Heat Pump Payback in Chicago, IL
Should Chicago switch to a heat pump?
Here in Chicago, the honest answer is that a heat pump raises your annual running cost. $5,500 is what Chicago would pay extra to go electric rather than replace the furnace and AC with the same again. Running costs here land $234 a year higher than the furnace it replaces, so that premium is never recovered. There's no spin on that: Chicago's numbers say wait.
Checking a different city
This runs the same numbers for 3206 US cities, not just Chicago. Look one up here.
The climate behind Chicago's payback figure
Degree days tell the story here: Chicago racks up 4454 heating degree days each year (base 65°F), and summers add a moderate cooling load, with 920 cooling degree days on the cooling side. The 99% winter design temperature here, the cold snap equipment must be sized for, not the seasonal average, is -5.1°F, and the coldest daily reading in the 2024 station record was -9°F. That puts the seasonal coefficient of performance at 2.58 for the recommended cold-climate unit. A cold-climate unit is the right call in Chicago, below 25°F design temperature, a standard heat pump leans hard on electric-resistance backup, which erases most of the savings. Climate figures trace to the nearest NOAA station, Northerly Island, 4.1 miles from Chicago.
The yearly running costs in Chicago
Electricity use for heating alone comes out to about 4,371 kWh a year on the 2000-square-foot reference house; folding in cooling puts the electric bill near $983 a year. Chicago's gas rate of $11.25 per Mcf, applied to the 46 Mcf a year the furnace burns, puts the current furnace-and-AC running cost near $749 a year, against 19.06¢ per kWh for electricity. With running costs higher every year, there is no payback at any purchase price; over 15 years, against a like-for-like replacement, a household here would end $9,004 behind.
What would change Chicago's answer
The heat pump would become the cheaper option in Chicago if electricity fell to 13.2¢/kWh (from 19.06¢) or gas rose above $16.29 per Mcf (from $11.25). At today's prices a cheaper quote cannot rescue the gas comparison in Chicago, since there is no yearly saving to recover it from.
The other scenario: no gas furnace to begin with
Not every home in Chicago has gas service. Swap the comparison to resistance heat instead of gas, and Chicago's answer improves. Switching saves about $1,394 a year here, a heat pump moving heat rather than generating it needs far less electricity than resistance coils, so the extra $10,000 spent up front comes back in about 7.2 years.
Where Chicago ranks in this dataset
Among 3206 cities, Chicago's winter puts it at rank 1218 for severity, while its size puts it at rank 3 for population, 1 in both cases being the extreme. That's the middle third for winter severity among the cities covered here.
Deciding what's next in Chicago, IL
About 2,721,308 people live in Chicago, Illinois, and every number on this page is what a contractor would actually work from when quoting a system here, the point isn't to replace that quote, it's to tell you whether to bother asking for one. Here, there's no cost penalty to waiting until your current furnace or AC actually needs replacing.
Ask a local HVAC contractor for a quote before committing either way.
Reading further on this page's numbers
Every constant behind this page, the 2.58 seasonal COP, the degree-day corrections, the equipment costs, is documented in the methodology guide. At a -5.1°F design temperature, Chicago sits in cold-climate territory; the guide to that class of unit explains why.