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 stays the cheapest fuel per delivered BTU, with a heat pump competitive depending on electric rates. For homes on oil, propane, or electric resistance, the heat pump advantage is decisive: it moves heat rather than producing it, so it delivers more heat per unit of energy than any combustion system can match.
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 typically delivers 2 to 3 units of heat for every 1 unit of electricity through 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.
What that means in operating cost
The COP advantage only pays off when electricity is reasonably priced relative to fuel. Converted to cost per million BTU of delivered heat at typical NH rates and equipment efficiencies:
- Natural gas (95 percent efficiency): roughly $13 to $19 per million BTU
- Cold-climate heat pump (average COP 2.5): roughly $24 to $35 per million BTU
- Fuel oil (87 percent efficiency): roughly $25 to $42 per million BTU
- Propane (95 percent efficiency): roughly $29 to $46 per million BTU
- Electric resistance: roughly $59 to $88 per million BTU
Specific rates vary by utility, supplier, and season; contact us or use your own current bills to run the comparison for your home. Natural gas stays lowest where available; the heat pump is second and beats oil and propane; electric resistance is the most expensive by a wide margin.
The case improves further with NHSaves utility rebates (ask us for current amounts), built-in summer AC from the same equipment, and electricity rates that 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 what ended and what remains, see our guide to the 25C credit ending and the incentives that still apply.
The dual-fuel configuration
For most NH homes, the lowest-cost setup is a dual-fuel system: a cold-climate heat pump as the primary heat source, paired with a gas, propane, or oil furnace or boiler as backup. The heat pump handles fall, mild winter days, and spring at high efficiency; the backup takes over during the coldest stretches when combustion becomes more economical. Changeover is automatic based on outdoor temperature, and you get summer cooling from the same heat pump. Pellet and wood stoves can be cost-competitive when fuel is cheap and local, but they overheat the room they sit in, underheat distant rooms, and need active loading and ash cleaning, so they work best as supplemental heat rather than a primary system.
Installation matters as much as the technology
The numbers above assume properly sized, well-installed equipment: a correct Manual J load calculation, adequate insulation and air sealing, proper duct design for ducted systems, correct refrigerant charge at commissioning, and a 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 compares for your situation. If you are weighing a heating replacement or a heat pump upgrade, contact A.J. LeBlanc Heating or call 603-623-0412. We run the numbers for your specific home and current rates. 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 roughly 2 to 3 at typical NH winter conditions. That is far 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. It 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.