This guide explains, in plain language, how the calculator estimates heat pump payback. You do not need an engineering background to use it. The goal is to show what assumptions are being made so you can judge whether they match your home.
At a high level, the calculator compares what heating costs you today with what it would likely cost after installing a heat pump. The difference is your estimated annual savings. Payback is simply the net upfront cost divided by those savings.
If savings are very small or negative, the calculator will tell you that payback is not achievable under the current assumptions. That does not mean a heat pump is a bad choice. It means the financial case depends heavily on your inputs.
The big picture
Every payback estimate comes down to three questions:
- What does heating cost you today?
- What would heating cost with a heat pump?
- How much did the heat pump actually cost after rebates?
The calculator builds those answers from a mix of your inputs and typical Canadian climate and efficiency models. Think of it as a structured estimate, not a guarantee. It is designed to help you compare scenarios and understand what matters most.
It is not an energy audit. It is a structured estimate that helps you compare scenarios.
How we estimate your current heating cost
There are two paths in the calculator.
If you know your annual heating spend
This is the most direct input. If you already know what you spend per year on propane, oil, gas, or electric heating, the calculator treats that as your baseline.
If you also enter your fuel price, the calculator can estimate your implied heating load behind the scenes. That allows it to model the heat pump more accurately instead of relying on broad averages.
The result is still useful for comparison, but adding fuel price makes the estimate noticeably more accurate.
If you estimate from home details
If you do not know your annual spend, the calculator estimates heating demand using:
- heated square footage
- insulation quality
- province-level climate data
Each province is mapped to a typical long-term heating profile. Colder climates require more annual heating energy than milder ones. Insulation level adjusts how much energy is needed to maintain comfort.
This produces an estimated annual heating load, which is then converted into fuel usage using standard energy conversion factors and typical system efficiencies. This is similar to how an energy advisor would do a rough model, but simplified so it can run instantly in a browser.
How we estimate heat pump operating cost
A heat pump does not create heat. It moves heat using electricity. Its efficiency is expressed as a seasonal performance factor that reflects real Canadian conditions.
The calculator uses:
- heat pump type (standard, cold-climate, hybrid)
- province climate profile
- a seasonal efficiency model
- your electricity rate
These values are based on real-world performance ranges, not marketing numbers. Cold-climate performance is treated differently from milder regions.
From this, it estimates how many kilowatt-hours of electricity are required to deliver the same amount of heating energy your home needs.
We also assume that a portion of heating may come from backup heat during extreme cold. That share is adjustable in the calculator. This reflects real-world behaviour where resistance heat or a secondary system covers the coldest hours of the year.
The result is an estimated annual electricity cost for heating with a heat pump.
Installed cost and rebates
Upfront cost matters as much as operating savings.
The calculator asks for:
- total installed cost
- rebates and incentives
Rebates are subtracted from the installed cost to produce a net upfront investment. Payback is based on this net number, not the sticker price.
This mirrors how homeowners actually experience the purchase.
Many people are surprised how much rebates change the math. The calculator treats rebates as cash off the top, not as a future credit.
How payback is calculated
Once baseline cost and heat pump cost are estimated:
annual savings = baseline cost − heat pump cost
net upfront cost = installed cost − rebates
simple payback = net upfront cost ÷ annual savings
If annual savings are small, payback stretches out. If savings are negative, the calculator reports that payback is not achieved under those assumptions.
This is a simple payback model. It does not include financing, maintenance differences, or energy price escalation. Those factors can matter in real life, but the purpose here is to provide a clear, comparable baseline.
What this model does not include
To keep the tool understandable and stable, some variables are intentionally simplified:
- short-term weather volatility
- occupant behaviour differences
- detailed building envelope modelling
- equipment degradation over time
- financing structures
- time-of-use electricity pricing
- future energy price forecasting
These factors can shift results, sometimes meaningfully. That is why it is best to treat the output as a decision aid, not a prediction of your exact utility bill.
The calculator is best used as a planning and comparison tool, not a guarantee.
How to use this guide with the calculator
If you want the most realistic estimate:
- Use your actual annual heating spend if available
- Add your fuel price if you know it
- Enter a realistic installed cost after quotes
- Test multiple electricity rates if pricing is uncertain
- Try different backup heat shares for conservative versus optimistic scenarios
Small changes in inputs can move payback by years. Running multiple scenarios is often more informative than chasing a single perfect number.
The intent of the calculator
The goal is transparency and comparison, not pretending to predict your bill to the dollar.
This model helps you answer questions like:
- Is a heat pump likely to save me money?
- How sensitive is payback to electricity price?
- Do rebates materially change the decision?
- Does climate make a large difference?
Those directional insights are often more valuable than a single exact figure.
If you are making a major renovation or equipment decision, pair this estimate with contractor quotes and, if needed, a professional energy assessment.