Heat Pump vs Gas Furnace in South Dakota: 2026 Running Costs
Heating a 2,000 sq ft South Dakota home costs about $1,742 a year with a heat pump versus $971 with a gas furnace. The heat pump costs about $772 a year more to run than gas — cheap gas and a cold climate is a hard combination to beat.
Heat pump vs gas furnace — South Dakota
Running cost for heating. Adjust anything to see the gap move.
Gas furnace is cheaper to run by
$772
per year · the heat pump never recovers its extra cost here
Heat pump / year
$1,742
12,313 kWh · COP 2.23
Gas furnace / year
$971
1,021 therms
Seasonal efficiency is modelled at COP 2.23 for this climate. Calculators that assume a flat COP of 3 everywhere overstate cold-climate performance — and that is where surprise winter bills come from.
The numbers behind it
| Heating degree days | 7,825 |
|---|---|
| Electricity rate | 14.15¢ / kWh |
| Natural gas price | $0.95 / therm |
| Modelled home size | 2,000 sq ft |
| Annual heat needed | 93.9 million BTU |
| Seasonal COP (modelled) | 2.23 |
| Heat pump electricity | 12,313 kWh |
| Gas used | 1,021 therms |
| Heat pump running cost | $1,742 |
| Gas furnace running cost | $971 |
| Annual difference | $772 for gas |
| Break-even gas price | $1.71 / therm |
| Break-even power price | 7.9¢ / kWh |
| Payback on install premium | Never on running cost |
Why the honest answer is often “it depends”
A heat pump wins where electricity is cheap relative to gas and the winter is mild enough to keep seasonal efficiency high. It loses where gas is cheap, power is expensive, or the climate is cold enough to drag efficiency down and call on resistance backup. In South Dakota the balance currently falls in the gas furnace's favour on running cost — but rebates, a dying air conditioner, or a gas price move can each flip that.
Common questions
Is a heat pump cheaper than gas heating in South Dakota?
On running cost alone, no. At 14.15¢ per kWh against gas at $0.95 a therm, a heat pump costs roughly $1,742 a year to run here versus $971 for gas — about $772 a year more. Cheap gas and a cold climate is the combination heat pumps struggle against.
Do heat pumps work in South Dakota's climate?
They work, but efficiency falls with temperature. At 7,825 heating degree days we model a seasonal COP of 2.23 — roughly 2.2 units of heat per unit of electricity across the season, not the 3+ that mild-climate marketing implies.
How long does a heat pump take to pay for itself in South Dakota?
It doesn't, on running cost alone — it costs more to run here, so the extra install cost never comes back through the energy bill. The case rests on rebates, replacing a dying air conditioner at the same time, or reasons other than money.
What electricity price would make a heat pump worthwhile in South Dakota?
Below about 7.9¢ per kWh, holding gas at $0.95 a therm. South Dakota averages 14.15¢, which is above that line. Equivalently, gas would need to reach $1.71 a therm for the two to level at today's power price.
Does this include air conditioning?
No, and that matters. A heat pump is also an air conditioner, so if you were replacing a failing AC anyway, the true extra cost is much lower than the figure used here — sometimes near zero. This compares heating running costs only.
How we calculate this
Annual heat demand comes from heating degree days and a modelled building heat-loss rate, then met two ways: a gas furnace at 92% efficiency, and a heat pump at a seasonal COP derived from the local climate.
That climate-varying COP is the part most calculators skip. Applying one flat efficiency everywhere assumes a mild winter in a cold state, and is the single biggest reason published heat pump savings often fail to appear on real bills.
Excluded: cooling benefit, rebates and incentives, maintenance differences, and any electrical panel upgrade. Analysis horizon 15 years.
Data vintage: Electricity: EIA Electric Power Monthly Table 5.6.B (residential, May 2026 YTD). Solar resource: PVGIS v5.3 (EU JRC), ERA5 2005-2023. Gasoline: AAA state averages. Natural gas: EIA residential by state. Heating degree days: NOAA CPC population-weighted normals. Retrieved 2026-08-03/04. Install costs, household usage, net-metering status, annual mileage, time-of-use spreads and outage hours remain estimates.