Heat Pump or Gas Furnace in Alaska: Which Costs Less to Run?

In Alaska, a natural gas furnace costs less to run than a heat pump, provided the house has gas service. The heat pump still beats electric baseboard by a wide margin. Both statements hold at the state’s average residential prices. They shift with the house, the utility and the coldest weeks of winter, which is where the rest of this comparison goes.

The short answer for Alaska

Start with the cost of delivering one million Btu of heat to the house. Using EIA average residential prices and ENERGY STAR efficiencies, a natural gas furnace at 97% AFUE comes to $12.88. A heat pump at 8.1 HSPF2 (seasonal COP about 2.4) comes to $33.44. Electric resistance, such as baseboard at 100% efficiency, comes to $79.40. The gas furnace is the cheapest to run here, $20.56 less per million Btu than the heat pump.

Read those numbers for what they are. This is running cost on the same unit of delivered heat, computed from statewide averages. It is not a yearly bill, because that depends on how big the house is, how tight it is and how many winters of wind it has seen. It is not the price of the equipment or the installation either. The gas price behind the $12.88 is the EIA’s statewide residential average, and gas rates vary by utility and by community. Get your own per-unit rate from your gas utility before treating the gap as yours.

If a gas line already serves the house, the furnace is the cheaper system to run; if it doesn’t, a heat pump is the cheaper electric option by a wide margin.

The heat pump lands in the middle for a simple reason. Electricity in Alaska is expensive, so even a machine that moves heat instead of making it can’t catch a gas flame. But it delivers more than twice the heat per unit of electricity that baseboard does, and that is enough to cut the cost of electric heat well under half.

What each option costs to run in Alaska

The electricity price behind the first two rows is 27.09 cents per kWh. That is the average residential price, year-to-date through July, in the U.S. Energy Information Administration’s Electric Power Monthly, Table 5.6.B. The gas row comes from the EIA’s average residential natural gas price for the state, converted at about 1,037 Btu per cubic foot, with electricity converted at 3,412 Btu per kWh. I’m not quoting the gas price itself because it isn’t among the verified figures here, only the delivered-heat result. Both prices are statewide averages. Use them to compare fuels, never as your bill.

Efficiency matters as much as the fuel price because you pay for the fuel, not for the heat. A kilowatt-hour run through baseboard gives back one kilowatt-hour of heat. Through a heat pump with a seasonal COP of about 2.4, the same kilowatt-hour yields about 2.4 times as much. A 97% AFUE furnace turns nearly all of its gas into heat in the house. So a fuel can look cheap per unit and still lose, or look pricey and still win. Compare fuels on cost per unit of delivered heat, never on price per kWh or per cubic foot.

One more efficiency detail, if you are shopping. ENERGY STAR asks for at least 8.5 HSPF2 from non-ducted split systems and at least 8.1 from ducted ones. A ductless unit has no duct losses, so it starts with an advantage and must clear a higher bar to earn the same label. The letters also matter: HSPF2 measures heating and SEER2 measures cooling. What HSPF2 Measures, and Why Ductless Asks for More goes further into that rating.

How cold it gets, and what that does to a heat pump

Anchorage International Airport logs about 9,979 heating degree days a year (base 65 F), according to NOAA’s 1991-2020 climate normals. The count adds up, for every day of the year, how far the mean temperature sat below 65 F. It is the number that turns a climate into a fuel bill: a house in a place with twice the degree days burns roughly twice the fuel. At the same station the mean daily minimum of the coldest month is 11.0°F. That is an average low, not a record, so individual nights run colder.

That is one reference city. A mountain valley or an interior location can run far colder, and in a colder part of the state the heating season runs longer and the coldest stretch bites harder. Anchorage’s figures describe a hard heating climate, not every Alaska address.

Here is where the heat pump number needs a caveat. The $33.44 uses a seasonal average efficiency, the ENERGY STAR minimum for a ducted system. In deep cold a heat pump’s efficiency drops, which means it uses more electricity per unit of heat precisely when the house needs the most. A gas furnace doesn’t have that problem; its 97% AFUE doesn’t sag with the thermometer. So the real gap on the coldest nights is likely wider than $20.56, and the heat pump’s seasonal average hides it. How Cold Is Too Cold for a Heat Pump covers the mechanics.

That is why a backup matters in this climate. Resistance strips built into the unit, or a furnace working alongside it, carry the coldest nights when the heat pump can’t keep up on its own. Price the heat pump as a system with a backup, and expect the running cost on the coldest nights to be worse than the seasonal $33.44. Note the strips are resistance heat, so on those nights you are paying something closer to the $79.40 rate for the share they supply.

What homes in Alaska already heat with

The EIA’s 2020 Residential Energy Consumption Survey puts natural gas as the main heating fuel in 57% of Alaska homes, fuel oil or kerosene in 24% and electricity in 13%. By equipment, 37% of homes use a furnace and 36% use a steam or hot-water boiler. The survey does not publish a figure for central heat pumps or for propane, because those estimates were suppressed as unreliable. That is not the same as zero, only a gap in the data.

Read those shares as history, not advice. They show which fuel was cheap and available when the homes were built. They are also state numbers from a national survey, not a count of your street. But they do say who the comparison applies to. For a gas-heated house, the $12.88 figure is the benchmark a heat pump has to beat, and on running cost alone it doesn’t. For the roughly one home in four on fuel oil or kerosene, the gas figure doesn’t apply, and there is no oil price among the verified figures to compare against.

A boiler house is a different conversion altogether. Hot-water radiators and baseboard have no ductwork, so a heat pump there usually means ductless indoor units or new ducts, and Ductless or Central walks through that choice. A house with no gas line has no gas option at all, and the choice becomes heat pump versus electric resistance, versus whatever else is delivered. For the wider picture of fuels and winters across the state, see Heating a Home in Alaska. Start from what’s already in the basement: the gas line and the distribution system decide which comparison you are really making.

When the other choice wins

The cheaper-to-run system isn’t always the right call. The first case is the obvious one: no gas service. Without a line to the house, the $12.88 figure is a number for someone else, and the heat pump’s $33.44 against baseboard’s $79.40 is the comparison that counts. Extending a gas line is its own project, and its cost isn’t something these figures cover.

Cooling is a weaker argument here than almost anywhere. Anchorage records only about 8 cooling degree days a year, so the air conditioning a heat pump provides is a minor benefit, not a selling point. Anyone in Alaska choosing a heat pump should be choosing it for heating.

A dual-fuel setup is the middle path: a heat pump handles the milder hours and a gas furnace takes over when the cold gets serious. It addresses the efficiency drop described earlier, using the furnace’s steady output on the coldest nights. Whether it pays off depends on the house and on how the two systems are controlled, so get an actual quote instead of assuming it.

Last, an existing furnace with years left usually beats a new system of any kind, since the cheapest heat is the equipment you already own. Repairing a Furnace or Replacing It sets out how to weigh age against repair costs. Keep a working gas furnace, and add a heat pump only if you have a reason beyond running cost.

Common questions

Is a heat pump cheaper than electric baseboard in Alaska?

Yes. At the same average prices, a heat pump at 8.1 HSPF2 comes to $33.44 per million Btu delivered, while electric resistance comes to $79.40.

Will a heat pump still work at the coldest temperatures?

It keeps running, but its efficiency drops as the cold deepens. The coldest-month mean daily minimum at Anchorage is 11.0°F, and nights go lower. A backup, either resistance strips or a furnace, carries the coldest nights.

Is $12.88 what I’ll pay to heat with gas?

No. It is the cost of one million Btu of delivered heat at statewide average gas prices and 97% AFUE. Your yearly bill depends on the house and on your utility’s rates.

Why does ENERGY STAR ask more of ductless heat pumps?

Non-ducted split systems must reach at least 8.5 HSPF2, against 8.1 for ducted ones. A ductless system has no duct losses, so it starts ahead and must be more efficient to earn the same label.