The Core Comparison
Heating costs depend on three factors: energy source price, system efficiency, and home insulation quality. This guide focuses on the first two.
Fuel cost per unit of heat
| Heating Source | Typical Price | Efficiency | Cost per Million BTU |
|---|---|---|---|
| Natural gas (ON) | $0.30/m³ | 96% (modern furnace) | ~$10 |
| Natural gas (AB) | $0.20/m³ | 96% | ~$7 |
| Heating oil | $1.75/L | 87% | ~$47 |
| Propane | $1.20/L | 95% | ~$43 |
| Electric baseboard (ON, 15¢/kWh) | $0.15/kWh | 100% | ~$44 |
| Electric baseboard (QC, 8¢/kWh) | $0.08/kWh | 100% | ~$23 |
| Heat pump (COP 3.0, ON 15¢/kWh) | $0.15/kWh | 300% | ~$15 |
| Heat pump (COP 3.0, QC 8¢/kWh) | $0.08/kWh | 300% | ~$8 |
A modern heat pump operating at COP 3.0 delivers competitive costs with natural gas in Ontario and is cheaper than gas in most other provinces.
Annual Heating Cost Comparison by Province
Estimated annual heating cost for a typical 1,800–2,000 sq ft home:
| Province | Natural Gas | Electric Baseboards | Cold-Climate Heat Pump |
|---|---|---|---|
| Alberta | $1,000–$1,600 | $2,200–$3,500 | $800–$1,400 |
| BC | $1,200–$1,900 | $1,200–$2,000 | $500–$900 |
| Ontario | $1,500–$2,200 | $2,000–$3,200 | $700–$1,200 |
| Quebec | $1,200–$1,800 | $1,000–$1,600 | $400–$700 |
| Manitoba | $1,200–$1,800 | $900–$1,500 | $400–$700 |
| Saskatchewan | $1,100–$1,700 | $2,000–$3,000 | $800–$1,300 |
| New Brunswick | $2,000–$3,000* | $2,000–$3,200 | $700–$1,200 |
| Nova Scotia | $2,500–$4,500* | $2,500–$4,000 | $800–$1,400 |
| Newfoundland | $2,500–$4,500* | $1,500–$2,500 | $600–$1,000 |
*Atlantic Canada relies heavily on heating oil; “gas” estimates here use heating oil pricing. Natural gas is not widely available in many Atlantic communities.
Gas Heating: Costs and Considerations
Natural gas furnace
A high-efficiency gas furnace (96% AFUE) is the most common heating system in Ontario, Alberta, BC, and the prairies.
- Equipment cost: $3,000–$6,000 installed
- Lifespan: 20–25 years
- Annual maintenance: $100–$200
Advantage: Low fuel cost per BTU in provinces with competitive gas rates Disadvantage: Fluctuating gas prices (volatile market); greenhouse gas emissions; may face future restrictions in some municipalities on fossil fuel use in new buildings
Natural gas availability
Natural gas is widely available in: BC, Alberta, Saskatchewan, Manitoba, Ontario, Quebec. It is not widely available in Atlantic Canada, PEI, and Yukon/NWT/Nunavut, where heating oil and propane are more common.
Electric Heating: Types and Costs
Electric baseboard heaters
The simplest form of electric heating — 100% efficient, but “100% efficient” means converting 1 kWh of electricity into 1 kWh of heat. At typical electricity prices, this is the most expensive heating option in provinces with rates above 12¢/kWh.
Electric furnace
Similar cost profile to baseboard heaters but with forced-air distribution. Also 100% efficient (COP 1.0). Common in older homes in BC and Ontario.
Cold-climate heat pump
A heat pump achieves COP 2.5–4.0, delivering 2.5–4 units of heat per unit of electricity. At COP 3.0 and 15¢/kWh electricity, the effective heating cost is equivalent to natural gas at $0.30/m³.
The Heat Pump Case
For most Canadians, the real comparison is not “gas vs. electric baseboards” but “gas furnace vs. heat pump.”
Gas furnace vs. cold-climate heat pump (Ontario example)
| Factor | Gas Furnace | Cold-Climate Heat Pump |
|---|---|---|
| Annual heating cost | $1,800 | $1,000 |
| Annual savings | — | $800 |
| Equipment cost | $4,000 installed | $13,000 installed |
| Available rebates | None | $10,000 (Enbridge HER+) |
| Net cost after rebates | $4,000 | $3,000 |
| Payback vs. gas | — | 3.75 years |
| 20-year total cost | $40,000 | $23,000 (equipment + fuel) |
The heat pump wins on 20-year total cost, especially with rebates.
Atlantic Canada: oil heat vs. heat pump
The economics are even more compelling where oil heating is the baseline:
| Factor | Oil Furnace | Cold-Climate Heat Pump |
|---|---|---|
| Annual heating cost | $4,000 (2,000L oil) | $1,000 |
| Annual savings | — | $3,000 |
| Net cost after rebates ($12,000 NS rebate) | — | ~$1,000–$3,000 |
| Payback | — | Under 2 years |
Factors That Affect Your Decision
Your current heating system age
If your furnace or boiler is over 15 years old and due for replacement, a heat pump upgrade makes strong economic sense — you’re replacing anyway, and the cost differential narrows.
Home insulation quality
A well-insulated home reduces heating costs regardless of fuel type. Before upgrading your heating system, consider whether insulation improvements make sense first. See home insulation costs.
Electricity rate in your province
The heat pump advantage grows with higher electricity rates because the efficiency multiplier is more valuable. At Quebec’s 8¢/kWh, a heat pump is extremely cost-effective.
Carbon pricing and future gas prices
Natural gas prices are volatile. With industrial carbon pricing remaining, future gas rate trajectories are uncertain. Electric heating systems are insulated from gas price volatility.