Heat Pump Payback in Memphis, TN
Heat pump vs. gas furnace in Memphis, TN
Memphis technically pencils out, but only past the point the equipment would need replacing anyway. Against a like-for-like gas furnace and AC swap, going electric costs $5,500 more up front here. Memphis's residents would see roughly $161 a year back in running costs, putting the payback around 34.3 years. Memphis's own numbers say this pencils out only in theory, not in practice.
Checking a different city
This runs the same numbers for 3206 US cities, not just Memphis. Look one up here.
The climate behind Memphis's payback figure
2396 heating degree days pile up here every year, so Memphis has a mild winter by US standards; the cooling side runs to 2383 cooling degree days, where summers are hot enough that cooling matters as much as heating. The 99% winter design temperature here, the cold snap equipment must be sized for, not the seasonal average, is 12°F, and the coldest daily reading in the 2024 station record was 1.9°F. That puts the seasonal coefficient of performance at 2.99 for the recommended cold-climate unit. The average winter here is gentle, but sizing follows the cold snaps, and 12°F is below the 25°F point where a standard unit leans on resistance backup, so a cold-climate unit is what gets priced for Memphis. Source: NOAA station Memphis International Airport, 3.8 miles from Memphis, the closest one on record.
The yearly running costs in Memphis
Modelled on a typical 2000-square-foot house, the heat pump draws about 2,029 kWh a year to keep it warm, plus cooling, for a combined electric bill near $563 a year. Memphis's gas rate of $11.84 per Mcf, applied to the 25 Mcf a year the furnace burns, puts the current furnace-and-AC running cost near $724 a year, against 13.87¢ per kWh for electricity. Priced as a standalone purchase, with a working furnace ripped out early, payback would take longer than the 15-year equipment life. Measured against the like-for-like replacement instead, a household here ends 15 years $3,092 behind.
How sensitive Memphis's result is to prices
This result holds unless electricity climbs above 30.4¢/kWh (it is 13.87¢ now) or gas drops below $5.41 per Mcf (now $11.84); past either point, gas becomes the cheaper fuel in Memphis. When quotes arrive, compare the heat pump price with a like-for-like furnace and AC replacement: at $161 a year saved, a difference under $1,127 pays back within 7 years here, and under $1,610 within 10.
If your home heats with electric baseboard instead of gas
Gas isn't universal in Memphis, many houses run on electric heat already. Against electric-resistance heat, baseboard or an electric furnace, both 100% efficient but still just resistance, the case for switching gets stronger here. Switching saves about $707 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 14.2 years.
Where Memphis ranks in this dataset
Among 3206 cities, Memphis's winter puts it at rank 2237 for severity, while its size puts it at rank 29 for population, 1 in both cases being the extreme. That's the mildest third of cities covered, where utility rates carry more of the answer than climate does.
Deciding what's next in Memphis, TN
About 610,919 people live in Memphis, Tennessee, 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.
Line up a few local HVAC quotes before you decide.
More on how this number was built
Nothing above is a black box: the methodology guide shows the full arithmetic behind Memphis's 2.99 seasonal COP and payback figure. Memphis's 12°F design temperature is below the 25°F line, which is why a cold-climate unit is the right call here, see what that changes in the cold-climate unit guide.