What Is a Heat Pump?
A heat pump is an electrically powered heating and cooling system that moves heat rather than generating it. In winter, it extracts heat from outdoor air (even cold air) and moves it inside. In summer, it reverses — working as an air conditioner. Because it moves heat rather than burning fuel, a heat pump delivers 2–4 units of heat per unit of electricity consumed.
This efficiency ratio (called the Coefficient of Performance, or COP) is why heat pumps dramatically reduce energy costs for households currently using electric resistance heating or heating oil.
Types of Heat Pumps
| Type | Best For | Cost Range (Installed) | Efficiency |
|---|---|---|---|
| Air-source (mini-split) | Smaller homes, room-by-room | $3,000–$8,000 | COP 2.5–4.0 |
| Air-source (central/ducted) | Homes with existing ducts | $7,000–$15,000 | COP 2.5–3.5 |
| Cold-climate air-source | All of Canada | $8,000–$18,000 | COP 2.0–3.5 at −15°C |
| Geothermal (ground-source) | New builds, rural properties | $18,000–$30,000 | COP 3.5–5.0 |
| Heat pump water heater | Any home | $1,800–$3,000 | COP 2.5–3.5 |
For most Canadian retrofits, a cold-climate air-source heat pump is the most practical option.
Cost Breakdown
Installation costs by province
Labour rates and installation complexity vary across Canada:
| Province | Typical Central System Installed Cost |
|---|---|
| British Columbia | $10,000–$18,000 |
| Alberta | $9,000–$16,000 |
| Ontario | $9,000–$17,000 |
| Quebec | $8,000–$14,000 |
| Nova Scotia | $8,000–$15,000 |
| New Brunswick | $8,000–$14,000 |
| Manitoba | $9,000–$16,000 |
Homes without existing ductwork (typical for mini-split systems) have lower installation costs since no duct modifications are needed.
Government Grants and Rebates
Combining federal and provincial programs can dramatically reduce out-of-pocket costs.
Federal programs
Oil to Heat Pump Affordability Grant
- Up to $15,000 for low- and moderate-income households converting from oil heating to a heat pump
- Eligibility: household income under $113,000; currently heat with oil, propane, or electric resistance
- Administered by Natural Resources Canada
Canada Greener Homes Loan
- Up to $40,000 interest-free for EnerGuide-recommended retrofits including heat pumps
- Repaid when home is sold or term ends
- Check NRCan website for current availability
Provincial programs (2026)
| Province | Program | Heat Pump Rebate |
|---|---|---|
| BC | CleanBC / BC Hydro Efficient Home | Up to $16,000 cold-climate ASHP |
| Ontario | Enbridge Home Efficiency Rebate Plus | Up to $10,000 |
| Nova Scotia | Efficiency Nova Scotia | Up to $12,000 cold-climate ASHP |
| New Brunswick | NB Power Home Energy Efficiency | Up to $5,000 |
| PEI | EfficiencyPEI | Up to $10,000 |
| Quebec | Hydro-Québec Thermopompe program | Up to $2,000 |
| Manitoba | Efficiency Manitoba | Up to $3,000 |
| Newfoundland | NL Hydro programs | Varies |
Programs change — verify current amounts with your provincial energy efficiency agency.
Combined example: Nova Scotia
- Installation cost: $12,000
- Oil to Heat Pump Affordability Grant (federal): −$10,000
- Efficiency Nova Scotia rebate: −$6,000 (can stack up to the cost)
- Net out-of-pocket: ~$0–$2,000 for a system that replaces an oil furnace
Annual Savings on Heating Bills
The savings depend on what you’re replacing. The comparison versus oil heating is most dramatic.
Replacing oil heating (most common Atlantic Canada scenario)
| Metric | Oil Furnace | Cold-Climate Heat Pump |
|---|---|---|
| Annual heating consumption | 2,500L oil/year | 6,000 kWh electricity |
| Annual cost (oil at $1.80/L) | $4,500 | — |
| Annual cost (electricity at 15¢/kWh) | — | $900 |
| Annual savings | — | $3,600 |
| Payback (before rebates, $12,000 system) | — | 3.3 years |
Replacing electric baseboard heating (common in BC/Quebec)
| Metric | Baseboard Heaters | Heat Pump |
|---|---|---|
| Annual heating (10,000 sq ft equivalent) | 15,000 kWh | 5,500 kWh |
| Annual cost at 12¢/kWh | $1,800 | $660 |
| Annual savings | — | $1,140 |
| Payback (before rebates, $10,000 system) | — | 8.8 years |
| Payback (after $6,000 in rebates) | — | 3.5 years |
Choosing a Contractor
The rebate programs above often require installation by a registered or certified contractor. Key steps:
- Get 3 quotes — prices vary by 20–30% across contractors
- Confirm HRAI (Heating, Refrigeration and Air Conditioning Institute) certification
- Verify EnerGuide energy audit requirement — some programs require this before installation (and it can generate a rebate of $300–$600 for the audit itself)
- Ask about rebate processing — many contractors submit rebates on your behalf; confirm who handles paperwork
- Check equipment eligibility — not all models qualify for all rebates; ask for the CSA/ENERGY STAR certified model sheet