Which Costs Less to Operate: Heat Pumps or Propane?

August 5, 2024

Choosing the right heating system is crucial for cost and energy efficiency. Heat pumps transfer heat between indoors and outdoors, providing versatile year-round use. In contrast, propane heating systems generate heat by burning propane. This guide will help you understand which option is more cost-effective and efficient for your home. 


Heat Pumps: Heat Pumps are devices that transfer heat from one place to another. They can extract heat from the ambient air temperature outside and move it into your home. This process is reversed in the summer to cool your home, making Heat Pumps versatile for year-round use. 

 

Propane heating systems: Propane heating systems burn propane gas to generate heat, which is transferred through a heat exchanger to warm air or water. The heated air or water is then distributed throughout the home, while combustion byproducts are vented outside. 


What is a BTU?  


The British Thermal Unit (BTU) measures energy capacity for heating or cooling a space, with 1 BTU being the energy needed to raise 1 pound of water by 1°F, akin to the heat from a lit match. Electric resistance heating generates 3,413 BTUs per kilowatt-hour (kWh).  In contrast, heat pumps, which move heat rather than generate it, are far more efficient, offering significantly more BTUs per dollar, making them a more cost-effective and energy-efficient choice for heating. 


What is COP?  


The Coefficient of Performance (COP) indicates the efficiency of a heating or cooling system. It represents the ratio of heat energy moved or generated to the amount of energy input. For instance, electric resistance heat has a COP of 1, meaning all the energy input is converted directly into heat. In contrast, most Heat Pumps have a COP greater than 1, as they use less energy to transfer heat from one location to another rather than generating heat from scratch. 

 

What is Distribution Loss?  


Distribution Loss is not a factor when dealing with Ductless Heat Pumps, because they use air-tight copper piping to move refrigerant from one place to another, resulting in 0% distribution losses. 

 

How much heat can you get for a dollar?   


The table below shows the amount of heat in BTUs you can expect to receive per dollar spent on various heat sources. Look and see if you could save money by switching to a more efficient heating system. 


Fuel Source Unit Measure BTU/unit Cost/Unit Efficiency Distribution Losses BTU per $1
Electric kW Hour 3,413 $0.28 100% 0% 12,189
Propane Gallon 90,000 $3.50 82% 8% 19,399
Heat Pump COP 2 kW Hour 3,413 $0.28 200% 0% 24,379
Oil Gallon 140,000 $4.25 75% 8% 22,729
Wood - Pellet Ton 16,000,000 $275.00 65% 8% 34,793
Natural Gas Therm 100,000 $1.96 82% 8% 38,490
Heat Pump COP 3 kW Hour 3,413 $0.28 300% 0% 36,568
Wood Cord 18,000,000 $250.00 60% 8% 39,744
Heat Pump COP 3.5 kW Hour 3,413 $0.28 350% 0% 42,663
Heat Pump COP 4 kW Hour 3,413 $0.28 400% 0% 48,757


Heat pumps produce more BTUs per dollar spent compared to propane heating, making them a more cost-effective and energy-efficient choice. Propane heating systems offer about 19,399 BTUs per dollar, considering a gallon of propane costs $3.50. In contrast, heat pumps with a Coefficient of Performance (COP) of 3 provide around 36,568 BTUs per dollar. This significant difference arises because heat pumps move heat rather than generate it by burning fuel, leading to much higher efficiency and more heat output for the same amount of energy and cost. 

 

Which heat source produces the more BTUs per dollar spent, oil or Heat Pumps?   

 

Heat Pumps: Heat Pump efficiency will vary depending on the COP of the system and outdoor temperatures. However, even Heat Pumps with relatively low COPs typically outperform oil heat when measured dollar for dollar.   
 

Heat Pump COP 2: 24,379 BTUs per $1 

Heat Pump COP 3: 36,568 BTUs per $1 

Heat Pump COP 3.5: 42,663 BTUs per $1 

Heat Pump COP 4: 48,757 BTUs per $1 

 

As the data shows, even a Heat Pump with a COP of 2 provides more BTUs per dollar than propane heat. The higher the COP, the greater the cost savings. For instance, a Heat Pump with a COP of 4 delivers more than double the BTUs per dollar compared to propane heat. 

 

Propane Heat: Propane heating systems typically provide about 19,399 BTUs for every dollar spent. 

 

Overall, heat pumps are a more economical choice than propane heating, especially in terms of BTUs per dollar spent, making them a smart investment for both cost savings and energy efficiency. 

 

How can a Heat Pump have a Coefficient of Performance over 100%? 


In traditional heating systems such as electric heaters or oil furnaces, efficiency is defined by the conversion of fuel to heat, which cannot surpass 100% because they can only convert the energy they use. Heat pumps, however, operate on a different principle. Rather than generating heat from electricity, they transfer heat from outside to inside. By using electricity to run a compressor and fans, heat pumps can move more heat energy than the electrical energy they consume. This process results in a COP greater than 1, meaning their efficiencies are usually over 100%. 

 


How does the COP of a Heat Pump vary with lower temperatures? 


The Coefficient of Performance (COP) of a Heat Pump declines in colder temperatures because the unit needs to exert more effort to extract heat from the colder outside air, which holds less heat. This extra effort demands more electricity, reducing overall efficiency. As outdoor temperatures drop, the difference between inside and outside temperatures widens, requiring even more energy for heat transfer and further lowering the COP. Therefore, it's crucial to size the system according to your home's BTU needs based on your local design temperature. In Massachusetts, this design temperature is typically around 8°F for the Metrowest area, though it can vary by location. 


Different heat pump models have varying minimum operating temperatures, generally between -5°F and -15°F. The COP will continue to decrease as the temperature approaches its minimum operating range, but the heat pump will still be capable of delivering its maximum rated BTU output to keep your home warm. 

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