Natural gas costs less to run in Michigan. A heat pump costs more per unit of heat, but it is the only one of the two that also cools the house, and that gap shifts with a few local facts: how cold winter gets, what the house already has, and whether you need air conditioning.
The short answer for Michigan
A natural gas furnace at 97% AFUE delivers one million Btu of heat to the house for $10.86. A heat pump at 8.1 HSPF2 (a seasonal COP of about 2.4) costs $26.58 for the same million Btu. Electric resistance, such as baseboard heat, costs $63.10. The cheapest system to run here is the gas furnace, at $15.72 less per million Btu than the heat pump. Those figures were computed from average residential electricity and natural gas prices from the U.S. Energy Information Administration (EIA), ENERGY STAR efficiencies and EIA’s energy conversions.
Read them for what they are. This is a running cost on the same unit of heat, fuel against fuel. It is not a yearly bill, which depends on the size of the house, how leaky it is and how many winter days you keep it warm. It is not the price of the equipment either, and installation can swing the long-term math in either direction.
The heat pump does not come off badly in this table. Against baseboard heat it is far cheaper to run, and that is the comparison that counts in a house with no gas line. The gap with gas is real, though, and a long Michigan winter gives it plenty of time to add up. If gas already runs to the house, the furnace is the cheaper system to run; if it does not, a heat pump beats resistance heat by a wide margin.
The sections below cover what narrows that gap, what widens it and when the cheaper option is still the wrong call.
What each option costs to run in Michigan
| System | Efficiency used | Cost per million Btu delivered |
|---|---|---|
| Natural gas furnace | 97% AFUE | $10.86 |
| Heat pump | 8.1 HSPF2 (seasonal COP about 2.4) | $26.58 |
| Electric resistance (baseboard) | 100% efficient | $63.10 |
Electricity is priced at 21.53 cents per kWh, the average residential price for the year to date through July, from the EIA’s Electric Power Monthly, Table 5.6.B. It is a statewide average. Utilities and rate plans differ, so use it to compare fuels, not as a prediction of your bill. The electricity side of the math uses 3,412 Btu per kWh.
The gas figure rests on EIA’s average residential natural gas price and about 1,037 Btu per cubic foot of gas. The per-cubic-foot price is not quoted here, so for a current number, look at your own utility’s rate sheet.
Efficiency matters as much as the fuel price because the two systems do different jobs. A gas furnace burns fuel and turns 97% of it into heat. Resistance heat turns every unit of electricity into exactly one unit of heat. A heat pump moves heat that already exists outdoors, so a seasonal COP of about 2.4 means each unit of electricity brings in more than two units of heat. Electricity costs far more than gas per Btu, so the heat pump’s efficiency narrows the distance to gas without erasing it, and it erases most of the distance to baseboard.
The label has a detail worth knowing. ENERGY STAR asks 8.1 HSPF2 of a ducted heat pump but 8.5 of a non-ducted one, for the same badge. A ductless system has no duct losses, so it starts with an advantage and has to be better to earn the label. Both must also reach 15.2 SEER2, but SEER2 rates cooling and HSPF2 rates heating, so compare the same letter between two units. These are minimums to earn the label, not typical values. What HSPF2 Measures, and Why Ductless Asks for More goes deeper into the rating. Compare systems on the cost of delivered heat, not on the price of a kWh or a cubic foot of gas.
How cold it gets, and what that does to a heat pump
Detroit Metro Airport, the reference station for Michigan, averages about 6,067 heating degree days a year (base 65°F). The figure adds up, for every day of the year, how far the mean temperature sat below 65°F, and it is what turns a climate into a cost. Twice the degree days means roughly twice the fuel for the same house. Over a season this long, even a modest difference per million Btu becomes a real difference on the bill.
The same station shows a coldest-month mean daily minimum of 19.2°F. That is an average of the nightly lows, so some nights fall well below it. This is also a single station. Northern Michigan and the Upper Peninsula can run colder than the Detroit area, and a house there faces a harder winter than these numbers suggest.
That matters because the heat pump figure in the table is a seasonal average. In deep cold, a heat pump’s efficiency drops and it draws more electricity per unit of heat. On the coldest nights, a backup (electric resistance strips or a furnace) carries part of the load. The $26.58 figure is therefore a fair season-long yardstick, but it is not what the system costs on a 10-degree night.
Cold-climate heat pumps are designed for this, and many Michigan homes run them. How a system holds up depends on the model, the sizing and the house. The article How Cold Is Too Cold for a Heat Pump explains where the limits are, without a single magic threshold.
In Michigan, plan a heat pump together with its backup, and size the backup as carefully as the heat pump.
What homes in Michigan already heat with
The EIA’s 2020 Residential Energy Consumption Survey (RECS) gives state shares: 83% of Michigan homes heat with a furnace, 9% with a steam or hot-water boiler, 77% with natural gas, 10% with electricity and 9% with propane. For central heat pumps and for fuel oil or kerosene, the survey does not publish a figure, because the estimate was suppressed as unreliable. That is not the same as zero.
Those shares describe what was installed, which says which fuel was cheap and available when the houses were built. They are not a recommendation, and they are state numbers, not a count for your street. Still, they show that most homes here already have a gas furnace and the ductwork that goes with it, which is the setting where the cost table favors gas most clearly.
A house without a gas line changes the comparison. Propane homes cannot use the $10.86 figure, since propane has its own price that comes from your supplier. For those houses, the table’s contest is the heat pump against resistance heat, and the heat pump wins easily.
A boiler house is a different conversion altogether. With radiators or baseboard hot water there are no ducts to reuse, so a heat pump usually means a ductless setup or new ductwork. The tradeoffs are laid out in Ductless or Central, and Heating a Home in Michigan covers the wider picture. If you have a boiler and radiators, treat a heat pump as a different conversion, not a swap of one furnace for another.
When the other choice wins
The cheaper-to-run option is not always the right call. Four situations tip the decision toward the heat pump or toward keeping what you have.
- No gas service. Without a gas line, the real comparison is a heat pump against resistance heat or propane, and the heat pump has the clear running-cost edge over resistance heat.
- A need for air conditioning. Detroit Metro Airport logs about 847 cooling degree days a year, so cooling is a real part of the season. A heat pump handles both jobs, and ENERGY STAR sets a 15.2 SEER2 minimum for the cooling side.
- A dual-fuel setup. A heat pump paired with a gas furnace lets the heat pump handle milder weather, while the furnace takes over in the coldest stretch. The control settings decide when the switch happens.
- An old system with years left. A working furnace that still has life in it is worth keeping for now.
The air conditioning case deserves a second look. If a central AC unit is near the end of its life, one heat pump that replaces it and shares the furnace’s duct system can make more sense than a new AC beside an aging furnace. That is a bundling argument, not a running-cost argument, and the dollar figures depend on the quotes you get.
For an aging furnace, the question is repair or replacement, not heat pump or gas. Repairing a Furnace or Replacing It walks through that decision. Keep a working gas furnace, and add a heat pump only if you also need cooling or want a dual-fuel setup.
Common questions
Is a heat pump cheaper than a gas furnace in Michigan?
Not to run. On EIA-based prices, a gas furnace at 97% AFUE costs $10.86 per million Btu delivered, against $26.58 for a heat pump at 8.1 HSPF2. Equipment and installation costs are separate and can change the overall math.
Is a heat pump cheaper than baseboard heat?
Yes. Baseboard heat costs $63.10 per million Btu delivered at 21.53 cents per kWh, so the heat pump at $26.58 is far cheaper to run than electric resistance.
Can a heat pump handle a Michigan winter?
Detroit’s coldest month averages a nightly low of 19.2°F, and some nights run colder. A heat pump’s efficiency drops in deep cold, so a backup of resistance strips or a furnace carries the coldest nights.
Does the $10.86 or $26.58 figure show my yearly bill?
No. Those numbers compare fuels on the same unit of heat. Your bill depends on the house, your local rates and how much heat you use over the season.