Do Heat Pumps Really Pay For Themselves?
Learn how to calculate how long it will take for your heat pump to pay for itself in energy savings.
It’s common for homeowners investing in heat pumps to wonder when they’ll see their investment pay for itself in energy savings. The answer to that question depends on several factors that don’t necessarily stay at a fixed rate over time (such as energy rates and usage) so finding the answer isn’t an exact science.
That said, the goal of this post will be to help give you a better idea of how long it will take to see a return on your heat pump investment. You can do this by looking at the cost savings from switching to a heat pump from the most common forms of home heating, coupled with the rebates available in your province. These key figures will go a long way in helping you determine when you can expect an ROI on your heat pump purchase.
Of course, other important factors impact the speed at which a heat pump will pay for itself, the largest of those being the overall cost of your heat pump. Heat pumps units can have significant variance in price, depending on the type and configuration you choose. For example, central ducted units will often cost more than a mini-split with a single indoor unit. For this reason, it’s best to calculate the final expected result after an in-home consultation with a Daikin Comfort Pro.
What Rebates Am I Entitled To Receive?
Many provincial governments in Canada have recognized the energy savings potential of heat pumps for homeowners. To help offset the initial cost of installation of heat pumps (and other energy saving upgrades), they have offered rebates which can go a long way to covering a significant portion of the installation cost.
Below is an outline of the rebates available in each Atlantic province, along with their maximum rebate amount. Be sure to subtract them from your upfront cost when tallying you heat pump ROI.
New Brunswick – Total Home Energy Savings Program – Max Rebate: $1,500-$1,750
This rebate program allows New Brunswick homeowners to request an “energy audit” which then recommends energy efficient upgrades (such as heat pumps) which can be covered under a rebate.
Nova Scotia – Efficiency Nova Scotia – Max Rebate: $2,500
Nova Scotia has a fairly generous heat pump program that allows homeowners to either receive an energy audit or apply for rebates direct from approved heat pump models.
Prince Edward Island – Energy Efficient Equipment Rebates – Max Rebate: $1,200
PEI has a pretty straightforward and generous program allowing rebates for the purchase of EnergyStar rated heat pumps.
Newfoundland and Labrador – Energy Efficient Loan Program – $0 (loan program)
In Newfoundland and Labrador, the government has yet to usher in a rebate program and instead has opted for a loan program. This loan program offers help homeowners assistance on the purchase of a heat pump at a rate of 4.95%.
What Do I Stand To Save in Annual Heating Costs?
Average yearly savings are the single most significant benefit of switching to heat pumps from traditional heating methods, and the largest determinant of how quickly you can expect to see ROI from your heat pump.
The amount of savings is primarily determined by the efficiency of the heating method you had been previously using.
For the sake of illustration, Efficiency Nova Scotia has compiled a useful heating comparison chart that shows the differences in yearly cost across various heating methods for a 1,700 square foot home.
Their comparison showed the following differences:
Electric Baseboard/Furnace
$1,591/yr savings with a central ducted system
$2,016/yr with a mini-split system
Condensing Oil Furnace
$302/yr savings with central ducted system
$727/yr with a mini-split system
New Oil Furnace
$551/yr savings with central ducted system
$976/yr with a mini-split system
Old Oil Furnace
$1,055/yr savings with central ducted system
$1,447/yr with a mini-split system
These figures help to illustrate the potential annual savings compared to the most common traditional heating sources. By combining these numbers with those of the various rebate programs, you should have a ballpark range of what you can expect for ROI on your heat pump in the first year.
However, it’s important to note that electricity rates can differ to a fair degree from province to province. In fact, Quebec Hydro found moderate differences between rates in all four Atlantic provinces in their annual report on electricity prices.
Calculate Your Savings
To help save you from doing some mental math, we’ve created a useful cost savings calculator which combines your current heating source, province and annual heating spend that gives you a further estimate on your annual savings from switching to a heat pump.