Hybrid (Dual-Fuel) Heating: Pairing a Heat Pump with Your Furnace

A hybrid or dual-fuel system pairs an electric air-source heat pump with a fossil-fuel furnace, usually natural gas, sometimes propane or oil. The heat pump handles cooling all summer and most of the heating through spring, fall and mild winter days. When it gets cold enough that the furnace is cheaper or more comfortable, the thermostat switches over.

For many Ontario homes, hybrid is the practical middle path: a large cut in fossil fuel use without relying on a heat pump alone during a −25 °C cold snap.

How a hybrid system is set up

In a typical ducted hybrid install:

• The outdoor heat pump replaces your central air conditioner condenser.
• An indoor coil sits on top of your existing (or new) furnace, in the same spot an AC coil would.
• The furnace blower moves air for both systems.
• A dual-fuel capable thermostat, or the manufacturer's communicating control, decides which source runs, using an outdoor temperature sensor.

The heat pump and furnace normally do not run at the same time with this coil arrangement, because hot furnace air passing over the heat pump coil can damage it. The controls handle the switch.

Note: If your furnace is a mid-efficiency model from before about 2010, consider whether it is worth pairing with a new heat pump or whether to replace it at the same time. See our furnace replacement guide.

Choosing the changeover temperature

There are two ways to think about when to switch:

1. Thermal balance point — the outdoor temperature where the heat pump can no longer meet the home's heat loss on its own. Below it, you need backup heat regardless of price.
2. Economic balance point — the outdoor temperature where heat from the furnace becomes cheaper than heat from the heat pump.

Working out the economic balance point

Gas heat cost per kWh of delivered heat = gas price ÷ (10.35 kWh/m³ × furnace efficiency). At 45¢/m³ and 95% efficiency, that is about 4.6¢ per kWh of heat.

Heat pump heat cost per kWh = electricity price ÷ COP.

The heat pump is cheaper whenever its COP is above electricity price ÷ gas heat cost. This table shows the break-even COP for different prices (electricity price is your effective all-in cost after the Ontario Electricity Rebate):

Effective electricity price	Gas at 35¢/m³	Gas at 45¢/m³	Gas at 50¢/m³
12¢/kWh	COP 3.4	COP 2.6	COP 2.4
14¢/kWh	COP 3.9	COP 3.1	COP 2.8
16¢/kWh	COP 4.5	COP 3.5	COP 3.1

All figures are estimates; assumptions are 10.35 kWh per m³ and a 95% AFUE furnace.

A typical cold-climate heat pump might run at a COP of 3.5–4.5 around +8 °C, 2.5–3.0 around −8 °C, and 2.0–2.5 around −15 °C (estimates; check your model's data). Combine that with the table and the economic changeover often lands somewhere between about 0 °C and −10 °C in Ontario, and around −5 °C to −10 °C is a common setting. If your priority is lower emissions rather than lowest cost, you can set it colder, down to the thermal balance point.

Tip: Time-of-Use matters. At 9.1¢ off-peak overnight and on weekends, the heat pump is cheaper at colder temperatures than it is at 18.9¢ on-peak. Some advanced controls can switch based on time of day as well as temperature. See our electricity price plans guide.

What it costs

Item	Typical range (estimate)	Notes
Add a heat pump to a working furnace	Roughly $8,000–$15,000	Similar to, or somewhat above, a quality central AC replacement; varies with size and brand
New heat pump + new high-efficiency furnace	$15,000–$30,000	When both are near end of life
Dual-fuel thermostat	Often included; $200–$500 if separate	Must support heat pump with fossil backup
HRS rebate (gas-heated home)	$500/ton, up to $2,000	Cold-climate model, participating contractor, pre-approval required

The Home Renovation Savings Program pays the heat pump rebate on qualifying equipment; new gas furnaces themselves are not eligible. According to Save on Energy, gas-heated homes are in the lower rebate tier. Homes heated mainly by propane or oil fall into the higher "other primary heat" tier of $1,250 per ton, up to $7,500. Confirm current details on https://saveonenergy.ca (opens in a new tab) or in our rebates directory.

Operating costs: a rough illustration

Using the same assumptions as our heat pump vs gas cost guide (2,200 m³ of heating gas a year, 45¢/m³, 17¢/kWh all-in, 15.7% OER), suppose the heat pump covers about 75% of annual heat at a higher average COP of 3.2, because it only runs in milder weather, and the furnace covers the remaining 25%.

Component	Estimate
Heat pump electricity	~5,060 kWh → ~$726 after OER
Furnace gas	~550 m³ → ~$248
Hybrid total	~$974
Gas furnace only, for comparison	~$990

At these prices, hybrid running costs are roughly the same as gas alone, while cutting gas use by about three-quarters. The financial case rests mainly on replacing your AC with a heat pump that also heats, plus any rebate. Your split may differ; homes in Ottawa or the north will see the furnace run more.

When hybrid makes the most sense

Hybrid is often the right choice if:

• Your gas furnace is less than about 10–12 years old and in good condition.
• Your air conditioner needs replacing now.
• You live in Eastern or Northern Ontario, with many hours below −20 °C.
• Your ducts are sized for a furnace and would struggle with heat pump airflow at the coldest temperatures.
• You heat with propane or oil and want to cut fuel deliveries sharply without a full switch yet.
• Your electrical panel can handle a heat pump but not large electric backup strips.

It may be less suitable if you want to disconnect gas entirely (you will keep paying the gas customer charge), or if your furnace is very old and would need replacing soon anyway, in which case an all-electric system with appropriate backup could be simpler.

Setup and controls checklist

• Heat pump sized from a room-by-room heat loss calculation, not just matched to the old AC size. See HVAC sizing.
• Outdoor temperature sensor installed and working.
• Changeover temperature set and written on the install documents.
• Furnace and heat pump not set to run at the same time unless the equipment is designed for it.
• Thermostat setbacks modest; large setbacks can push the system onto the furnace during recovery.
• Both the furnace (by a TSSA-licensed gas technician) and the heat pump serviced annually. See our maintenance checklist.

Frequently asked questions

Can I add a heat pump to my existing furnace?

Usually, yes, if the furnace has a variable-speed or multi-speed blower and enough room for the coil. Your contractor should check the blower capacity, duct sizing and furnace condition first.

Who sets the changeover temperature?

Your installer sets it at commissioning, but you can usually change it in the thermostat's installer settings. Revisit it if gas or electricity prices change significantly.

Does a hybrid system qualify for the HRS rebate?

The heat pump portion can, if it is a qualifying cold-climate model installed by a participating contractor with pre-approval. The furnace does not earn a rebate under the program.

Will I save money compared to just my furnace?

At 2026 Ontario prices, savings on heating alone are modest. The benefits are efficient cooling, reduced gas use, flexibility to switch fuels as prices change, and often a lower upfront cost than going fully electric.