Is a heat pump cheaper than gas in Michigan?
Midwest · Cold (e.g. Northeast, upper Midwest) · EIA residential fuel prices
For a reference 2,000 sq ft home in Michigan (assumed seasonal COP 2.4, 95% gas furnace), a heat pump costs about $1,450/year to run versus about $644/year for natural gas — so a heat pump is about $806/yr more than a gas furnace. It is cheaper than propane ($1,453/yr), cheaper than heating oil ($2,136/yr), and far cheaper than electric resistance ($3,479/yr). The cheapest option here is natural gas furnace (95% afue). These are estimates — verify with an HVAC pro.
Source: EIA Electric Power Monthly, Table 5.6.A (residential). Data as of June 2026.
Michigan residential fuel prices
| Fuel | Residential price | Source / period |
|---|---|---|
| Electricity (residential) | 21.20¢/kWh | EIA, March 2026 |
| Natural gas (residential) | $1.092/therm | EIA, March 2026 |
| Heating oil (residential) | $4.491/gal | EIA, Midwest (PADD 2) |
| Propane (residential) | $2.184/gal | EIA, Midwest (PADD 2) |
Source: EIA (electricity, natural gas, heating oil & propane). Data as of June 2026.
Michigan residential natural gas is $11.32/Mcf (about $1.092/therm), EIA March 2026. Heating oil and propane are EIA residential prices for Midwest (PADD 2) (Week ending 2026-03-30) — EIA does not publish these per individual state.
Annual heating cost in Michigan — every system compared
Reference: a 2,000 sq ft home in a cold (e.g. northeast, upper midwest), roughly 56 MMBTU/year of useful heat. Energy cost only (no equipment, install or maintenance):
| Heating system | Annual energy cost | Annual use |
|---|---|---|
| Natural gas furnace (95% AFUE) | $644/yr | 589 therms |
| Heat pump | $1,450/yr | 6,839 kWh |
| Propane furnace (92% AFUE) | $1,453/yr | 665 gal |
| Heating oil (85% AFUE) | $2,136/yr | 476 gal |
| Electric resistance (baseboard, COP 1.0) | $3,479/yr | 16,413 kWh |
Source: EIA fuel prices + ENERGY STAR energy conversions. Data as of June 2026.
Cheapest to run in this reference case: Natural gas furnace (95% AFUE). Run your own home size, COP and prices.
Heat pump vs each fuel in Michigan
| Comparison | Heat pump | Other system | Heat-pump result |
|---|---|---|---|
| vs natural gas (95% AFUE) | $1,450 | $644 | $806/yr more |
| vs propane (92% AFUE) | $1,450 | $1,453 | Saves $3/yr |
| vs heating oil (85% AFUE) | $1,450 | $2,136 | Saves $687/yr |
| vs electric resistance (COP 1.0) | $1,450 | $3,479 | Saves $2,030/yr |
How Michigan compares with similar states
The five states with the closest electricity price to Michigan, and how heat-pump-vs-gas savings look there:
| State | Electricity ¢/kWh | Heat-pump vs gas (ref. home) |
|---|---|---|
| Michigan (this state) | 21.20¢ | $806/yr more |
| Pennsylvania | 20.92¢ | $483/yr more |
| Maryland | 22.20¢ | $208/yr more |
| New Jersey | 23.49¢ | $366/yr more |
| Illinois | 18.86¢ | $602/yr more |
| Wisconsin | 18.80¢ | $1,363/yr more |
Frequently asked questions
Is a heat pump cheaper to run than gas in Michigan?
Not in this reference case. For a 2,000 sq ft home in Michigan (assumed seasonal COP 2.4, 95% gas furnace), a heat pump costs about $1,450/year vs about $644/year for gas, because Michigan has relatively cheap natural gas. A heat pump is still typically cheaper than propane, oil and electric resistance here.
What does it cost to heat a home in Michigan?
Using EIA March 2026 prices and a 2,000 sq ft home in a cold (e.g. northeast, upper midwest) (about 56 MMBTU/yr), estimated annual energy cost is about: heat pump $1,450, natural gas $644, propane $1,453, heating oil $2,136, electric resistance $3,479. The cheapest here is natural gas furnace (95% afue).
Is a heat pump cheaper than propane or heating oil in Michigan?
In this reference case, vs propane a heat pump saves about $3/year, and vs heating oil it saves about $687/year. Heat pumps usually beat both delivered fuels comfortably because they deliver far more heat per unit of energy.
How does Michigan rank for heat-pump savings?
On heat-pump savings vs a gas furnace (reference 2,000 sq ft home), Michigan ranks #42 of 51 states (1 = saves the most). This reflects Michigan's mix of 21.20¢/kWh electricity and $1.092/therm gas.
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Sources & accuracy
Electricity: EIA Electric Power Monthly, Table 5.6.A (residential) (March 2026); natural gas: EIA residential price (March 2026); heating oil & propane: EIA Heating Oil and Propane Update (Midwest (PADD 2), Week ending 2026-03-30); energy constants: ENERGY STAR Thermal Energy Conversions. All U.S. public domain. These are statewide/regional averages and the comparison is an estimate, not a quote or engineering analysis. Actual savings depend on your home, climate, equipment and rates. Verify with an HVAC professional. See methodology and disclaimer.
Last updated: 2026-06-29