Heat Pump vs Oil Furnace Calculator

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Table of contents

• How to use
• Common mistakes
• Definitions
• Methodology
• Limitations & assumptions
• Sources

AFUE: Annual Fuel Utilization Efficiency. In this calculator, Oil furnace efficiency, AFUE is the percent of the oil's heat that becomes useful heat in your home over a season.

HSPF2: Heating Seasonal Performance Factor 2. Heat pump heating rating, HSPF2 tells how many Btu of heat the heat pump delivers for each watt-hour of electricity over a heating season.

Btu: British thermal unit, a small unit of heat energy. The calculator uses 138,500 Btu per gallon for heating oil [1].

MMBtu: One million Btu. Useful heat your oil furnace delivered is shown in MMBtu per year so the number is easier to read.

Simple payback after incentives: Net project cost after incentives divided by Annual cost savings with the heat pump. It is a rough number of years to recover the upfront cost from energy savings alone.

Break-even electricity price: The $ per kWh where the estimated heat pump cost equals the estimated oil furnace cost for the same useful heat.

Mistake: Using one oil delivery for Oil used for heating each year when that delivery did not cover the whole winter.
Fix: Add the gallons from a full heating season before entering Oil used for heating each year.

Mistake: Entering a low supply-only number for Electricity price and leaving out delivery charges.
Fix: Use the total Electricity price from your bill in $ per kWh if you can.

Mistake: Typing Oil furnace efficiency, AFUE as 0.85 instead of 85.
Fix: Enter Oil furnace efficiency, AFUE as a percent from 1 to 100, such as 85.

Mistake: Mixing up HSPF and HSPF2 when entering Heat pump heating rating, HSPF2.
Fix: Use the HSPF2 rating from the heat pump listing when available, because the calculator treats the value as Btu per Wh.

Mistake: Putting the after-rebate price into Installed heat pump cost before incentives and also entering Rebates and tax credits.
Fix: Enter the full Installed heat pump cost before incentives, then enter Rebates and tax credits separately.

Mistake: Reading a negative Annual cost savings with the heat pump as a calculator error.
Fix: A negative Annual cost savings with the heat pump means the heat pump costs more to run at the prices and ratings entered.

• The calculation treats Oil used for heating each year as space-heating oil only. If your oil also heats domestic hot water, the heat pump comparison may overstate your heating load.
• Heating oil is treated as 138,500 Btu per gallon. Actual fuel content can vary slightly by fuel blend and supplier.
• Heat pump heating rating, HSPF2 is used as a seasonal average. Real performance changes with outdoor temperature, system sizing, duct or line-set losses, defrost cycles, and thermostat settings.
• The calculator compares yearly energy cost only. It does not include maintenance, financing, equipment life, backup heat, oil tank costs, panel upgrades beyond the entered installed cost, or resale value.
• Simple payback after incentives is not calculated when Annual cost savings with the heat pump is zero or negative, because energy savings alone do not recover the project cost.
• If Rebates and tax credits are larger than Installed heat pump cost before incentives, Net project cost after incentives can be negative. The calculator keeps that signed value instead of forcing it to zero.

Useful heat from the oil furnace

The calculator first estimates how much useful heat your current oil furnace delivered. It multiplies your yearly oil gallons by the heating oil heat content, then by AFUE as a decimal. The heating oil value used is 138,500 Btu per gallon [1].

useful_heat_btu = annual_oil_gallons * 138500 * (oil_afue_percent / 100)

useful_heat_delivered_mmbtu = useful_heat_btu / 1000000

Heat pump electricity use and yearly cost

HSPF2 is in Btu per watt-hour. Electric bills use kilowatt-hours, so the formula multiplies HSPF2 by 1,000 watt-hours per kilowatt-hour.

heat_pump_electricity_use = useful_heat_btu / (heat_pump_hspf2 * 1000)

annual_heat_pump_cost = heat_pump_electricity_use * electricity_price_per_kwh

Oil cost, savings, payback, and break-even price

The oil cost is the gallons used each year times the entered oil price. Annual savings stays signed, so a negative value means the heat pump costs more to run at the entered prices.

annual_oil_furnace_cost = annual_oil_gallons * oil_price_per_gallon

annual_cost_savings = annual_oil_furnace_cost - annual_heat_pump_cost

net_project_cost_after_incentives = installed_cost - incentives

simple_payback_years = net_project_cost_after_incentives / annual_cost_savings

The payback formula is used only when net project cost and yearly savings are both positive. If net project cost is zero or below and savings are positive, payback is shown as 0 years. If savings are zero or negative, payback is shown as not reached from energy savings alone.

break_even_electricity_price = annual_oil_furnace_cost / heat_pump_electricity_use

Mini-example

With 600 gallons of oil, $4.00 per gallon oil, 85 percent AFUE, $0.22 per kWh electricity, HSPF2 of 8.5, $12,000 installed cost, and $2,000 in incentives, useful heat is 70.635 MMBtu per year. The heat pump uses about 8,309 kWh and costs about $1,828 per year. The oil furnace costs $2,400 per year, so annual savings are about $572. Net project cost is $10,000, giving a simple payback of about 17.5 years.