Is a Heat Pump Worth It in Colorado?

Last updated June 27, 2026 · based on Colorado energy prices

In Colorado, where residential electricity averages about 15¢/kWh and natural gas about $0.95/therm, a heat pump may actually cost a bit more to run than cheap natural gas here — the case is strongest if you're also replacing an aging AC. Colorado has a cold heating climate, which means a heat pump runs at a seasonal efficiency (COP) near 2.6 here.

Colorado heating cost comparison (average 2,000 sq ft home)

If you currently heat with oil, the picture is much stronger: a heat pump could save around $1,588/year versus heating oil at Colorado prices. Against electric baseboard heat, a heat pump cuts heating energy use by about two-thirds, so the savings are even larger.

What this means for Colorado homeowners in 2026

The federal heat pump tax credit expired December 31, 2025, so a 2026 install in Colorado carries the full upfront cost unless you qualify for a state or utility rebate. Because Colorado's climate is cold, the strongest financial case is when you're replacing both an old furnace and an aging air conditioner at once — the heat pump does both jobs with one system. Since cheap gas keeps running-cost savings modest here, lean on the combined heating-plus-cooling replacement and any available rebates to justify the switch.

Colorado rebates

Check whether Colorado has launched its HEEHRA home-electrification rebate program (worth up to $8,000 for income-qualified households) and confirm it still has funding before counting on it — availability changes month to month. Also check your local electric utility, which may offer its own heat pump rebate of a few hundred to a couple thousand dollars. See our 2026 rebate guide for details.

Estimates based on Colorado average energy prices and a simplified model; your results will vary. Energy prices and incentives change frequently. Not financial advice.