Does a Heat Pump Replace a Furnace?

January 9, 2024

If you’re looking for a simple “yes” or no” answer to this question, you might be disappointed. 

Whether a heat pump can replace a furnace in your home depends on several variables, such as the local climate, the availability of cheap fuel sources other than electricity, and the current HVAC setup in your home. Your decision may also be influenced by other factors, such as the availability of government grants, rebates or loans and attitudes toward carbon footprints.

Generally speaking, if you’re thinking of getting a heat pump, it’s a better option if you experience milder or only moderately cold winters and have limited access to cheap fuel sources. Otherwise, a heat pump may be better off working in tandem with a furnace as a backup heating system—rather than replacing a furnace.

With the growing popularity of heat pumps across Canada, delving a little deeper into this topic can help you consider the main factors and make an informed decision about whether to replace your furnace with a heat pump or upgrade your HVAC system.

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Heat pumps vs furnaces

Heat pumps are big news in Canada, taking up a lot of column inches online these days. But do they deserve the buzz?

What are the main differences between heat pumps and furnaces and how suitable are they for your home?  Would a more conventional gas or oil furnace be a better option than a heat pump? 

Let’s first consider the two technologies…

What is a heat pump?

Heat pumps are relatively modern additions to the vast array of home heating and cooling options for Canadian homes—though the technology has been around for a long time.

A heat pump doesn’t produce heat by burning. It transfers heat, removing heat from the outdoors (even in low temperatures) and transporting it inside your home in winter and then reversing the process in summer.

Heat pumps are powered by electricity, capturing thermal energy from one of three sources: the air (the most common), water or ground (geothermal) with the help of a refrigerant. They then compress it for heat and expand it to cool. This is not new technology. It’s the same basic tech that’s used in a fridge or air conditioner.

A fridge keeps your food cold by using refrigerant to squeeze heat out of the air inside the fridge and transferring it to the room (that’s why the outside of fridges feel warm or hot). This is how a heat pump works in winter.

A reversing valve on the heat pump allows it to work as an air conditioner during the summer., squeezing the heat out of your house and transferring it outside.

Over the years, heat pumps have improved in efficiency and as homeowners develop greater appetites for cheaper, more energy-efficient ways to control their indoor air quality, this has driven more interest in heat pumps. Pound for pound, they are considered the most energy-efficient means of heating homes in many parts of the world.

Because of the ability of heat pumps to revere the heating and cooling processes according to the conditions, these units can perform several jobs: heating, air conditioning, dehumidifying, and filtering the air.

This means they can do all the jobs that a comprehensive HVAC system usually does. Understandably then, heat pumps have garnered a lot of interest because of potential cost-savings. 

Air-source heat pumps are by far the most common in Canada. These units can be one of several different types:

    • Ductless vs. ducted: Sometimes, only a small hole in the wall is required during installation; other systems require existing or new ductwork.
  • Split vs. packaged: Most heat pumps are split systems (one coil inside and one outside) but packaged systems usually have both coils and the fan outdoors. 

Multi-zone vs. single-zone: Single-zone systems are designed for a single room while multi-zone installations allow you to heat or cool multiple rooms and open spaces.

What is a conventional furnace?

Forced-air furnaces have been the most popular way to heat homes across Canada since their introduction as central heating systems in the 1930s. 

In simple terms, they are combustion systems. A furnace’s power source ignites burners, which heat up a heat exchanger that, in turn, warms up the air and distributes it through the home’s ductwork.

Its job is to do one major thing: heat the home. Combined with a humidifier, a furnace may also help a home maintain the ideal house humidity levels.

Domestic furnaces in Canada use natural gas, propane, oil or electricity to fuel the burning process. The furnace is often part of a complete HVAC system that also includes air conditioning, a humidifier, and air purifiers.

Today, around 60 percent of Canadian homes use gas furnaces for their heating system and only around nine percent of homes use oil. Oil-powered heating has even been banned in new construction projects in some areas of the country as the focus shifts to environmentally friendly ways of heating homes.

Over the years, furnace efficiency has improved with the technology—partly to comply with government regulations and partly to lower household carbon footprints and monthly energy bills. They also operate more quietly than in the past and can offer delayed airflow and variable speeds.

Why are heat pumps growing in popularity?

During these times of inflation and escalating energy costs, reducing the monthly energy bills is a priority for many households across Canada.

Heat pumps are seen as a way to do this without sacrificing the home heating we all rely on for comfort during the colder months.

In 2023, only seven percent of all Canadian households used heat pumps in the previous 12 months, despite heat pumps being considered the most energy-efficient heating source.

Yet, HVAC installation companies saw a tenfold increase in interest in heat pumps in 2022.

As technology advances and homeowners become more familiar with what heat pumps can do (and the potential cost-savings), we can expect to see the seven percent figure increase rapidly across Canada as more homeowners replace furnaces or install dual heating systems with furnaces and heat pumps.

What to consider before switching to a heat pump

Before deciding to make the switch to a heat pump, you’ll need to assess the current setup in your home and be clear on what your main objectives are.

Following are the main considerations before deciding to opt for a heat pump or a more traditional HVAC setup—or both:

  • What are the winter temperatures in your region? Do you live in one of the milder areas of the country or do you face extended periods of temperatures well below zero?
  • What are the energy costs in your region? How much is natural gas, electricity, and oil in your area? This will impact the relative cost-effectiveness of furnaces and heat pumps where you live.

How old is your existing HVAC equipment? If you have an inefficient, 30-year-old, oil-powered furnace, it will be an easier decision to switch to an energy-efficient heat pump than if you recently installed a new, high-efficiency gas furnace (96 AFUE or higher).

  • Do you intend to use the heat pump as your primary heating source? If the heat pump is your primary heating source, rather than working in tandem with a furnace, you need to be sure it can handle the load in winter.
  • Are government grants or interest-free loans available? Federal and provincial government energy policies are constantly changing. Check whether retrofitting grants, rebates, or interest-free loans are available if you plan to install new heating or cooling equipment (they usually apply only to certain make/models).
  • What is your existing HVAC setup? Whole-home heat pumps and furnaces can use the same ductwork to move air through your home, often making replacement relatively straightforward if the ductwork is already in place in your home. Ductless mini-split heat pumps don’t use ductwork at all.

Pros and cons of heat pumps in Canada

All heating and cooling equipment comes with relative strengths and weaknesses. Let’s take a look at how heat pumps fare…

Main pros

  • Potentially provide an all-in-one system to replace your HVAC system 
  • Simple to maintain (annual maintenance)
  • Can deliver up to three times more heat energy than the electrical energy it consumes
  • The least expensive heating and cooling option to run
  • Some homeowners may be eligible for federal rebates/grants to help install a heat pump
  • No fossil fuels burnt in your home (heat pumps run on electricity)
  • No carbon monoxide risks
  • Air may be less dry in the winter than with a standard HVAC system
  • Minimally intrusive as they can be installed without extra ductwork 
  • Run quietly 
  • Take up little space

Main cons

  • Less effective during very cold snaps in very cold climates (like much of Canada experiences!)
  • May require a backup heating system for ultra-cold days (below -20 degrees Celsius)
  • May be slower to heat the home than traditional HVAC equipment
  • Upfront installation costs are usually more expensive than a furnace (for whole-home systems)
  • Lifespan may be slightly shorter than furnaces
  • No option to use natural gas or fuels other than electricity
  • May experience problems with low airflow 
  • Modification of the ductwork may be required at times 
  • Split-system heat pumps may have too much or too little refrigerant (reduces performance and efficiency)
  • Electricity production may still involve carbon emissions (so the environmental “angle” may be overplayed at times)
  • Fewer models to choose from

Pros and cons of furnaces in Canada

Here’s how furnaces stack up with their strengths and weaknesses:

Main pros

  • The initial furnace installation costs are usually lower than with heat pumps
  • Fast heating, almost immediately heating a home
  • A furnace heats the air to higher temperatures than a heat pump
  • Available in multiple types with different efficiency levels
  • Use a variety of fuel options: gas, oil, propane, and electricity
  • Standard technology that most people are familiar with
  • Easy to find furnace repair professionals
  • Cozy feeling to the warmth
  • Can be combined with a humidifier to moisten dry air in the home in winter 
  • Long lifespan (15-20 years)

Many furnace models to compare and select from

Main cons

  • Only do one job: heat the home 
  • AC is required to cool the home in summer
  • Generally, less energy-efficient than heat pumps
  • Ductwork is required, which adds to the installation and maintenance costs
  • Slightly more difficult to maintain (annual furnace maintenance and furnace cleaning are necessary)
  • Burn fossil fuels in your home (may create air quality problems as well as environmental concerns)
  • Carbon monoxide and other safety risks for your family
  • Air may be excessively dry in winter (requires humidification)
  • May operate noisily
  • Can produce unwanted odours in the home when first turned on
  • May be subject to short-cycling if not well-maintained

Note: The installation cost of any heating and cooling equipment is heavily dependent on a home’s existing heating infrastructure and its layout and insulation. Claiming that a heat pump or furnace is “cheaper to install” can be misleading as your home will need an inspection for a true estimate of installation costs.

What’s the best home heating system in milder areas of Canada?

If you live in Victoria or Vancouver—or even Windsor or London in Ontario— you have vastly different heating and cooling requirements to homes in Yukon, northern Manitoba or northern Alberta.

This is obvious—but how does it affect your choice of HVAC equipment? Specifically, can a heat pump replace a furnace and air conditioner there?

British Columbia, Quebec, and Ontario account for almost three-quarters of the total heat pumps installed in Canada. They are an attractive option as a primary heating source where gas/oil energy prices are high, winter temperatures are manageable, and grants, loans or rebates are available from government energy schemes.

Grants and loans

The federal government offers a home retrofitting grant for certain makes and models of heat pumps—if they are installed by a professional. Typical grants are for $2,500 to $5,000, which can help with the high upfront costs of installing a heat pump (typically, $7,500 to $20,000)

Similarly, zero-interest loans may be available through the Canada Greener Homes Initiative. These loans are repayable over 10 years.

Policies change frequently so check with your HVAC installation company about any financial assistance you may be eligible for.

Heat pump or furnace in Alberta?

The uptake of heat pumps in the traditionally colder areas of the country like Alberta, Manitoba, Nova Scotia, and Saskatchewan is much lower than in the milder areas

A typical response from Albertans to heat pumps is “They don’t provide enough heat when it’s really cold.”

“Really cold” in Alberta is different from “really cold” in many other parts of the country. It means 20 or 25 degrees below (or lower), which occurs frequently during our winters.

Many of the more affordable models of heat pumps aren’t powerful enough to heat a home through an Alberta winter. They work—but don’t usually generate enough heat during the coldest snaps where the temperature dips below -15 degrees Celsius.

Temperatures frequently hit -15C or below in Calgary and Edmonton. These are the average daily high/low temperatures for Dec-Feb in central and northern Alberta:













High Level




Remember, these are average daily high/low temperatures. The mercury can fall below -15C for five or 10 days straight even in southern or central Alberta. A lack of heating in the home during those times makes life very uncomfortable for occupants.

So, to heat homes properly in Alberta, heat pumps should work in tandem with a natural gas or electric furnace. This increases the upfront costs of the system though heat pumps use less energy and can reduce the overall running costs.

Cold climate heat pumps are rated for lower temperatures but these are considerably more expensive than their standard cousins—up to five times more!

This, combined with the abundance of cheap natural gas to power household furnaces means that heat pumps are far less attractive in Alberta than in many milder areas of the country (where oil and gas is more expensive).

As part of the Canada Greener Homes Grant Initiative, you could access significant financial assistance from the Alberta rebate incentive with energy evaluations and energy-efficient retrofits for your home, including the use of heat pumps.

The City of Calgary also offers low-interest flexible financing for home energy improvements, including heat pumps.

Bear in mind, however, that you may struggle to get insurance for your Alberta home without having a backup heating system for your heat pump.

Gas-powered furnaces still rule the roost with home heating systems in Calgary, Edmonton, and the rest of Alberta. A heat pump can act as your primary heating source in the spring/autumn and your cooling source in summer but you’ll need a furnace or other backup heating system when the cold weather really bites.

This may change in the future as heat pump technology advances and better addresses the needs of super-cold climates.


Can I use a heat pump with a gas furnace?

Yes, this is a common solution for homeowners who want the energy-efficient benefits of a heat pump but the reliability of a furnace during the coldest snaps. 

Using a heat pump with a backup heating source like a furnace is especially recommended in areas of the country where the mercury regularly falls below -15 or -20 degrees Celsius.

Bear in mind too that not every HVAC system can simply have a heat pump plugged into it. The air handler and ductwork may need to be altered for it to work seamlessly.

Can a heat pump replace a furnace and air conditioner?

Yes, in some areas of Canada, a heat pump can replace the need for a traditional HVAC setup with a furnace and air conditioner. However, in areas that experience the coldest winters, a backup source of heating is usually recommended in case the heat generated is inadequate.

If you’re going to replace a gas furnace with a heat pump, you’ll need to ensure that the old furnace is removed and recycled appropriately, the appropriate electrical work is done and your home’s existing ductwork and insulation is adequate.

Do you need a furnace with a heat pump?

No, it’s not necessary to run a furnace with a heat pump but there may be some advantages to doing so in homes with very cold winters. Homeowners can heat their homes with energy-efficient heat pumps for most of the year and switch to a furnace for the coldest periods.

How does a dual heating system work?

A dual heating system switches between an electric heat pump and a gas furnace according to the air temperatures. This can be a split system (with separate heat pump and furnace components) or a dual-fuel HVAC that includes both in a single system. It is controlled using a smart thermostat.

Which is cheaper: a heat pump or gas furnace?

This depends on multiple factors, such as your location, the cost of energy, how you install your heating system, your home’s present HVAC setup, and so on.

Generally speaking, heat pumps are more expensive to install than furnaces but repay their investment over the months of lower energy bills due to the greater energy efficiency.

The cost of a new furnace in Alberta may be lower than in much of the rest of the country, however, because of the lower natural gas costs in the province. Heat pumps are generally more cost-effective where energy costs are higher.

Are heat pumps new?

No. Neither furnace technology nor heat pump technology is new. However, both technologies have advanced considerably over the years, creating more efficient systems.

Heat pumps use the type of tech used in refrigerators and air conditioning to transfer heat using refrigerant and electricity while furnaces generate heat using gas, oil or electric combustion technology.

When should I choose a heat pump over a furnace?

Heat pumps are generally preferable options to furnaces for homes in areas without prolonged spells of sub-zero temperatures or access to cheap fuel. If homeowners want to reduce their carbon footprints, reduce monthly HVAC bills, or grants/interest-free loans are available for installing heat pumps, there may be added incentives to make the switch.

Because of the higher upfront costs, only choose a heat pump if you plan on staying in your house for 5-10 years, so you have long enough to pay back the investment.

When should I choose a furnace over a heat pump?

Furnaces are generally preferable options to heat pumps in homes that experience prolonged spells of subzero temperatures, (especially below -15 to -20 degrees Celsius) and access to cheap fuel. They are also a good option if you’re just looking for heating rather than an all-in-one heating and cooling system.

If you’re not sure how long you’ll remain in your home, a furnace may also be more attractive because of its generally lower upfront costs.

Can heat pumps use gas?

This is a common question in Alberta, where natural gas is so cheap. Unfortunately, heat pumps use electricity, not gas or oil.

The final verdict: Heat pump or furnace?

Right now, a heat pump may be a viable option as a primary heating source if you live in an area of Canada that doesn’t experience plummeting winter temperatures (below -20 degrees Celsius) and doesn’t have cheap natural gas available.

However, for most Albertans, heat pumps are more likely to be a secondary heating source because of the low winter temperatures and availability of cheap natural gas to power furnaces. In Calgary, they often work in tandem with furnaces to reduce energy costs and carbon footprints during all but the coldest snaps. When temperatures dip very low, the furnace kicks in.

Furnace and heat pump technology is changing rapidly so it’s best to watch this space over the coming years. Heat pumps may better address the needs of homes in the coldest parts of the country in the years ahead.

Every home’s needs are unique. For tailored advice about heating your home, call the heating and cooling professionals at Alberta Mountain Air at 403-236-4366 or contact us online.

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