Against electric baseboard, a heat pump is the clear winner on running cost in South Dakota. Against a gas furnace, the answer turns on one number the verified data here doesn’t include: what your utility charges for natural gas. Below are the figures that are solid, the climate that tests them, and the cases where the cheaper system is the wrong choice.
The short answer for South Dakota
At the state’s average residential electricity price, a heat pump delivers a million Btu of heat for $17.90. Electric resistance (baseboard, 100% efficient) costs $42.50 for the same heat. That leaves the heat pump $24.60 cheaper per million Btu. These figures are computed from EIA residential prices and ENERGY STAR efficiencies, and the heat pump number assumes the ENERGY STAR minimum of 8.1 HSPF2, a seasonal average.
Natural gas is the missing piece. The data behind this comparison carries no South Dakota gas price, so I won’t invent a cost per million Btu for a gas furnace. Your gas utility publishes its residential rate. Take that price per unit of gas, account for the furnace’s efficiency, and set it against $17.90. That is the whole comparison.
Two limits apply. This is running cost on the same unit of delivered heat, not a yearly bill, because a yearly bill depends on the size, insulation and air leakage of your house. It is also not the price of the equipment, which can shift the math over a system’s life. Treat $17.90 as the number a gas furnace has to beat, and get your utility’s gas rate before deciding.
One more point. If your only choices are baseboard resistance and a heat pump, the question is closed. More than half the cost of resistance heat disappears when the same electricity runs through a heat pump.
What each option costs to run in South Dakota
| System | Efficiency used | Cost per million Btu delivered |
|---|---|---|
| Electric resistance (baseboard) | 100% efficient | $42.50 |
| Heat pump | 8.1 HSPF2 (seasonal COP about 2.4) | $17.90 |
| Natural gas furnace | No gas price in the verified data | Ask your local gas utility |
The electricity price behind the table is 14.50 cents per kWh, the average residential price year-to-date through July 2026, from the U.S. Energy Information Administration’s Electric Power Monthly (Table 5.6.B). It is a statewide average. Your utility and rate plan may differ, so use it to compare fuels, not to predict your bill. The conversion is EIA’s: one kilowatt-hour carries 3,412 Btu.
Efficiency matters as much as the fuel price because the two multiply. Baseboard turns each kilowatt-hour into one kilowatt-hour of heat, nothing more. A heat pump moves heat from outside air rather than making it, so a seasonal COP of about 2.4 means roughly 2.4 units of heat for each unit of electricity. The same logic applies to gas. A cheap fuel burned in a low-efficiency furnace can lose to a pricier fuel used well. Compare cost per delivered million Btu, never cost per kWh against cost per unit of gas.
Why ductless units must score higher
ENERGY STAR sets its minimums at 8.1 HSPF2 for ducted split and single-package heat pumps, and 8.5 for non-ducted split systems. A ductless unit has no duct losses, so it starts with an advantage and has to be better to earn the same label. These are minimums to earn the badge, not typical values. What HSPF2 Measures, and Why Ductless Asks for More explains the rating in detail. HSPF2 measures heating and SEER2 measures cooling, so compare the same letter across models.
How cold it gets, and what that does to a heat pump
Sioux Falls, the reference station, averages about 7,248 heating degree days a year (base 65°F). That total adds up, for every day, how far the mean temperature sat below 65°F. It is a long, serious heating season. The mean daily minimum of the coldest month is 8.5°F (NOAA NCEI Climate Normals, 1991-2020). Those are one station’s numbers, and other parts of the state can run colder.
Heat pump efficiency falls as outdoor air gets colder. The $17.90 figure uses a seasonal COP of about 2.4, an average across the whole winter, not a guarantee for every hour. On the coldest nights the real COP sits below that average, and in the mildest weeks of fall and spring it sits above. The seasonal figure is honest for the winter as a whole, but it hides a hard stretch in the middle.
That is why a backup matters here. In deep cold, electric resistance strips or a gas furnace carry the coldest nights, and every hour the backup runs costs closer to the $42.50 resistance figure than to $17.90. So a South Dakota heat pump is rarely a single-source system. It handles the long shoulder seasons and most of the winter efficiently, while the backup covers the extremes.
No single temperature tells you where a given heat pump stops being efficient, because models differ. Check the manufacturer’s performance data at low outdoor temperatures for the exact unit. How Cold Is Too Cold for a Heat Pump covers how to read those numbers. Choose the heat pump on its published cold-weather output, and size the backup for the coldest nights, not the average ones.
What homes in South Dakota already heat with
The Energy Information Administration’s 2020 Residential Energy Consumption Survey gives a clear picture of what is installed. Furnaces heat 75% of South Dakota homes. Natural gas is the main heating fuel in 58%, electricity in 25%, and propane in 14%. A steam or hot-water boiler heats 7%. The survey does not publish a figure for central heat pumps or for fuel oil and kerosene, because those estimates were suppressed as unreliable. That is not the same as zero.
These shares say what was installed, and so which fuel was cheap when the houses were built. They are not a recommendation. They are also state shares from a national survey, not a count for your county.
What they mean for the choice is practical. A house with a gas line and a furnace already has the backup in place, so adding a heat pump can work as a dual-fuel setup. A house on propane has no gas service, which changes the comparison. This data carries no propane price, so get a current quote before comparing it with $17.90. A boiler house is a different conversion altogether. With no ductwork, a heat pump usually means ductless units or new ducts, and Ductless or Central walks through that decision. For the wider picture of how homes here stay warm, see Heating a Home in South Dakota. Start from your existing equipment and fuel, because it decides which conversion you are actually pricing.
When the other choice wins
Cheaper to run is not always the right call. The first exception is service. A house with no natural gas line can’t compare against a gas furnace on running cost at all, and propane or electricity become the real contenders. In that case the heat pump’s $24.60 advantage over resistance is the comparison that matters.
The second is cooling. Sioux Falls averages about 847 cooling degree days a year, enough that summers need real air conditioning. A heat pump cools as well as heats, so it can replace a separate air conditioner and change what the total project costs. A gas furnace still needs its own cooling. ENERGY STAR sets a floor of 15.2 SEER2 for the cooling side of heat pumps, so look at that letter as well as HSPF2.
The third is dual-fuel. Where a gas furnace already exists, pairing it with a heat pump gives you the heat pump’s efficiency most of the winter and gas on the coldest nights. That setup can beat either system alone, and it avoids resistance strips running at $42.50 per million Btu during the deepest cold.
The fourth is age. A furnace with years left in it is worth keeping until it needs real money. Repairing a Furnace or Replacing It lays out how to weigh a repair against replacement. A cheaper running cost on paper doesn’t repay a full replacement if the old system still works. Switch when the old system fails or when you need cooling, not just because the heat pump’s per-Btu figure looks better.
Common questions
Is a heat pump cheaper to run than a gas furnace in South Dakota?
Against electric resistance, yes, by $24.60 per million Btu. Against gas, it depends on your utility’s gas rate, which isn’t in the verified data. Compare it with the heat pump’s $17.90 per million Btu.
Will a heat pump keep up on the coldest nights?
Efficiency drops in deep cold. Sioux Falls sees a coldest-month mean daily minimum of 8.5°F, so plan on a backup of resistance strips or a furnace for the worst nights.
Does the $17.90 figure show my yearly heating bill?
No. It compares fuels on one unit of delivered heat at average prices. Your yearly bill depends on your house, your rate plan and how much the backup runs.
Why does ENERGY STAR require 8.5 HSPF2 for ductless and 8.1 for ducted?
Ductless systems have no duct losses, so they begin with an advantage. They must perform better to earn the same label as a ducted unit.