Costs to Run a Heat Pump in Ontario’s Winter?

Heat pumps are growing in popularity in Ontario for home heating and cooling. 

Do the numbers add up? Will your hydro bill go through the roof if you switch to a heat pump?

Let’s run through some Ontario-specific examples to find out…

Heat pumps work the same way everywhere on the planet. So why the Ontario focus? Because fuel vs. electricity prices and local climate are huge factors in running costs.

The specifics are tailored to Ontario — but most of the info here will be useful to anyone living where temperatures go below freezing in the winter.

Table of Contents

Heat Pumps are Plenty Able to Handle our Winters

You might have heard that heat pumps just aren’t up to heating in our bitter cold winters. With older versions of heat pump technology there was some truth to this — it’s not true anymore.

A modern cold climate heat pump will work effectively down to -20°C and below. Making heat pumps a great heating option for the vast majority of Ontarians. 

Even further north in the province a heat pump can handle a lot of your heating needs with a gas or propane furnace kicking in at the coldest times.

When properly installed, plenty of today’s air-source heat pumps can keep your home toasty even amid bone-chilling cold, using far less energy than other types of heating systems.

Heat Pumps Aren't Energy Hungry Like Electric Baseboards

Heat pumps and baseboards both run on electricity but that’s where the similarity ends.

Old-fashioned electric baseboard heating has huge running costs. Heat pumps heat your home much more efficiently. No need to be put-off by the very idea of an electric heating option.

Real-world experience confirms the science — heat pumps consistently use two, three or even four times less electricity than baseboards. 

Understanding Heat Pump Running Costs

There are three factors that play into the cost of heating your home using heat pumps:

  1. Performance of the particular heat pump.
  2. Your cost of electricity.
  3. The outdoor temperature.
Let’s break those down one by one…

Heat Pump Performance

Heat pumps all work in fundamentally the same way — gathering heat from outside and transferring it indoors. That doesn’t mean that all heat pumps have the same abilities though.

The most modern heat pumps have huge advantages in our cold winter weather. Older heat pumps suffered from severe reductions in efficiency and heat output on cold days. A modern cold climate heat pump will hum along happily at -20°C and below.

Understanding heat pump performance isn't always simple. Fortunately there's a standardized number to compare efficiency between different heat pump models: HSPF (Heating Seasonal Performance Factor).

The higher the HSPF number the more affordable a heat pump will be to run. HSPF results are often given for two different climate zones — "Zone V" results apply to colder climates so they're the ones to look for.

Electricity and Heating Fuel Costs

The cost of electricity is key to heat pump running costs. Ontario has cheap electricity compared to much of North America — so we’re well placed to benefit from heat pumps.

Whether a heat pump will save you money or not comes down to the costs of competing heating fuels.

Average Electricity Price by Location

Data from Hydro-Québec 2022. link

Outdoor Temperature

Heat pumps are fundamentally different from other heating options. They don’t generate heat like a furnace or boiler does — instead they move heat from outdoor air into your home. As the outdoor air gets colder heat pumps work harder to deliver the same amount of heat.

Heat Pumps vs. Electric Baseboards Costs

There’s no competition here. Heat pumps beat electric baseboards everytime on running costs. Baseboards and heat pumps both use electricity but the heat pump uses much less of it. After switching to heat pump your heating bill can easily be cut in half.

If your home doesn't have ductwork then mini-split heat pumps (aka ductless) might be a good choice. Like all heat pumps, mini-splits works as very efficient air conditioners for the summer months. Learn all about mini-split vs. ducted heat pumps.

Heat Pumps vs. Propane Costs

For early winter 2022 a propane cost of 90¢/litre is typical. Propane cost varies by location and supplier.

Electricity for Ontario customers averages about 13¢/kWh.

At current prices switching to a cold climate heat pump system should save about 50% on heating costs.

In fact, heating with old-fashioned electric baseboards costs less when propane goes above 90¢ per litre.

Heat Pumps vs. Oil Costs

Early winter 2022 furnace oil is priced around $2.20/litre (according to Natural Resources Canada).

That makes oil the most expensive way to heat your home in Ontario! You can expect savings of two-thirds on your heating bills after a switch to heat pumps.

Switching from oil can save you money on your home insurance too. Insurance companies don't like oil because of the expense of cleaning after oil leaks.

Heat Pumps vs. Natural Gas Costs

Surely natural gas is the cheapest heating option? In Ontario that’s no longer true. A string of natural gas price hikes for Ontario customers have rapidly shifted balance towards electric heat pumps.

Spring 2023 Update: We've launched a Canada-only running cost calculator for heat pump vs. natural gas

You only need to give us your location and our database of utility prices and climate regions does the rest.

>> Try it now <<

Natural Gas Price for Ontario Enbridge Customers

Data from Ontario Energy Board Quarterly Rate Adjustments

We’re more Canada-specific heat pump tools soon. 
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Canada's Carbon Tax Favours Heat Pumps

Canada’s carbon tax makes heat pumps even more attractive in Ontario.

Long story short, natural gas and other fossil fuels will be taxed more every year through 2030. Carbon tax applies to electricity costs too — however Ontario’s generation is low-carbon (lots of hydro and nuclear with some natural gas) so the tax is much lower on electricity.

Over time natural gas prices are expected to climb relative to electricity. Tipping affordability further in favour heat pumps.

Upfront Costs of Heat Pumps

There’s a downside to heat pump costs: upfront they’re more costly than a traditional furnace or boiler. 

There’s more skilled labour involved in installing a heat pump system compared to a furnace of boiler upgrade. Plus the equipment is more complex and that means a higher purchase cost. 

Any cold climate heat pump is also an efficient central air con unit. That's a built-in benefit you don't get from a replacement boiler or furnace.

Cost of a Ducted Heat Pump for an Ontario Home

HVAC costs vary a lot from one home to another — there are so many variables involved. The best way to get accurate costs for your situation is to get some quotes from local heat pump contractors.

To give a ballpark: Installation of a whole-home cold climate heat pump for a 2,000 square foot home in Ontario might come in at $15,000-20,000 in 2023.

Get the specifics on Ontario air-source heat pump costs in our deep-dive.

Understanding Heat Pump Costs

There are multiple factors that feed into the heat pump cost for your home. Here are some of the important ones.

If your home doesn’t have a 200 amp electrical panel you likely need upgrades to hydro supply and panel. Particularly if you are going all-electric with electric resistance heat to backup the heat pump.

A drafty, poorly insulated home will need a larger and more expensive heat pump.

The size of home is a big factor in heat pump cost — more space to heat means bigger more costly equipment.

Equipment efficiency and brand name both play into equipment cost.

Heat pumps move large volumes of warm air so older, narrower ducts that worked with a furnace may need to be upgraded.

A hybrid (dual-fuel) setup can save money upfront by combining a mid-range heat pump with a simple gas furnace. Hybrid also avoids electrical upgrade costs you might need for an all-electric system.

Hybrid heat pumps (aka dual-fuel) are a popular option in Ontario. The heat pump handles heating at milder temperatures and a natural gas furnace kicks in when it gets colder.

Rebates for Heat Pumps in Ontario

Electrifying residential heating with heat pumps is a great way to reduce carbon emissions. So, many provinces have programs to encourage homeowners to switch. Nova Scotia and BC stand out with generous rebates.

In Ontario we get no help paying for heat pumps from the province (thanks for nothing Doug).

There’s a good news for Ontarians though: the federal Greener Homes program will chip in $5,000 to help with the cost of a cold climate heat pump. That grant increases to $6,500 in January 2023! Greener Homes also offers interest free loans to pay for heat pumps and other energy-efficient upgrades. 

Read our in-depth guide to getting rebates from Greener Homes.


In Ontario, Heat pumps are much cheaper to run than propane, oil or electric baseboard heating. Heat pumps even have lower running costs that natural gas.

The upfront costs aren’t small but government grants help offset that price. Long story short: switching to heat pumps is a sound financial decision in Ontario

Learn more about the practicalities of heat pumps in Ontario's climate with our complete guide.

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