Heat pump vs oil furnace: the real numbers
Updated October 24, 2026
Heating oil is one of the most expensive ways to heat a Canadian home. A heat pump can replace most of it and keep the furnace as backup for the coldest nights.
- Oil burned≈ 1,340 L/yr
- Oil cost$2,400
- Heat pump cost$700
- Savings$1,700
Assumptions: oil at $1.80/L, furnace at 80% efficiency.
Savings by city
| City | Electricity | Oil | Heat pump | Savings/yr | Payback |
|---|---|---|---|---|---|
| Vancouver | 11.72 ¢ | $1,700 | $300 | $1,400 | 2.6 yr |
| Toronto | 15.57 ¢ | $2,100 | $600 | $1,600 | 2.9 yr |
| Ottawa | 15.57 ¢ | $2,500 | $700 | $1,800 | 2.6 yr |
| Montreal | 8.29 ¢ | $2,400 | $400 | $2,100 | 2.3 yr |
| Quebec City | 8.29 ¢ | $2,800 | $400 | $2,400 | 2.0 yr |
| Halifax | 19.13 ¢ | $2,400 | $700 | $1,700 | 2.8 yr |
| Moncton | 15.84 ¢ | $2,600 | $700 | $1,900 | 2.5 yr |
| Charlottetown | 17.80 ¢ | $2,600 | $800 | $1,800 | 2.6 yr |
| St. John’s | 15.59 ¢ | $2,700 | $700 | $2,000 | 1.9 yr |
| Winnipeg | 9.97 ¢ | $3,200 | $600 | $2,600 | 1.8 yr |
| Regina | 15.48 ¢ | $3,200 | $1,000 | $2,300 | 2.1 yr |
| Calgary | 12.00 ¢ | $2,800 | $600 | $2,200 | 2.2 yr |
| Edmonton | 12.00 ¢ | $3,300 | $800 | $2,500 | 1.9 yr |
The calculation assumes the heat pump supplies all the heat; in practice the furnace takes over below the balance point, a few hours a year. Payback is on the DIY price, before rebates.
Keep the furnace as backup
This is the most common setup: the heat pump heats the house most of the time, and the furnace only starts below the balance point. You keep the security of a second system and greatly reduce oil deliveries.
Help to get off oil
- The federal OHPA (oil to heat pump) program is closed; the announced national rebate is to replace it, with criteria expected on November 1, 2026.
- Oil to Electric Incentive Program (Newfoundland and Labrador): Mini-split: $5,000 (general) or $10,000 (income-qualified); multi-zone: $6,500 or $13,000; up to $22,000 overall.
- Several Atlantic provinces have oil-specific streams: see the province-by-province details. Rebates by province
Frequently asked questions
How much do you save by replacing oil with a heat pump?
For a typical bungalow, from $1,400 to $2,600 a year depending on the city, with oil at $1.80/L.
Do I have to remove the oil furnace?
No, unless a program requires it (some oil streams require removing the tank). It can stay as backup.
Keep reading
Heat pump vs baseboard heatersCold-climate heat pumpsHeat pump cost in CanadaRebates by province