Energy-efficient heating and cooling on us

Multi-unit residential buildings, including retirement homes and homes less than six months old are eligible for electric heat pump rebates. Participants do not need to disconnect their natural gas service, but must be a first-time installer of an eligible electric heat pump system.

Effective April 1, 2025, the Federal Carbon Charge (FCC) under the Greenhouse Gas Pollution Pricing Act has been set to zero. This action has changed the cost spread between natural gas and electricity significantly¹. As a result, this changes the economics of electric heat pump operation, particularly for natural gas customers who are looking to offset some or all of their space heating energy consumption with an electric heat pump. Natural gas customers who have installed or are planning to install an electric heat pump for space heating may experience increases in their home’s total energy bills². The homeowner should work with their HVAC Contractor to ensure their equipment and controls have been/will be installed and set-up to meet their specific goals for space heating.

Footnotes:

¹ The fuel price spread in Ontario without the FCC and including the Ontario Electricity Rebate (OER) is approximately 4:1 as of May 1, 2025. This means that electricity energy costs are approximately 4 times those of natural gas energy costs per unit of equivalent energy. In the Sarnia area this same rating is 3.97:1. This cost spread reflects energy pricing only and is based on the below published resources:

Electricity rates as of May 1, 2025, for the Sarnia area:

• Bluewater Power

Natural Gas supply prices as of July 1, 2025, in the Sarnia area:

• Union South Rate Zone

To compare prices per unit of equivalent energy, measurements for natural gas consumption (m³) are converted into the same energy basis as electricity (kWh). See conversion factors published by the Canada Energy Regulator.

² The consumer economics of fuel switching from natural gas to electricity are largely dependent on the fuel price spread, the efficiency of the heat pump, the difference in costs of purchasing and installing a heat pump relative to a conventional gas heating system, and whether the consumer has other gas appliances in the home. For the Sarnia Saves pilot, the cost of the heat pump is fully covered but the difference in fuel spread (i.e. operating costs) needs to be considered as well as whether natural gas service is continued to fuel other equipment and appliances in the home once space heating has been fully converted to electricity.

The efficiency of heat pumps, which is expressed as a coefficient of performance (COP), typically ranges from 2-4 for air source heat pumps (Plumbing and HVAC Magazine, Edition: The Contractor’s Guide to Heat Pumps, pg 7, April 2025). This translates to an effective efficiency of 200%-400%, meaning that for every unit of electricity used, the heat pump moves 2-4 units of heat into the home.

The efficiency of natural gas furnaces is expressed as Annual Fuel Utilization Efficiency (AFUE). The average high efficiency natural gas furnace has an AFUE between 90% - 98.5% (https://www.energy.gov/energysaver/furnaces-and-boilers). This means that the furnace converts 90-98.5% of the energy in the natural gas into heat for the home.

To illustrate the potential residential energy costs of producing the equivalent heat content using an air source heat pump vs. a natural gas furnace, please see the chart below. This chart is based on approximate residential electricity prices from Bluewater Power (using a weighted average price per kWh of $0.09807/kWh) and natural gas price ($0.256/m³) in the Union South rate zone for Sarnia, which translates to equivalent energy costs of ~$0.0247/kWh. The chart is provided for illustrative purposes only and is not intended to represent energy cost impacts specific to your property. Note that fixed monthly charges for electricity and natural gas are not included in this comparison.