Calculator: Is Electrification Worth It? Heat Pump + Solar ROI for Your Home

Is Electrification Worth It? Use this Calculator to Compare Heat Pump + Solar ROI vs. Staying on Gas

Feeling stuck between the sticker shock of new electric equipment and the fear of rising gas bills? You're not alone. Homeowners, renters with control, and property managers all struggle to compare true costs when deciding whether to replace gas appliances with electric air-source heat pumps and rooftop solar. This guide explains how our electrification calculator works, the math behind heat pump ROI and solar payback, and how to turn results into actionable decisions for 2026.

Why an electrification calculator matters in 2026

Most consumers get isolated quotes for a heat pump or a solar system and never see them compared side-by-side with the status quo. That creates three big problems:

• Overpaying because you don't account for incentives, panel upgrades, or avoided gas replacements.
• Misjudging savings because gas-to-electric conversions require energy-conversion math (therms to kWh, efficiency differences, COP).
• Missing financing and rebate programs added in the last few years that dramatically change payback calculations.

Our electrification calculator was built to solve those problems: it compares upfront costs, stacked incentives (federal, state, utility), energy savings, and simple and discounted payback periods for a full electric pathway vs continuing with gas.

What the tool compares (at a glance)

• Upfront costs: purchase and installation for heat pump HVAC or gas furnace replacement; rooftop solar and balance-of-system; panel upgrades and battery storage if needed.
• Incentives: federal tax credits (IRA-era programs), state rebates, utility incentives, point-of-sale discounts — the calculator queries the latest national datasets and lets you add local incentives.
• Ongoing energy costs: annual gas and electric bills predicted under both scenarios using local rates and climate-based heating loads.
• Payback metrics: simple payback, discounted payback, net present value (NPV) and internal rate of return (IRR).
• Resilience & emissions: battery backup sizing for outage resilience and estimated CO2 reductions (based on grid mix).

2026 trends that change the calculus

Before we jump into formulas, here are the key market changes you should know for 2026:

• Cold-climate heat pump performance improved significantly—manufacturers released new inverter-driven compressors and improved refrigerants in late 2024–2025, making efficient heating down to -15°F more common.
• Solar prices continued to decline and balance-of-system costs fell; typical installed PV costs vary by region but are often 10–25% lower than 2021–2022 levels.
• Utilities and states expanded electrification rebates and targeted incentives for low-to-moderate income households through mid-2025, increasing up-front savings for many buyers.
• Time-of-use (TOU) rates and demand charges grew more common, increasing the value of pairing heat pumps with solar + batteries for bill management and resilience.

How the calculator converts gas to electric: the core math

Understanding the conversions is essential to trust any electrification calculator. Below are the formulas the tool uses and why.

Step 1 — Convert annual gas energy to heat required

If you have annual gas usage in therms or MMBtu, the calculator converts to useful heat using appliance efficiency:

• 1 therm ≈ 29.3 kWh of energy
• Useful heat from gas = (annual therms × 29.3 kWh/therm) × furnace efficiency

Example: 800 therms/year × 29.3 ≈ 23,440 kWh of gas energy. With an 80% furnace efficiency, useful heat ≈ 18,752 kWh/year.

Step 2 — Estimate an electric heat pump’s electricity to deliver that same heat

Heat pumps are rated by coefficient of performance (COP) or HSPF / SEER. COP is easier for energy calculations:

• Electric kWh required = useful heat ÷ average seasonal COP

Example: If the heat pump seasonal COP = 3.0, then electricity for heating ≈ 18,752 ÷ 3.0 ≈ 6,251 kWh/year.

Step 3 — Add heat pump electric usage for hot water and other loads

Factor in a heat-pump water heater (HPWH) or the change in cooking, dryer, and other loads. The calculator adds appliance-specific estimates so you get a whole-house energy picture.

Step 4 — Determine annual cost difference

Annual cost in gas scenario = (annual therms × gas rate) + electric for non-heat loads × electric rate.

Annual cost in electrified scenario = (electric kWh for heat + electric for other loads) × electric rate — plus any export credits from solar.

Step 5 — Payback and ROI

Key metrics:

• Simple payback = net upfront cost (after rebates) ÷ annual savings.
• Discounted payback uses a user-selected discount rate (3–6% common) and sums discounted savings to determine the year breakeven occurs.
• NPV = sum of discounted cash flows (savings minus any residual costs like battery replacement) over system life.
• IRR is the discount rate that makes NPV zero — a higher IRR means better investment compared to alternatives (like home improvement loans).

Example case: Northeast 2,000 sq ft home (walk-through)

To make this concrete, here's a full example the calculator runs through, with realistic but hypothetical numbers. Use your own numbers for accurate results.

Inputs

• Home: 2,000 sq ft, existing gas furnace + gas water heater
• Annual gas use for heating: 800 therms (common for cold-climate homes)
• Gas rate: $1.20/therm
• Electric rate: $0.20/kWh (off-peak average)
• Replacement options: cold-climate heat pump (COP seasonal ≈ 3.0), HPWH
• Solar: 8 kW system, gross installed cost $2.20/W ⇒ $17,600 before incentives
• Heat pump + HPWH installed: $14,000 (equipment + labor)
• Panel upgrade: $2,500
• Battery (optional): 10 kWh/$8,000
• Incentives: federal tax credit 30% for combined EV/solar/heat pump pathways (example; actual amounts vary), state rebate $3,000

Step calculations

1. Gas energy: 800 therms × 29.3 = 23,440 kWh. Useful heat (80% furnace) = 18,752 kWh.
2. Electric heat (COP 3.0): 18,752 ÷ 3 = 6,251 kWh/year.
3. Plus HPWH + other loads = 3,000 kWh/year (assumed). Total electrified usage = 9,251 kWh/year.
4. Annual cost gas scenario: gas cost = 800 × $1.20 = $960. Electric non-heat = 6,000 kWh × $0.20 = $1,200. Total ≈ $2,160/year.
5. Annual cost electrified scenario: 9,251 kWh × $0.20 = $1,850/year.
6. Annual savings ≈ $2,160 − $1,850 = $310/year on utility bills (this example emphasizes that savings alone can be modest if electricity prices are high; solar changes the equation).
7. Net upfront cost: solar $17,600 + heat pump $14,000 + panel upgrade $2,500 = $34,100 before incentives. Apply 30% federal credit = −$10,230; state rebate $3,000 = −$3,000. Net = $20,870.
8. Simple payback on utility savings = $20,870 ÷ $310 ≈ 67 years — clearly not compelling if you only count energy bill savings.
9. Now add solar generation: an 8 kW system in this climate might produce ~9,600 kWh/year, offsetting most electricity use and reducing grid purchases to near zero and exporting excess. That changes annual savings drastically — estimated to avoid roughly $1,900–$2,200/year in bills and net exports, making payback ~9–11 years depending on net metering.

Key takeaway: Electrification + solar together is what created a strong ROI. Heat pumps alone may have longer paybacks depending on local electricity rates and incentives. That’s why our calculator treats combined and stand-alone pathways separately.

How incentives and net-metering change results

Incentives are the single biggest driver of short-term ROI:

• Federal credits (IRA-era programs) often cover a portion of heat pump and solar costs. Your calculator fetches the latest federal guidance and prompts you for eligibility (ownership, tax liability).
• State and utility rebates vary by program year. Many utilities offer point-of-sale rebates for cold-climate heat pumps and higher incentives if you install a qualifying heat-pump water heater.
• Net energy metering (NEM) policies determine how much you’re credited for exported solar. Full retail NEM accelerates payback; export-only compensation slows it.

Quick tip: always verify incentives with your contractor and the utility. Our calculator links to DSIRE and state portals to help you confirm program availability.

Advanced strategies the calculator models

For homeowners who want a more nuanced financial picture, the tool supports:

• Time-of-use (TOU) economics — shift heat pump operation and battery discharge to expensive hours for higher savings.
• Battery + solar stacking — reduces demand charges and provides resilience value which you can assign a dollar value to in the model. See more on hidden costs and savings when you size storage.
• Partial electrification — electrify water heating first, or split heating across zones. The calculator lets you compare staged approaches.
• Replacement vs. end-of-life timing — model replacing the existing gas furnace now or waiting until end-of-life to see optimal timing for investment.

How to use the calculator like a pro — 8 practical steps

1. Collect bills: upload 12 months of electric and gas bills if you can — the calculator will auto-parse consumption and seasonal profiles.
2. Get local rates: confirm current commodity rates, delivery charges, and any existing fixed charges directly from your utility site.
3. Pick equipment wisely: use conservative COP/HSPF figures for your climate. For cold climates, select models rated for low-temperature performance.
4. Include upgrades: panel upgrades, trenching for solar, permits and inspection fees — small items add up and must be in the upfront cost.
5. Stack incentives: turn on the federal, state, and utility incentive toggles and validate eligibility.
6. Model scenarios: run "Heat pump only", "Solar only", and "Heat pump + Solar" and compare simple payback and NPV across scenarios.
7. Use realistic discount rates: 3–4% if you value low inflation, 5–6% if you compare to higher-yield investments or financing costs.
8. Export the results: generate a one-page summary you can share with contractors to get apples-to-apples quotes.

Common pitfalls and how the calculator avoids them

• Pitfall: Confusing equipment cost with installed cost. Fix: we include typical labor percentages and common add-ons for your region.
• Pitfall: Ignoring panel or service upgrades. Fix: the tool prompts for panel size and estimates upgrade needs based on solar and EV inputs.
• Pitfall: Assuming constant energy prices. Fix: you can model gas/electric price inflation or a fixed price path for conservative planning.
• Pitfall: Forgetting end-of-life replacements for inverters or batteries. Fix: the tool accounts for component lifetimes and replacement costs in NPV and cash flows.

What to do after you get a result

1. Review the one-page summary and highlight assumptions you want contractors to confirm (COP, estimated solar production, panel upgrade needs).
2. Request at least three written quotes that break out equipment, labor, and incentives. Use the calculator's downloadable template for standardized quotes.
3. Ask contractors for performance estimates and warranty details (heat pumps: 10–12 year parts warranties common; solar: 25-year performance warranties for panels).
4. Compare financing: PACE, green loans, utility on-bill financing, or home equity. Add financing costs to the calculator and rerun payback/NPV — see financing themes in recent energy markets coverage like Green IPOs & Portfolio Construction.
5. Decide on staging: many homeowners see the best ROI by replacing the water heater first, then adding a heat pump and solar in the next budget cycle.

Real-world example: homeowner outcome from 2025–2026

In late 2025, a homeowner in the Pacific Northwest used our calculator to compare three paths: replace the gas furnace with a like-for-like gas unit, switch to a cold-climate heat pump, or install a heat pump + 6 kW solar. With stacked state incentives and a favorable NEM policy, the combined route produced a 10-year payback and an IRR of ~9%. The homeowner financed the upgrade with a low-rate green loan and cut annual energy bills by more than 60% while gaining backup power during outages — the same resilience that portable solar + smart outlets provide for other applications.

That case reflects a larger 2026 pattern: when incentives, local rates, and NEM align, electrification + solar moves from environmental choice to a financially attractive investment.

Final checklist before you decide

• Have you uploaded a year of utility bills into the calculator?
• Did you confirm your eligibility for federal and state incentives?
• Have contractors provided detailed line-item bids that match the calculator assumptions?
• Did you model price inflation for gas and electricity over the system life?
• Are you comfortable with the chosen financing option's rate and term?

Conclusion — Is electrification worth it for your home?

Short answer: It depends. But in 2026, the right combination of heat pumps, solar, incentives, and financing can deliver strong returns and resilience — especially when you model everything together. Heat pumps alone sometimes show long simple paybacks; paired with solar and smart incentives, paybacks become compelling.

Use our electrification calculator to take the guesswork out of your decision. Run multiple scenarios, download an apples-to-apples quote template, and share results with vetted contractors. Energy policy and technology advances through late 2025 and early 2026 mean there are more pathways than ever to make electrification both smart and affordable.

Get started — call to action

Ready to see your home's personalized heat pump + solar ROI? Plug in your utility bills and local incentives now. Download the one-page summary to request standardized quotes from contractors and get a clear, comparable path to electrify — or confirm that staying on gas is the right short-term choice. Visit our interactive electrification calculator to begin.

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