AC or furnace failing? Heat pump vs. like-for-like for USBIA-San Carlos Project customers
If your air conditioner or furnace is on its way out, you can replace it with the same kind of system or switch to a heat pump. Here is what each costs to install and to run on USBIA-San Carlos Project's electricity rates in Arizona.
It depends on your quotes. A high-efficiency cold-climate heat pump saves about $410 a year to run, so it comes out ahead over 15 years if its quote is no more than $6,100 above the quote for a new furnace and AC.
| Option | Installed cost (typical, range, after rebates) | Energy cost per year | 15-year total | Payback vs. like-for-like |
|---|---|---|---|---|
| New gas furnace + new AC | $11,400 $8,900–$13,800 |
$1,070 |
$27,400 | Baseline |
| Heat pump (replaces both) | $11,400 $7,900–$14,800 |
$900 saves $170/yr |
$24,900 | Cheaper up front and to run |
| High-efficiency cold-climate heat pump Lowest 15-year cost | $14,800 $10,900–$19,700 |
$660 saves $410/yr |
$24,700 | 8.4 years |
Typical 1,800 sq ft home with average insulation, both systems replaced. Change the details below.
Your home
What this is based on
- Electricity: USBIA-San Carlos Project's average residential price in AZ (EIA), $0.195/kWh; the winter price of extra kWh is estimated at $0.180/kWh. Enter your own rate for a closer answer.
- Weather: CASA GRANDE (1,241 heating and 3,963 cooling degree days a year, 1991-2020).
- Gas: Arizona average residential price over the last five winter months (EIA), $1.78/therm.
- Installation labor: Arizona HVAC installer wages are 3% below the national median (BLS, $28.56 vs. $29.33/hour), so installed prices here are scaled by 0.99.
- Energy use:
- New gas furnace + new AC: 4,432 kWh and 118 therms a year for heating and cooling
- Heat pump (replaces both): 4,695 kWh a year for heating and cooling
- High-efficiency cold-climate heat pump: 3,460 kWh a year for heating and cooling
Rebates
- APS ended residential HVAC rebates on January 1, 2026. Efficiency Arizona's income-based HEAR rebates no longer cover gas-to-electric switches (since September 1, 2026). The federal 25C tax credit ended with 2025 installs.
How USBIA-San Carlos Project's rates change the answer
USBIA-San Carlos Project's electricity price for a typical home is 26% above the Arizona average ($0.195 vs. $0.155 per kWh). A heat pump moves your heating from gas to electricity, so the electricity price is the biggest single factor: calculators that use a state average can get the answer wrong for your utility. At these prices, a heat pump is cheaper to run for a typical home here.
How we calculate this
Heating and cooling need. Your home's yearly heating and cooling need comes from 1991-2020 NOAA climate normals for the nearest weather station, scaled by floor area and insulation level. If you know last winter's gas use, compare it with the therms shown below.
Equipment. New furnace 95% AFUE; new AC SEER2 13.4; standard heat pump SEER2 15.2 / HSPF2 7.8; high-efficiency cold-climate heat pump SEER2 21.5 / HSPF2 10.6. Heat pump efficiency falls as it gets colder, and in cold months part of the heat comes from backup electric strips (or your old furnace, if you keep it). Existing equipment is assumed to be a 15-20 year old 80% furnace or SEER2 9.5 AC.
Installed costs. Installed prices vary a lot, so we show a typical price and a range for a home of about 1,800 sq ft with existing ductwork, scaled for larger or smaller homes: furnace and AC together $9,000–$14,000; furnace alone $3,800–$7,000; AC alone $4,500–$9,000; standard heat pump $8,000–$15,000; high-efficiency cold-climate heat pump $11,000–$20,000; electrical panel upgrade, if needed, $1,500–$4,000. These are national figures drawn from published studies and program data (NESCAUM / Energy Solutions, Heat Pumps in the Northeast and Mid-Atlantic: Costs and Market Trends (October 2024); Rewiring America, Upfront cost of home electrification (March 2024); EIA, Updated Buildings Sector Appliance and Equipment Costs and Efficiencies (2023)). Local labor costs, your ductwork and your electrical panel all move the price, and rebates can lower it. The most useful number on this page is how much more a heat pump can cost than a like-for-like quote and still come out ahead: get quotes for both and compare.
Labor and rebates. Half of each installed price is treated as labor and scaled by the state's median HVAC installer wage relative to the U.S. median (U.S. Bureau of Labor Statistics). Rebates listed on this page are subtracted when you tick the box; per-ton rebates assume about one ton of capacity per 600 sq ft. Rebates change often and have eligibility rules, so confirm with the program before you buy.
Not included. Financing, maintenance (similar for all options), local town rebates, and changes in energy prices over time.