Calculating your energy costs

At a glance: 

• Given current electricity rates and rising gas costs, Air Source Heat pumps are an affordable heating and cooling option.
• For homeowners looking to lower their energy bills, upgrading to more energy efficient systems can make the most sense. 
• Low upfront installation costs may have higher annual operating costs

Comparing Heating and Cooling Costs

The chart below presents annual cost estimates for heating and cooling based on different systems, reflecting the latest fuel and electricity rates in Massachusetts for a 1600 sq foot house:

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Breaking Down the Costs

Electric Baseboard + Window Unit

Due to rising electricity rates, electric baseboard heating has become even more expensive to operate. Massachusetts residents are currently paying an average of 33 cents per kilowatt-hour (kWh) for electricity, significantly higher than the national average. As a result, this system remains the least cost-effective choice, with a total cost ranging from $2,841 to $5,857 per year.

Oil Boiler + Window Unit

Heating oil prices have risen in Massachusetts, increasing the operating costs of oil boilers. The total annual expense for this system now falls between $1,623 and $3,117. While it is more affordable than electric baseboard heating, it still lacks efficiency and sustainability.

Gas Furnace + Central AC

Recent rate increases for natural gas have increased the cost of gas furnace systems. For some homeowners gas furnaces paired with central air conditioning remain a relatively cost-effective solution, with a total yearly cost between $1,000 and $2,000.

Air Source Heat Pump

Air source heat pumps continue to be one of the most energy-efficient options. Despite rising electricity rates, their efficiency in both heating and cooling results in an annual cost ranging from $1,100 to $2,300. Their ability to transfer heat rather than generate it makes them a highly effective option for homeowners looking to cut costs while maintaining year-round comfort.

Choosing the Best System for Your Home

When selecting a heating and cooling system, consider the following factors:

• Initial Installation Costs: Heat pumps and gas furnaces require higher upfront investments but offer lower operating costs over time.
• Energy Efficiency: The air source heat pump remains the most efficient system, reducing both heating and cooling expenses.
• Fuel Availability: Rising fuel and electricity costs may influence your decision, depending on local utility rates.
• Long-Term Savings: While some systems like electric baseboard or boiler systems have low installation costs, their long-term energy expenses make them the least cost-effective choice.
• Alternative Energy Sources: Exploring renewable energy options, such as solar panels, can provide long-term savings and reduce dependence on fluctuating energy markets.
• Maintenance: Some systems are easier to maintain, read our post about how to maintain your heat pump. 
• Safety: Heat pumps do not use combustion and are healthier and safer for families, especially those who may have respiratory problems or respiratory sensitivity like young children and the elderly.
  

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Conclusion

These numbers are based on a specific size and type of home and there are so many more factors to consider than what we’ve covered in this blog post. If you’d like to learn more about your specific energy costs, get a personalized plan for upgrading to a more energy efficient system, verify your eligibility for financing and rebates to make the switch even more affordable - then set up your Tetra profile. Answer a few questions and get personalized results instantly.