Canada’s Oil to Heat Pump Affordability Grant — Cut Your Bills

The OHPA program is an add-on to the Greener Homes program from the federal government. 

Greener Homes provides support for Canadian homeowners to switch to heat pumps — OHPA extends an extra $5,000 for the oil to heat pump switching costs.

OHPA is due to open for application in Spring 2023. The outline of the program was announced in November 2022. 

Here’s what you need to know if you’re considering the switch from oil to heat pump…

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Canada's OHPA Grants

The Federal OHPA program will help low and middle-income homeowners switch from heating oil to heat pumps.

The cost of heating with oil has rocketed upwards in the past few years. Heat pumps are a much cheaper, safer and cleaner option. But, they come with significant up-front costs. This program is designed to help people afford to make the switch.

Households with less than the Canadian median income will be eligible for OHPA. e.g. A four person household with after-tax income below $53,140 would qualify based on 2022 numbers.

Benefits of Heat Pump vs. Oil Heating

There are many good reasons to switch from oil to heat pump:

  1. Running costs — with heating oil prices as high you’re almost certain to find the electricity for a heat pump costs less.
  2. Safety — oil brings risks of fire, carbon monoxide poisoning and spills while an electric heat pump is completely safe.
  3. Cheaper Insurance — many insurers charge extra if you have oil heating to cover the added risk.
  4. Environmental — electrical generation varies by province but it’s much cleaner than oil nationwide.

Switching from Forced Air Oil Heating to Heat Pump

As a general rule, if you have ducts already then replacing your furnace with a ducted heat pump makes sense.

However there are cases where using ductless heat pumps makes sense. If your home is small and fairly open-plan then ductless might be a good fit — as you would only need a small number of “heads” to deliver heat to your entire home.

Installing or upgrading ducts can be a substantial expense. So if your home lacks ducts or they’re under-sized then ductless may make more financial sense

Heat pumps deliver air that's less hot than air from a furnace. So heat pumps need to push more air to keep your home comfortable.

Some ducting that's large enough for a furnace must to be upgraded to work well with a heat pump.

Switching from a Oil Boiler to Heat Pump

If your oil system uses hot water rads the considerations are different. Air-to-water (hydronic) heat pumps that deliver heat through hot water do exist. However they’re still fairly rare in North America. 

If you can find one there’s a good chance you will need to upgrade your radiators. Hydronic heat pumps, as they’re known, deliver larger volumes of less-hot water. Lower water temperature means you need larger radiator surface area to distribute sufficient heat into your home.

Radiant floor systems are generally compatible with the water temperature delivered by a heat pump. So, if you have a radiant floor system a straight swap of old boiler for new heat pump may be practical. 

A downside of rad or radiant floor systems is they don't provide cooling and dehumudification for the warmer months.

If you want to take advantage of the excellent summer-capability of a heat pump system then installing ductwork or going with a mini-split heat pump system might be for you.

Running Costs of Oil vs. Heat Pump

If you have grid electricity in Canada then a heat pump is certain to be cheaper to run than oil heating. In fact, at current oil prices plain old electric space heaters are cheaper than oil — and they don’t have the huge efficiency advantages of heat pumps.

Several factors determine running costs of oil vs. heat pump:

  1. Fuel oil price.
  2. Electricity price.
  3. Heat pump efficiency (which varies with outdoor temperature).
  4. Oil furnace/boiler efficiency.
Let’s take an example of a home in Nova Scotia, where oil heating is common. A home paying 15¢ on average for electricity and $2.00 per litre of oil could expect to save at least 50% on their heating costs with a heat pump.
A 50% on fuel cost is not unusual — in fact it’s probably conservative. $2/l oil would be a bargain compared to winter 2022 prices and we’re assuming that the oil furnace is the most efficient and well maintained unit possible.

We’re launching a Canadian heating cost calculator soon. Sign up and we’ll keep you updated on the calculator and other fresh info!

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Upfront Cost of Oil to Heat Pump Switch

Upfront costs for any HVAC system are substantial — and heat pumps tend to cost more than a straight boiler or furnace replacement. The exact cost depends entirely on your home and needs.

  • Electrical Upgrades — if you have a 200 amp electrical panel already you’re golden. If you have an older 100A system then you can expect to upgrade that to have enough capacity for your heat pump.
  • Size and Insulation of your home — if you have a large, drafty home then you’ll need a large heat pump too and that costs.
  • Removal of oil system — decommissioning and removing your oil tank will cost you.

Of course, even if you’re household income is above the limit for OHPA eligibility, there are other sources of grants. Greener Homes offers $5k in grants and up to $40k in interest free loans. Plus there are other provincial and local programs around the country.

The range of costs is wide and very hard to estimate without looking at your individual home and needs.
A mini-split system for a small home might come in at $10k while a central ducted system with new ducts and electrical upgrades could cost $30K+

To get an idea of the costs to switch for your home, get some free estimates from local contractors.

Check out our guide to finding a good heat pump installer.