• Dividing $1661.50 by 1,285.9 results in a cost of $1.29 per therm.
• His gas furnaces had an efficiency of 92% when he bought them. If you don’t know what yours is, enter 90%, the number used by Energy Information Agency for a typical gas-fired furnace.
• Entering $1.29 and 92% into the calculator results in a cost of $13.98 per million BTUs.
• His PNM electricity rate is 14.45 cents per kilowatt-hour (kWh). Electric resistance heating is 100% efficient. So if he had baseboard heating it would be costing him $42.35 per million BTU. Very expensive.
• To find out what a heat pump would cost to run, he divides this number by 3 because a heat pump is about 3 times more efficient than electric heating, on average.  This gives him a cost of $14.12 per million BTUs.
• Conclusion: Based on actual bills, running a heat pump costs about the same as a gas furnace in this case.

Here is a hypothetical cost comparison example for the Albuquerque/East Mountains area based on commodity prices, not actual bills.

• DUCTS. If you have central air conditioning or forced-air heating with ductwork that comes through ceiling, wall or floor registers then you can install a Ducted System (also called a Split System).  The heat pump is “split” in two parts, with one outside and a second inside, typically located in the basement, attic or closet where an existing furnace or AC unit may be located  This centrally ducted system could serve the whole house or many rooms, often with no duct expansion required. Cold-climate heat pumps may require enlarging ductwork.  A variant called compact-ducted uses smaller inside units and short duct pathways to heat/cool only a few rooms. 
• If you have ducts but they are in the garage or attic and leak energy, you might be better off going for ductless (see below)

• NO DUCTS. If you have baseboard heaters, electric space heaters, radiators, wall or window units or do not have viable ductwork in your home or in specific rooms or additions, you will probably want Ductless or Mini-Split heat pumps.  A Mini-Split system consists of one outdoor unit and up to ~8 indoor air handlers or “heads.”  You can have a mini-split system heat/cool just one room or an entire house. A typical house has 4 or 5 indoor air handlers, each independently controlling the temperature in its “zone.”  If  you want your air handler to heat/cool an area larger than one room, either careful about leaving doors open to maintain air flow or have the contractor add vents over doorways to encourage air flow or install a short-ducted run from an air handler to other rooms.

 A mini-split can also be a good choice for additions where it is too expensive to extend your existing HVAC system. The NEEP guide suggests a ‘start small’ approach by trying out a 1- or 2-zone mini split where it can lower energy bills  (e.g., large, open great room) if your existing HVAC system still has some life in it. Usually seen mounted high up on a wall, the “heads” can be installed low or even in the ceiling.  

• If you have radiant floor heating, an hydronic (air-to-water) Heat Pump for radiant floor or wall heating and cooling can be installed. Water carries more thermal energy per volume than air so these units have the potential to be more efficient than air-to-air heat pumps. Hydronic heat pumps can also be retrofits for radiators/boilers and ducts/ductless systems and be used for pools and hot tubs.  If you are building a new house, install narrower loops, spaced closer together than standard when installing the floor tubing; that configuration will afford the highest efficiency match to a heat pump.  It is our understanding that hydronic heat pumps do NOT yet qualify for IRA tax credits or rebates.
• Renters may be interested in portable ​​window heat pumps. Wirecutter suggests these are best in places that have a warmer year-round climate. However are not expected to be approved for IRA rebates until 2024/2025, according to Rewiring America.

• New Mexico straddles climate zones 3-5 (higher numbers are colder). Consumer Reports says “modern heat pumps in a properly designed system can provide all the heat a home will need up through Zone 6.
• However, in its recent analysis, the Southwest Energy Efficiency Project (SWEEP) concludes the most practical and common retrofit scenario for Albuquerque and Zone 4/5 residents for the next 5-7 years will be to install a 2–stage heat pump paired with an efficient gas furnace (either existing or new) for backup heating when temperatures fall below ~25℉. More expensive alternatives to a heat pump/backup gas furnace or wood pellet stove combo include the installation of a cold-climate heat pump,  or 1- or 2- stage heat pump with an electric strip. The former could require expanded ductwork, and the latter scenario would significantly increase electricity costs on cold days, erasing some of the heat pumps economic advantages.

• To see Zone 4 & 5 scenarios for different house sizes and existing heat systems, visit the bottom of Loveelectric.org’s  webpage.

• If you live in warmer, southern New Mexico in Zone 3, no backup is needed. 

• In general, the more you spend on equipment now, the less you’ll spend on electricity later.  
• According to Carbon Switch which conducted a survey, heat pump installations range from $3,500 to $20,000, depending on the size of the home, with a $14,000 average cost after rebates (mostly from states). For ductless mini splits, the site reports, expect a range of $7,000 to $25,000 depending on the number of zones.

Heat pumps that collect heat from air are less expensive to install than heat pumps that harvest it from the ground. Air-source heat pumps are the most common heat pump, with nearly 4 million sold in 2021. The advantage of ground-sourced or geothermal heat pumps is that ground temperatures are more constant throughout the year, and during the winter, the earth is warmer than the air while in summer the ground is cooler.  These systems cost much more than air-source units but the extra cost may be recouped in energy savings in 5-10 years, according to the Department of Energy. About 50,000 geothermal heat pumps are installed in the U.S. annually. Water-source heat pumps are less expensive than ground-source because they get their heat from the bottom of a pond. 

• Hybrid heat pumps may combine air, water and/or ground sources, integrate solar panels or package an electric heat pump with a gas or electric furnace. Packaged heat pump units lump all the components together inside one box outside. They are found outside mobile homes, apartment buildings and commercial buildings.
• Prices also vary according to how well the equipment is able to adjust the temperature with the least amount of energy. One-stage, or one-speed, heat pumps have the least finesse and lower efficiency, and generate the most noise. They run at all on or all off.   More expensive two-stage heat pumps switch between 70% and 100% compressor speed to adjust the temperature. The most expensive upfront cost belongs to highly efficient, quieter inverter or variable compressor speed heat pumps that work like cruise control on a car, constantly adjusting needed heating or cooling by operating between 40%-100% capacity in 1% increments. Variable heat pumps are the most efficient, so they have the lowest electricity cost, but often the highest upfront and repair costs.

• Altitude – Air-source heat pumps have less air to work with at high altitudes so your contractor should increase the capacity or size of a ducted heat pump system accordingly. Mini-splits installed to heat or cool a room only should be less of a problem.