) | Cheaper Option |
| Mild Weather (0°C to +10°C) | $0.06/kWh equivalent | $0.08/kWh equivalent | Heat Pump |
| Moderate Cold (–10°C to 0°C) | $0.09/kWh equivalent | $0.08/kWh equivalent | About Equal |
| Deep Cold (–25°C or below) | $0.13/kWh equivalent | $0.08/kWh equivalent | Gas Furnace |
In short, heat pumps win during mild to moderate cold, while gas furnaces dominate during extreme cold snaps.
Real-World Operating Costs in Calgary (2025 Estimates)
Let’s compare annual heating costs for a 1,800 sq. ft. Calgary home:
- Natural Gas Furnace: $900–$1,200 per year
- Cold-Climate Heat Pump: $700–$1,100 per year
- Hybrid Dual-Fuel System: $600–$900 per year
In most Calgary homes, a hybrid setup offers the best overall value. The heat pump handles mild days efficiently, while the furnace steps in only during severe cold, saving fuel and improving comfort.
Environmental and Comfort Factors
Beyond cost, there are comfort and sustainability benefits to consider:
Lower Carbon Emissions: A natural gas furnace produces around 2.3 tons of CO₂ per year for an average Calgary home. A heat pump cuts that by up to 60%, especially if powered by renewable electricity.
Cleaner Air Quality: Since heat pumps don’t burn fuel, they reduce indoor pollutants and carbon monoxide risks.
Steady Comfort: Furnaces deliver quick bursts of hot air, while heat pumps provide steady, consistent warmth, ideal for families who prefer an even temperature.
Rebates and Incentives That Lower Heat Pump Costs
The Canada Greener Homes Initiative and Alberta Energy Efficiency programs offer rebates of up to $5,000 for eligible heat pump installations. Some Calgary homeowners may qualify for additional municipal incentives or low-interest financing.
When combined with lower energy use, these rebates can significantly shorten the payback period, making a cold-climate or hybrid heat pump a smart long-term investment.
For example, pairing a Navien NPE-Series tankless water heater with a cold-climate heat pump can further cut annual energy costs and qualify for multi-system efficiency bonuses.
Which System Makes More Sense for Calgary Homes?
The right choice depends on your home’s age, insulation, and energy priorities.
- Newer, well-insulated homes: Heat pumps or hybrids offer top efficiency and comfort.
- Older or less insulated homes: Gas furnaces may still be more practical until you improve sealing and insulation.
- Hybrid systems: Offer the perfect balance, electric heating when it’s efficient, and gas when it’s not.
In neighborhoods like Auburn Bay, Nolan Hill, and Shawnessy, homeowners upgrading to hybrid systems report lower bills and smoother heating during Calgary’s fluctuating weather.
FAQs About Heating Costs in Calgary
Are heat pumps cheaper to run than natural gas in Alberta?
Yes, during mild winter days and shoulder seasons, heat pumps cost less to operate. But when temperatures drop below –20°C, natural gas tends to be cheaper.
What temperature is too cold for a heat pump in Calgary?
Most cold-climate heat pumps perform efficiently down to –25°C. Below that, a gas backup ensures reliable comfort.
Can heat pumps work in older Calgary homes?
Yes, but insulation and electrical systems may need upgrades to get the full efficiency benefit.
Can I combine my existing furnace with a heat pump?
Absolutely. That’s called a hybrid dual-fuel system, and it’s ideal for Calgary’s temperature swings.
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