What Is the Most Efficient Heating System?
For most southern New Hampshire homes not on natural gas, the heating system with the lowest operating cost in 2026 is a modern cold-climate heat pump, often paired with a fossil-fuel backup in a dual-fuel configuration. Where natural gas is available, it remains the cheapest fuel per delivered BTU, and a heat pump is competitive with it depending on electric rates. For homes heating with oil, propane, or electric resistance, the heat pump advantage is decisive, and the reason is straightforward: a heat pump moves heat rather than producing it, which means it delivers more heat per unit of energy than any combustion system can match.
At A.J. LeBlanc Heating, here is how the efficiency math works and where heat pumps win the operating-cost comparison.
The efficiency math, simplified
Every heating system has an effective coefficient of performance (COP), the ratio of useful heat output to energy input:
- Electric resistance heat: COP of exactly 1.0
- High-efficiency gas, propane, or oil furnace/boiler: COP of roughly 0.90 to 0.98
- Cold-climate heat pump at 47°F outdoor: COP of 3.0+
- Cold-climate heat pump at 17°F outdoor: COP of roughly 2.0 to 2.5
- Cold-climate heat pump at 0°F outdoor: COP of roughly 1.5 to 2.0
A heat pump can deliver 2 to 3 units of heat for every 1 unit of electricity consumed during most of a NH heating season. That is the source of its operating-cost advantage over oil and propane, and what keeps it competitive with natural gas.
Translating COP into actual operating cost
The COP advantage only matters if electricity is reasonably priced relative to fuel. In NH:
- Electricity rates (as of mid-2026): typically $0.20 to $0.30 per kWh (varies by utility and supply contract)
- Natural gas: where available, roughly $1.20 to $1.80 per therm
- Propane: typically $2.50 to $4.00 per gallon
- Fuel oil: typically $3.00 to $5.00 per gallon
When you convert each to cost per million BTU of delivered heat at typical equipment efficiencies:
- Cold-climate heat pump (average COP 2.5): roughly $24 to $35 per million BTU
- Natural gas (95 percent efficiency): roughly $13 to $19 per million BTU
- Propane (95 percent efficiency): roughly $29 to $46 per million BTU
- Fuel oil (87 percent efficiency): roughly $25 to $42 per million BTU
- Electric resistance: roughly $59 to $88 per million BTU
Numbers are approximate and depend on current rates. Natural gas remains the lowest-cost option where available; heat pumps are second and ahead of oil and propane. Electric resistance is the most expensive by a wide margin.
Why heat pumps still win in NH despite electricity costs
Even with higher electricity rates than the national average, NH heat pump operating cost compares favorably to oil and propane because the COP advantage is so large. The math gets even better when you factor in:
- NHSaves utility rebates that reduce upfront cost (ask us for current amounts)
- Cooling included: the same equipment provides AC in summer, eliminating a separate cooling system
- Reduced fuel volatility: electricity rates are more stable than oil and propane
Note that the federal 25C tax credit for heat pumps ended December 31, 2025, and is not available for 2026 installations. For the full picture on what ended and what remains, see our guide to the 25C credit ending and the incentives that still apply.
The dual-fuel configuration: best of both worlds
For most NH homes, the lowest-cost configuration is a dual-fuel system: a cold-climate heat pump as the primary heat source, paired with an existing or new gas, propane, or oil furnace or boiler as backup.
- The heat pump handles fall, winter mild days, and spring at high efficiency
- The backup takes over during the coldest stretches when the combustion equipment becomes more economical
- Automatic changeover based on outdoor temperature requires no homeowner intervention
- You also get summer cooling from the same heat pump
What about pellet stoves and wood stoves?
Pellet and wood stoves can be cost-competitive when:
- The fuel is sourced locally at low cost
- The homeowner is comfortable handling fuel and ash daily
- The home layout allows the stove to heat the spaces that matter
For whole-home comfort, however, stoves struggle. They tend to overheat the room they are in and underheat distant rooms. They also require active management (loading fuel, cleaning ash) that automatic central systems do not. For most NH homeowners, a stove is a supplemental heat source rather than a primary heating system.
Equipment and installation matter as much as the technology choice
The efficiency numbers above assume properly sized, well-installed equipment. Real-world performance depends on:
- Correct sizing (Manual J load calculation)
- Adequate insulation and air sealing in the home itself
- Proper duct design (for ducted systems)
- Correct refrigerant charge at commissioning
- Smart thermostat configured for the equipment type
Cutting corners on installation can erase the efficiency advantage of even the best equipment.
Run the numbers for your home
Our Heat Pump Cost Comparison Calculator lets you plug in your current fuel and electric rates to see how a heat pump would compare for your specific situation. It is the fastest way to translate the COP math above into actual dollar figures.
Schedule a consultation
If you are evaluating a heating system replacement or considering a heat pump upgrade for your NH home, contact A.J. LeBlanc Heating. We run the numbers for your specific home with your current rates and address-specific options. Serving New Hampshire families since 1928.
Frequently Asked Questions
What is the most efficient heating system available?
Air-source cold-climate heat pumps are the most efficient option for NH homes, with a COP of 2 to 3 at typical NH winter conditions. That is significantly more efficient than any combustion system, which delivers less than 1 unit of heat per unit of fuel energy.
Is natural gas cheaper than a heat pump in New Hampshire?
Natural gas is typically the lowest-cost fuel where it is available. Cold-climate heat pumps are competitive with natural gas and beat oil, propane, and electric resistance handily.
Do heat pumps still work below zero?
Yes. Modern cold-climate heat pumps deliver useful heating down to outdoor temperatures of minus 13°F and lower. Capacity declines as temperatures drop, which is why most NH installations include a backup heat source.
What is a dual-fuel heating system?
A heat pump paired with a backup fossil-fuel furnace or boiler. The heat pump handles most of the season at high efficiency; the backup covers the coldest days. Typically produces the lowest year-round operating cost in NH.
How long do heat pumps last?
Modern heat pumps typically last 12 to 15 years with proper maintenance. The outdoor unit takes more weather abuse than a comparable AC condenser, so annual service matters more.