Heat Pump vs. Traditional HVAC in Arizona
Compare heat pump installation cost and operating savings against gas furnace and central AC, including IRA rebates and fuel cost trajectories.
A heat pump in Arizona replaces both furnace and air conditioner with a single unit that achieves an average coefficient of performance (COP) of 3.5. At Arizona's electricity rate of $13.2¢/kWh, the operating cost comparison against gas heating at $1.20/therm determines whether the switch makes financial sense.
The IRA provides a 30% tax credit (up to $2,000) for heat pump installations under Section 25C, plus up to $8,000 in point-of-sale rebates for income-qualified households through the HOMES and HEAR programs.
Annual Cost Comparison
| Category | Gas Furnace + AC | Heat Pump |
|---|---|---|
| Annual heating fuel cost | $720 | $663 |
| Annual cooling savings | $0 | $300 |
| Net annual savings | $357/year | |
At COP 3.5, a heat pump uses 5,023 kWh/year for heating — about 171 equivalent therms of gas at the electrical equivalent rate. Pairing with solar in Arizona (1,750 kWh/kW/yr) further reduces the operating cost, since the heat pump draws from your solar production rather than the grid.
The heat pump economics improve when gas prices rise. At $1.50/therm (a 25% increase), annual savings jump to $537/year. The heat pump essentially hedges against gas price volatility while providing both heating and cooling in a single system.
Frequently Asked Questions
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