Cost Savings to Switch from Oil, Gas, or Electric to a Heat Pump System

Mike Cappuccio, founder of N.E.T.R. Inc., walks you through the Mass Save Cost Calculator in order to show the value of installing a heat pump system, either in fuel cost savings and/or reduction in CO2 emissions.

John Maher:     Hi, I’m John Maher. I’m here today with Mike Cappuccio, founder of N E T R Inc., a heating and cooling company in Massachusetts with a focus on Mitsubishi, ductless heating and cooling products. And today we’re talking about the cost savings to switch from oil, gas, or electric to a ductless heat pump system. Welcome Mike.

Mike Cappuccio:           Hi John, how are you?

Can Switching from Oil, Gas or Electric to a Ductless Heat Pump Save You Money?

John:    Good, thanks. So Mike, can switching from oil, gas, electric, or even propane heat to a ductless heat pump system, save you money?

Mike:   Kind of a loaded question, John, but there’s a “yes” to that, and then there’s a “no” to that. And it all depends on certain things, as far as what type of fuel you are heating your home with and what temperature might you want to run your heat pump at. And what are the cost of those fuels today? There are instances where when you’re using gas heat to heat your home, is it cost effective to switch over to a heat pump? It could be, it could not be. Most of the time we’re seeing it’s about the same cost, sometimes [it could] actually cost you a little bit more to run your heat pump than with gas, because gas is obviously the most economical way to heat your home. But, the other side of that too is, “how much can you affect the environment if you’re not using gas to heat your home?”

With the price of oil today upwards of probably $4 or $5 a gallon for heating oil to heat your home – could even be more, we look back three years ago, it was under $2; so, heating your home with a heat pump in the winter time versus oil in today’s market, being June of 2022, it’s going to be less money to heat your home with the heat pump at the lower temperatures. But, one thing that I always tell people, if you’re looking to heat your home with a heat pump, is you’ve definitely got to look at the envelope of the home and tighten it up, as far as insulation goes, windows go, things like that. You have to do a home energy audit with your home and you need to make this home as tight as you can, because most furnaces and boilers will produce 70-80,000 BTUs where most of these heat pumps are somewhere around 50,000 BTUs. So you need to definitely tighten up the home, do a proper heat load calculation on it, and then look at the cost comparisons; see what those are.

Mass Save Heating Comparison Calculator

John:    Yeah. So Mike, why don’t you walk us through this Mass Save heating comparison calculator and maybe get into some specific numbers of different types of, depending on what type of heat I have in my house, or what type of air conditioning I have in my house, in my square footage, etc. See whether or not, economically, it makes sense, or that I’m going to get some savings in my heating and cooling in my house by switching to ductless. And then of course, like you said, the other thing to consider is the environmental impact as well with all of these and how much less carbon you’re going to be putting into the air. And I think the comparison calculator gets a little bit into that as well. So why don’t you walk us through that.

Mike:   Okay. So, John, this is a great calculator tool that Mass Save has on their website that it’s basically there for the homeowner to go on and go look and do some research on this. I highly recommend doing the research before you do just jump into this. So again, it’s on Mass Save’s website, it’s called a heating comparison calculator. And basically what it’s going to do is it’s going to compare the annual cost. And it’s going to show you the carbon emission savings from investing in a new heating and cooling system, which would be a ductless heat pump, or a ducted heat pump depending on which type of a system you would put in your home. So I’m going to show you some cost comparisons. I’m going to kind of scroll down on the screen here a little bit, and I’m going to get into a…let’s say a gas home.

Ductless vs Gas Heat

I’m just going to kind of use a basic zip code here in the Boston area. This is Saugus 01906. I just know it, because it’s my zip code and I’m going to talk to you a little bit about the home square footage. Let’s take a 2000 square foot home, basic ranch of some sort. I’m going to call it and the existing heating system, when you do to this drop down here, it’s going to ask you, “do you have an air source heat pump already? And is it ducted or ductless? Do you have a boiler with hot water steam, or radiant floor, electric baseboard, a furnace with hot air ducts and registers?” Those are your basic furnace with duct work that you’d be using, or a heating stove using coal, wood, or pellets. So it’s giving you multiple ways that you can heat your home.

But for right now, let’s just say that we’re using a boiler, old steam boiler, let’s say, or a radiant floor boiler in your home. And it’s now asking you with the existing heating system fuel, what type of fuel does your boiler run off of? So is it wood? Is it electricity? Is it fuel oil, natural gas, propane wood pellets, etc. I’m going to say that I’m going to be running this boiler on natural gas. Okay. Now it wants to know, the fourth box down is, “how do you want to enter your heating fuel consumption?” Okay. And this is basically either going to be done by dollars or CCF. The CCF is the measurement of the gas bill that you’re getting.

But for this case, we’re going to use dollars in here in your average fuel consumption. Basically, how much money do you spend a year in a heating season to heat your home with natural gas. Now, I want you to kind of look at, too, with this, this is where people get a little bit fooled with this is if you have natural gas to heat your home, you probably have a natural gas stove, you probably have a natural gas dryer, things like that are in your home. So I want you to look at the difference between an average monthly bill when you’re not heating your home in the summertime. Let’s say your gas bill might be a hundred dollars a [month]. And then in the wintertime, your gas bill might be $500 a [month]. Well, you’re still using your gas stove, you’re still using your gas dryer and things like that. So your average is $400 a month. And let’s say that goes on for five to six months of that additional $400. So you’re basically subtracting the difference of your average use that you’re using in the seasons when you’re still using your heat. So if we take that $400 a month for the natural gas and we multiplied it times five. Let’s say it’d be $2,000 for your heating system for that year. Okay.

Now what I want to do is I want to look at my cooling system. Do I have air conditioning in my house with this steam boiler? I probably don’t. I’m probably either probably using room or wall air conditioners or portable air conditioning at that time and putting them in the walls or in the windows or portable air conditioners with tubes that stick out the window, etc. So what I can do now is calculate my savings to this and look at this versus what it would cost me to heat my home with an air source heat pump or ductless heat pump, or ducted heat pump, whatever you really want to call it.

But at the end of the day, you’re heating your home with a heat pump. So I’ll calculate the savings here and you can see now that it actually gives you a nice little chart here that shows, “are there any savings? Are there estimated savings to use a ducted or ductless air source heat pump?” So see, this is an air to water heat pump. This is a ground source heat pump. And it does also show you that there is no savings. It’s -$250, but what is going to happen here is you’re going to save basically 3.4 metric tons of carbon going into the air. And that’s equivalent to the mileage of driving your car 8,000 miles per year by using a heat pump at that point. So it’s pretty substantial when you look at that, correct?

John:    Yeah, absolutely.

Mike:   Yeah. I mean, look at the ducted air source heat pump. When we start looking at using these, and this is using this as a full source of heat, okay? So there’s not a savings here and I’m just being honest with you.

John:    It’s going to a little bit more expensive with a heat pump. Yeah.

Mike:   It’ll be a little bit more. It is with removing natural gas. There’s not going to be a savings. I mean, it’s showing it to you. But here’s the impact of it. The 2.6 metric tons of what you’re doing here.

John:    Right. So if your focus is that you just want a greener home and you want to have less carbon emissions and you want to help the environment, then switching to ductless is going to do that for you.

Mike:   Yeah. And I mean, this is why, when you look at everyone, how they’re moving to ductless air source heat pumps, is the big factor that’s going on here is not with natural gas, is they want this to happen. They want the metric tons of the carbon to be avoided and the CO2 emissions. This is what’s causing the problems right here. So is there a savings with gas? No. I mean, the statistics are showing it right here. If you wanted to integrate it, okay. I mean, same thing with a ductless air source heat pump right here, but this is more a supplemental, this is if I used it at five degrees Fahrenheit, this is if I’m using my heat pump to heat my home above 30 degrees, okay, and…

John:    And under 30 degrees, you’re using your traditional system.

Mike:   Under 30, I’m using my traditional. But you can see, it’s going to cost you a little bit, but look at the impact you’re having here.

John:    Yeah.

Mike:   A big impact right here, almost as much as what you’re doing to use it full time, because you’ve got to remember, we don’t have a lot of heating hours below 28 degrees, 30 degrees. If you were to really sit down and look at those hours in the course of a heating season, I’ll bet you, it’s probably about 500 hours. It’s not a lot.

John:    Even in the middle of the winter, you tend to be in the thirties during the day. And then it’s really just at night it might drop down into the twenties or the teens or something like that.

Mike:   Yeah, exactly. I mean, there are nights that aren’t even really that cold, but I mean this gives you a good idea of where you’re going to come in at, but I mean, look, where are your savings? A new gas boiler going to a more higher efficiency boiler can help, can definitely help.

John:    But you’re not seeing nearly as much reduction in the carbon emissions…

Mike:   No.

John:    So, you are saving money with the new gas boiler, but you’re not really reducing much with the carbon.

Mike:   You’re not [reducing] carbon at all. You still have carbon there at that point. And I mean, it does also give you your carbon emission savings right here at the bottom. And then also what this is doing is, it is showing you the metric savings, the chart. Basically, this is the same chart as what’s above here, but now it’s giving you some costs, some rough costs of what it would cost to install these systems and then the cost after the incentives. Or, is there any savings? Is there any payback? So, I mean when you look at a ductless air source heat pump at $12-16,000 to install, there’s a $10,000 rebate, cost incentives, cost after incentives could be anywhere from $2000-$6,200, but is there a payback at this time? No.

John:    No. Because it’s going to cost a little bit more, so you’re not going to make money back. Right.

Mike:   Exactly. Yeah. I mean, look at the ground source heat pump, look at these years of what it would cost you to get a payback on this and cost after incentives of what this could possibly cost to do. So, it’s pretty good calculator. I mean, you can download this in a PDF. You could go back and edit your inputs if you want. So, I mean, this is a great tool to go look at if you have this type of fuel and you’re looking to switch over to a heat pump. Again, it’s the heating comparison calculator from Mass Save. It’s right on their website and it’s there for homeowners to go use to see what is your estimated cost. And it’s going to give you a real beautiful chart and good, good data of what you’re seeing here to what you’re going to have.

Oil Heat and Window AC vs Ductless

John:    Let’s try another example, Mike, if we could go back and put in some different types of fuels. Maybe if we started over and we put in… What generally gives the most cost savings? You said oil heat, right?

Mike:   Oil.

John:    So, let’s put in that you’re doing oil heat and maybe that you’re running some window air conditioners in the summer to air condition your home. And let’s take another look at the cost savings and see what changes.

Mike:   Okay, sure. I’ll use that same zip code again. And we’ll simulate the same house with a 2000 square foot heating system. And we’ll use this boiler this time, but we’ll now use fuel oil. Okay. And again, how do you want to enter it, gallons? How many gallons of fuel are you using or how many dollars of fuel are you using?

John:    Right. And this one is a little less complicated than the gas, because the gas you had to do the comparison between your gas usage during the summer and your gas usage during the winter in order to try to figure out how much of the gas you’re using for heating. This one is obvious because you’re not using oil for running things like your stove, etc. So this one, you could just go right from your fuel oil bill.

Mike:   You might be making a little bit of hot water. You’re probably making some hot water with your oil at that time, but nothing crazy.

John:    Right.

Mike:   So, I mean, look it. I mean, I’m hearing upwards now of $5 a gallon for oil, for home heating oil, you got a 250 gallon tank. I mean, two hundred and fifty times five is what?

John:    $1250.

Mike:   $1250 to fill your tank. And I mean, if you’re filling your tank, I don’t know, three or four times in the course of the winter. Let’s do an average, let’s do $4,000.

John:    Sure. Yeah.

Mike:   That’s pretty much where we’d be today.

John:    Yeah. And then maybe the room, wall, or portable air conditioners. Yeah, let’s add the air conditioning in there too and just see.

Mike:   Okay. So now you can see this one is producing positives. There’s a lot of positives in here and a lot of metric tons of being avoided with oil, because it’s much higher because of the type of fuel that you’re burning. It’s an oil heated home. So, I mean, when we start looking at a ductless air source heat pump to heat your home, okay, $846 in savings, avoiding 7.6 metric tons of carbon, it’s equivalent to driving your automobile a little over 18,000 miles.

John:    Wow. Yeah.

Mike:   That’s huge. I mean, and again, this is oil at the current prices today. I mean, if they tend to go up or they go down and they fluctuate a little bit, I mean. We saw this two and three years ago, when oil was cheap, it was running about the same, about the same amount to use your heat pump. But I mean, again, here’s your big impact right here, is on the CO2 admissions. And there is a savings, big savings with geothermal, but this is a different, different animal than what we do. It’s a right different type of a system. But I mean, a ducted air source heat pump to heat your home, again, same thing. This is using duct work. And then down below again, here’s your calculator right here showing you your electric and fuel cost savings right here of what’s going to happen.

Ductless Rebates

And then the carbon emissions over here on the other side, and then here’s some cost of where you would be in the payback. I mean, when you start looking at the ductless air source heat pump that is not supplemental, and you look at the rebates, the whole home rebate at $10,000, for $12,000 to $16,000 to install it, it’s a 2-7 year payback with anywhere from $2,000 to $6,200. And again, these numbers are based on pretty basic installations. I mean, there’s installations that could be more complex. There’s installations that might be a little bit easier. These are all average costs, okay? So, you just have to keep that in the back of your mind when you’re looking at this, but I mean, this is giving you a good, good idea of what this is going to do in your home and why you would want to do this.

I’m seeing a lot of activity now where people don’t understand this, the $10,000 whole home rebate. You know, they think that they’re going to save 40% on their energy bill and they’re heating with natural gas, and they’re going to get this $10,000 check to go out and install an air source heat pump in their house. Well, I just showed you that’s a false statement. You can get the $10,000 with natural gas to heat your home, but are you going to save 40% on your heating bill? No, you’re actually going to increase your heating bill at that point.

John:    But again, if your focus, if you really just want to have a greener house and you want to contribute less to global warming and things like that, that could very well be worth it to you and less emissions even in your home. So, it’s just like a cleaner environment that you’re living in in your home. If that’s what you’re looking for, then it could still be very well worth it to you.

Mike:   Yeah. And I mean, a lot of this is like, look at electric cars. Look at Tesla and look at these electric cars that they’re producing. They’re a little bit more money than a regular car.

John:    Right.

Mike:   But what are they doing? This is where that impact is coming. Am I right or wrong? This is why we’re going to the electric car market. Correct?

John:    Yeah. I mean, and a lot of people are focused on that. They want to be good stewards of the environment. And that’s what they’re looking for.

Mike:   Yes, this is the secondary source to that. You know, I want you to think of this, if you’re looking to go, looking to electrify your home, you’re probably going to have an electrical vehicle, and electric air source heat pump. You’re probably going to have solar in your house at some point too; I would think so. Now you have to look at the offset of these electric costs with solar too. I mean, I would highly recommend to anyone that is looking to do this, that you would absolutely want to be looking at solar too, because now you’re picking up the efficiencies everywhere you possibly can to use the environment to heat your home too.

John:    Yeah. You’re making your own electricity with the solar panels and then you’re also taking that energy and you’re putting it right into making heat and air conditioning in your home. And you’re much closer to that carbon neutral goal that people are looking for.

Mike:   I truly believe in the next 10 to 15 years, John, you’re going to be seeing homes built automatically with solar panels on them for… Everything is going to have an electric plug for a car. I mean, look at how fast the electric car market is moving right now. I mean, I saw something, commercials now, Ford trucks, Ford vans, everything is moving to electric.

There are things that Mass Save is putting out here right now. They’re offering these monies to switch over to these types of systems and these rebates are pretty substantial. And usually what I see with Mass Save in the beginning is the rebates come out real strong. And I saw some metrics on this last week of how many millions of dollars have already been given out in the first six months for air source heat pumps and installations and homes. It’s in the millions, right? And once these funds start drying up, usually year two, the rebates start to decrease at that point because it’s a three-year program and there’s only so much money in the funds. I’m not saying that’s what going to happen. But the norm of what you see is they come out of the gate strong and then it starts to decrease at that point.

John:    All right. So what do you recommend that people do? Should they come online onto the Mass Save website? Look up the cost calculator, put in their numbers for their house, get a rough estimate or an idea of what kind of savings, whether it’s in actual fuel costs or electricity costs or just how much they’re going to reduce their metric tons of carbon emissions. You know, take a look at that, get a realistic idea of that and then give N.E.T.R. a call to get a real estimate and have you come out and take a look at their home and and discuss the actual possibility of switching their home to ductless?

Mike:   Absolutely, John, absolutely. I love that, the way you’re thinking of how people should do it is do a little research on this. Understand that sometimes there could not be a savings to heat your home. The other thing you have to be looking at too, is where am I going to be from an air conditioning standpoint? Will I save money on my electric bill with this type of an air conditioning system, because with the heat pump, you do get air conditioning and you do get heat.

So, you have to look at that, but yes, I really highly recommend doing your research on this and understanding, “how is this going to impact my home? How is it going to impact my cost? And my yearly heating bills, how is it going to impact the metric tons? How is it going to impact the environment as well? And what other things should I be considering too?”

John:    All right. Well, that’s really great information, Mike. Thanks again for speaking with me today.

Mike:   Thanks, John.

John:    And if you want to get more information on this, you can go to the N.E.T.R. website at or call 781-933-NETR. That’s 781-933-6387.