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Heat Pump vs Oil: Cost and Break-Even Calculator

See what a year of heat costs with your oil boiler or furnace versus a heat pump, the electricity price where they break even, and how long an installation would take to pay back.

Add up a year of delivery tickets.
AFUE; older systems are often 75–82%.
All-in: supply + delivery, from your bill.
2.5 is a reasonable cold-climate seasonal average.
Lower it if oil keeps heating water or backs up on cold days.
Negative = you save. Positive = added cost.

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How the comparison works

The key is to compare the heat your house actually uses, not gallons against kilowatt-hours. Your oil deliveries tell us that heat: each gallon holds 138,500 Btu and your boiler or furnace delivers a share of it equal to its efficiency. A heat pump delivers more heat than the electricity it uses, because it moves heat from outdoors rather than making it. The ratio of heat out to electricity in is its coefficient of performance (COP).

Heat used per year (Btu) = gallons × 138,500 × oil efficiency Heat pump kWh = heat used × share ÷ (3,412 × COP) Oil cost now = gallons × oil price Cost after = kWh × electricity price + remaining oil gallons × oil price + other changes Break-even electricity price = oil price × 3,412 × COP ÷ (138,500 × oil efficiency) Break-even COP = electricity price × 138,500 × oil efficiency ÷ (3,412 × oil price) Simple payback (years) = (installed cost − rebates) ÷ yearly savings

HSPF and HSPF2 ratings are seasonal heating efficiency in Btu per watt-hour, so dividing by 3.412 converts them to a COP. HSPF2 uses a tougher test and reads lower than the older HSPF for the same unit. Both are rated for a moderate climate, so in a cold northern winter the real seasonal COP can come out lower than the rating suggests.

The break-even electricity price is the number to watch

With the defaults ($3.48 oil, 85% boiler, COP 2.5), the break-even electricity price is about 25 cents per kWh. EIA's Northeast average for the 2025–26 winter was about 24 cents, so at those numbers a heat pump runs almost exactly even with oil, and the savings depend on the details. They grow when:

The calculator only counts heating. A heat pump also replaces window air conditioners or central AC, often more efficiently, which is value this comparison leaves out.

Choosing realistic inputs

Gallons: if your boiler also makes your hot water, part of your oil goes to that. Unless you're also installing a heat pump water heater, lower the share the heat pump covers. Summer deliveries show your hot-water use.

COP: the U.S. Department of Energy's cold-climate heat pump field validation measured COPs of roughly 1.6 to 2.7 in weather below 30°F. Seasonal averages are higher because most heating hours are milder. For planning in New England or upstate New York, 2.3 to 3 is a sensible range; ask your installer for an estimate based on your house.

Installed cost and rebates: use real quotes. The federal 25C tax credit for heat pumps ended for equipment placed in service after December 31, 2025, but many states and utilities still offer rebates.

To compare other fuels too, try the heating fuel cost comparison. To get your yearly gallons from delivery slips, use the oil usage calculator.

Frequently asked questions

Is a heat pump cheaper than oil heat?

It depends mainly on three numbers: your electricity rate, your oil price and the heat pump's seasonal COP. With oil at $3.48 in an 85% boiler, a heat pump with a seasonal COP of 2.5 breaks even at about 25 cents per kWh. Below that rate the heat pump is cheaper to run; above it, oil is.

How many kWh does it take to replace a gallon of heating oil?

About 13 to 16 kWh with a modern heat pump. A gallon of oil burned in an 85% boiler delivers about 117,700 Btu; at a seasonal COP of 2.5 a heat pump needs about 13.8 kWh to deliver the same heat, and at a COP of 2.2 about 15.7 kWh.

What COP should I use for a heat pump in a cold climate?

For a modern cold-climate heat pump in the Northeast, a seasonal average around 2.3 to 3 is a reasonable planning range. DOE field testing found COPs of roughly 1.6 to 2.7 below 30°F, and efficiency is much higher in mild fall and spring weather. You can also divide the unit's HSPF rating by 3.412.

Should I keep my oil boiler as a backup?

Many homeowners do, at least at first. Keeping the boiler for the coldest days and for hot water lets a smaller heat pump carry most of the load. Set the share of heat the heat pump covers below 100% to model that.

Is there still a federal tax credit for heat pumps?

Not for new installations. The federal 25C energy efficient home improvement credit ended for equipment placed in service after December 31, 2025. State and utility rebates (such as Mass Save in Massachusetts or Energize CT) may still apply, so check your state's programs.

Sources

Last reviewed October 25, 2026. Estimates only; see the disclaimer.