Operating Cost: Heat Pump vs. Oil Furnace or Boiler

For a typical southern New Hampshire home heated by oil, a cold-climate heat pump generally has a lower operating cost than the existing oil furnace or boiler at current NH oil and electricity rates. The oil system becomes more economical at the coldest outdoor temperatures when heat pump efficiency drops. A dual-fuel setup that pairs the heat pump with the existing oil system as backup is typically the lowest-cost option overall and the most popular path forward for NH oil homes.

Here is the math at current NH rates with the assumptions that change the answer.

The numbers we will use

For this comparison:

Fuel oil price: $4.30 per gallon (NH average as of mid-2026; varies by supplier and season)
Fuel oil heat content: 138,500 BTU per gallon
Modern oil furnace or boiler efficiency: 87 percent AFUE
Electricity price: $0.30 per kWh (NH residential rate as of mid-2026; varies by utility and supply contract)
Cold-climate heat pump COP at 47°F: 3.0
Cold-climate heat pump COP at 17°F: 2.3
Cold-climate heat pump COP at 0°F: 1.8
Cold-climate heat pump COP at -10°F: 1.3

These are representative numbers. Real conditions vary; the math behind the comparison is the important part.

Cost per million BTU: oil furnace or boiler

One gallon of fuel oil delivers 138,500 BTU of fuel energy. At 87 percent AFUE, the burner converts that into 120,495 BTU of usable heat.

To produce 1,000,000 BTU of heat:

1,000,000 / 120,495 = 8.30 gallons of oil
8.30 gallons x $4.30 per gallon = $35.69 per million BTU

Oil has a higher BTU content per gallon than propane, which keeps oil's cost per BTU competitive even at higher per-gallon prices.

Cost per million BTU: cold-climate heat pump

One kWh of electricity delivers 3,412 BTU. Multiplied by the heat pump's COP, we get usable heat. At each operating point:

At 47°F outdoor (COP 3.0)

1 kWh = 3,412 BTU x 3.0 = 10,236 BTU
1,000,000 / 10,236 = 97.7 kWh
97.7 x $0.30 = $29.31 per million BTU

At 17°F outdoor (COP 2.3)

1 kWh = 3,412 BTU x 2.3 = 7,848 BTU
1,000,000 / 7,848 = 127.4 kWh
127.4 x $0.30 = $38.22 per million BTU

At 0°F outdoor (COP 1.8)

1 kWh = 3,412 BTU x 1.8 = 6,142 BTU
1,000,000 / 6,142 = 162.8 kWh
162.8 x $0.30 = $48.84 per million BTU

At -10°F outdoor (COP 1.3)

1 kWh = 3,412 BTU x 1.3 = 4,436 BTU
1,000,000 / 4,436 = 225.4 kWh
225.4 x $0.30 = $67.62 per million BTU

Where the crossover happens

At these rates, the heat pump is cheaper than oil at outdoor temperatures above roughly 20 to 25°F. Below that, oil becomes more economical per BTU delivered.

For NH winter, the heat pump is the lower-cost choice on most days from October through early December and from late February through April. Oil is more economical on the coldest stretches in January and early February.

Why dual-fuel makes the most sense for NH oil homes

A dual-fuel configuration pairs a cold-climate heat pump with the existing oil furnace or boiler as backup. A smart thermostat or built-in control automatically switches between them based on outdoor temperature:

Above the changeover temperature (typically 25 to 35°F for oil pairings): heat pump runs
Below the changeover temperature: oil backup runs

The result is the lowest year-round operating cost, with the security of a proven oil system for the coldest nights. NH oil homes are particularly well-suited to this approach because:

The existing oil system already works and does not need to be replaced
Adding a heat pump captures the operating cost savings without abandoning the proven backup
NHSaves incentives make the heat pump addition cheaper than the sticker price suggests
The same heat pump provides summer cooling, eliminating the need for a separate AC system

Other factors that affect the real-world comparison

Oil price volatility: NH oil prices have moved between $3.00 and $5.50+ per gallon over the past several years. Electricity rates are more stable.
Cooling included: the heat pump provides AC in summer. If you would otherwise add or replace AC, that cost favors the heat pump.
Annual service savings: if you transition primarily to the heat pump and use the oil only as backup, the oil burner runs many fewer hours per year. Annual oil service can sometimes be reduced to every other year.
Rebates and incentives: the federal 25C tax credit ended December 31, 2025 and no longer applies to new installations. NHSaves utility rebates remain available for qualifying heat pump installations; ask us for current amounts.

What to do if your oil system is at end of life

If your oil furnace or boiler is past 20 years old or showing signs of major component failure, a full transition to a cold-climate heat pump (with electric resistance backup or no backup if the home is well-insulated) is worth modeling alongside the dual-fuel option. The economics depend on:

The cost of the heat pump system you would install
The cost (and rebate availability) of envelope improvements to reduce heat loss
Your willingness to live without a fossil-fuel backup

Run the math for your specific home

Plug your current oil price and electric rate into our Heat Pump Cost Comparison Calculator to see cost per million BTU side-by-side at different outdoor temperatures. Update the numbers as fuel prices change to see when the crossover point shifts.

Schedule a consultation

If you are running an oil furnace or boiler and want to model what a heat pump or dual-fuel setup would actually cost to operate in your NH home, contact A.J. LeBlanc Heating. We will run the numbers with your specific home, your current oil supplier rate, and your utility's electricity rate. Serving New Hampshire families since 1928.

Frequently Asked Questions

Is a heat pump cheaper than oil in New Hampshire?

Above roughly 20 to 25°F outdoor, yes, at current rates. Below that, oil is cheaper per BTU. For most of the NH heating season, the heat pump wins. A dual-fuel pairing captures both.

Can I keep my oil system if I add a heat pump?

Yes. This is the dual-fuel configuration. The oil furnace or boiler stays in place as backup; the heat pump becomes the primary heat source. The system switches between them automatically.

What is the crossover temperature for heat pump vs oil?

At current NH rates, roughly 20 to 25°F. The exact number depends on your electricity rate, oil rate, and the heat pump's low-temperature performance.

Will I still need to fill my oil tank if I add a heat pump?

Yes, but much less often. In a dual-fuel setup, the oil system runs only during the coldest stretches. NH homes that convert often see oil use drop by 50 to 80 percent.

Should I replace my oil system entirely with a heat pump?

Depends on the home. For well-insulated NH homes, full electrification works. For older homes with high heat loss, the dual-fuel pairing is usually more economical and more reliable on the coldest nights.