AC or furnace failing? Heat pump vs. like-for-like for City of Norwood 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 City of Norwood's electricity rates in Massachusetts.

A high-efficiency cold-climate heat pump comes out ahead here even with a high quote: about $15,900 less than a new furnace and AC over 15 years at typical prices, and $800 a year less to run.

Option	Installed cost (typical, range, after rebates)	Energy cost per year	15-year total	Payback vs. like-for-like
New gas furnace + new AC	$13,000 $10,200–$15,900	$1,630	$37,500	Baseline
Heat pump (replaces both)	$13,000 $9,100–$17,000	$1,080 saves $560/yr	$29,200	Cheaper up front and to run
High-efficiency cold-climate heat pump Lowest 15-year cost	$9,000 $4,500–$14,700 after $7,950 rebate	$840 saves $800/yr	$21,600	Cheaper up front and to run

Typical 1,800 sq ft home with average insulation, both systems replaced. Change the details below.

Your home

What needs replacing?

Both (furnace and AC are old) My AC failed (furnace is fine) My furnace failed (AC is fine)

Heated floor area (sq ft)

Insulation and air sealing

ZIP code (optional)

Your electricity price ($/kWh, optional)

From your bill: total charges ÷ kWh used.

Your gas price ($/therm, optional)

Massachusetts winter average: $2.46.

With a heat pump I'd cancel gas service (no other gas appliances), saving the monthly gas customer charge (about $15) My electrical panel may need upgrading for a heat pump (adds about $2,400; an electrician can tell you) Include rebates I'm likely to qualify for (Mass Save air-source heat pump rebate) My household qualifies for income-based rebates

What this is based on

Electricity: City of Norwood's average residential price in MA (EIA), $0.177/kWh; the winter price of extra kWh is estimated at $0.172/kWh. Enter your own rate for a closer answer.
Weather: WALPOLE 2 HCN (5,883 heating and 727 cooling degree days a year, 1991-2020).
Gas: Massachusetts average residential price over the last five winter months (EIA), $2.46/therm.
Installation labor: Massachusetts HVAC installer wages are 27% above the national median (BLS, $37.16 vs. $29.33/hour), so installed prices here are scaled by 1.13.
Energy use:
- New gas furnace + new AC: 1,454 kWh and 562 therms a year for heating and cooling
- Heat pump (replaces both): 6,234 kWh a year for heating and cooling
- High-efficiency cold-climate heat pump: 4,848 kWh a year for heating and cooling

Rebates

Mass Save air-source heat pump rebate (checked 2026-11-08, valid to 2026-12-31): ENERGY STAR Cold Climate equipment, Mass Save installer network. Gas-heated homes qualify through a Mass Save gas sponsor (Berkshire Gas, Eversource, Liberty, National Grid, Unitil); municipal gas customers do not. Whole-home requires the home to be sufficiently weatherized.
Municipal light plant customers may have their own town rebates on top. The federal 25C tax credit ended with 2025 installs. Mass Save also offers a 0% HEAT Loan.

How City of Norwood's rates change the answer

City of Norwood's electricity price for a typical home is 42% below the Massachusetts average ($0.177 vs. $0.303 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.