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Cost of Heat Comparison

Annual energy costs

The following chart can help contractors and homeowners predict annual energy costs with a cold-climate air source heat pump (ccASHP). The chart compares two ccASHP system types commonly used in Minnesota with a baseline furnace and air conditioner (AC):

Baseline System – Furnace provides all heating and AC provides all cooling.

Dual Fuel / Hybrid System – ccASHP provides all cooling and all heating down to the specified switchover temperature, at which point the natural gas/propane furnace is used for heating.

All-Electric System – ccASHP provides all cooling and heating, with electric resistance heat used to meet any remaining heating load.

This tool models an ASHP archetype intended to represent an average cold climate air source heat pump (ccASHP) qualifying for the 25C Energy Efficient Home Improvement federal tax credit. 

Using the Chart

Get started by selecting the electric utility/region, fuel type, and electric rate that apply to the home’s location and system type. Details on rates, energy use, and energy savings can be viewed by hovering a cursor over the orange heating or blue cooling portion of each bar.

This chart is updated annually. The current rates shown were last updated October 2023.


The potential savings values listed here are estimates for an example home. These estimates are generalized results from field research and are intended to provide relative performance information to help rank options and make high-level decisions. These estimates should only be used when comparing scenarios for planning purposes. In general, hybrid-heat systems offer the lowest operational costs for both propane and natural gas customers, while all-electric systems may increase bills for natural gas customers. Dual fuel or off-peak electric rate options, where available, can decrease costs even further for systems with both propane and natural gas secondary heat.

Additional notes

The natural gas rate shown is a 2-year statewide average, weighted by historical climate data, except for Austin Utilities, Owatonna Public Utilities, Xcel Energy, and CenterPoint energy. We obtained specific historical price information from these utilities. The Rochester Public Utilities modeling uses current natural gas rate information from the Minnesota Energy Resources Corporation’s rate book. The propane rate used is a 2-year average of Minnesota weekly propane prices (November – April). Electric rates were provided by utility representatives, except for Great River Energy and Southern Minnesota’s standard electric rate, which uses a 2-year statewide average, weighted by historical climate data, to account for price variation across their 27 member cooperatives.

Electric and natural gas rates shown include all applicable volumetric charges, including base costs, riders, and state sales tax (6.875 %). Dual fuel electric rates, Xcel Energy’s electric space heating rate, and natural gas rates were assumed to be tax exempt during the heating season (defined by Minnesota law as November – May).

The all-electric solution is not modeled for dual fuel rates because dual fuel rates are only available for systems using a gas/propane backup. The hybrid-heat system was not modeled with a 45°F switchover temperature under Xcel Energy’s electric space heating rate because that rate is only available for systems that are the primary source of residential heat. An ASHP with a 45°F switchover temperature, serving 34% of the total heating hours in Minneapolis, would not meet this definition. The baseline furnace and AC option is modeled with the standard electric rate in all scenarios.

Great River Energy (GRE) and Missouri River Energy Services (MRES) are generation and transmission utilities. To find out whether your utility is serviced by GRE or MRES, search for your utility name in the “Select Utility” dropdown menu of the rebate map and verify the “Generation & Transmission Utility" information. If the fuel rate is listed as N/A the selected utility/region does not have that rate type available.

All scenarios were modeled using NOAA typical meteorological year (TMY3) weather data for the specified weather location and a typical heating design load for a home in Minnesota (~41,000 Btu/hour). This value represents the average load for a home built before 1990 in Minnesota, as measured by Center for Energy and Environment field research.

System performance is based on a field performance-adjusted 95% AFUE condensing furnace, 14 SEER/13.4 SEER2 single-stage AC, and mid-range ccASHP system archetype (16 SEER/15.2 SEER2, 9.5 HSPF/8.1 HSPF2, 2.1 COP @ 5°F) developed for the modeling tool.

The all-electric solution models a 4-ton system to allow the heat pump to deliver heat for a larger portion of the heating season for the example home modeled. This minimizes use of electric resistance backup and decreases operational costs. The hybrid-heat system models a 4-ton system at a 15°F switchover temperature and 3-ton system at additional switchover temperatures, so the heat pump has enough capacity to meet the heating load between 25° and 15°F.

Heat pump operating hours

The chart below estimates the number of operating hours for a heat pump in both heating and cooling mode. The number above each bar shows the number of hours in the specified temperature range, and the table below the chart summarizes the results. The two left columns show the number and percentage of operating hours during the heating season, split between the heat pump and the furnace. The right column shows the number of operating hours for a heat pump in cooling mode. As the chart indicates, 100% of cooling hours can be served by a heat pump. 

Using the Chart

Get started by selecting a location and a switchover temperature from the dropdown menus. The chart will reconfigure based on the weather location and switchover temperatures selected. As an example of chart interpretation, a heat pump in Minneapolis that switches to heating mode at 65°F and has a 25°F switchover temperature to a secondary heating source such as a gas furnace can deliver heat for 72% of the total heating hours in a typical year.


Additional Notes

These estimates are based on expected outdoor air temperatures throughout the year from NOAA typical meteorological year (TMY3) weather data. The chart assumes the heat pump switches to cooling mode at 65°F.

While this chart shows operating hours, it does not show the heating or cooling load (i.e., energy usage or carbon emissions) within each bin hour. For heating, as the temperature drops, the heating load increases. Similarly for cooling, as the temperature increases, the cooling load increases.