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New Jersey is gas-dominant territory. Let us be honest: at $1.35/therm, pure heating savings are modest (~$250/year). But a heat pump also replaces your AC, saving $550-750/year total. Here are the real numbers.
Last updated: February 2026
Natural gas at $1.35/therm is cheap in NJ compared to New England. The pure heating savings from a heat pump are modest: ~$250/year for a typical home. That alone does NOT justify the conversion. But here is the full picture: a heat pump also replaces your AC, saving an additional $300-500/year on cooling. Total annual benefit: $550-750/year. Combine that with NJ Whole Home rebates (up to $7,500) and utility rebates ($500-$1,400), and the math starts working — especially if your furnace or AC needs replacement anyway.
NJ gas per therm
annual gas cost (heating)
annual heat pump cost
heating-only savings
Gas at $1.35/therm (NJ average, Feb 2026). Heat pump at $0.26/kWh with COP of 3.0. Gas furnace at 95% AFUE. Heating savings are modest — but the HP also replaces your AC.
Gas at $1.35/therm vs heat pump at $0.26/kWh (NJ avg) with COP 3.0. Furnace efficiency: 95% AFUE. Includes AC savings because the heat pump replaces both systems.
| Home Size | Gas Usage | Gas/Year | HP/Year | Heating Savings | Total Benefit* |
|---|---|---|---|---|---|
Small 1,200 sq ft | 550 therms | $745 | $575 | $170 | $420 |
Medium 2,000 sq ft | 815 therms | $1,100 | $850 | $250 | $600 |
Large 3,000 sq ft | 1,150 therms | $1,555 | $1,200 | $355 | $805 |
1,200 sq ft · 550 therms/year
2,000 sq ft · 815 therms/year
3,000 sq ft · 1,150 therms/year
*Total benefit = heating savings + eliminated AC operating cost ($300-500/year). Gas at $1.35/therm, electricity at $0.26/kWh, COP 3.0, 95% AFUE furnace. Actual costs vary by insulation, thermostat settings, and local utility.
We are being upfront: pure heating cost savings do not justify the conversion on their own. Here is why.
NJ pays $1.35/therm vs $1.85/therm in Massachusetts. Cheaper gas means less cost advantage for the heat pump. NJ is closer to Marcellus Basin pipeline infrastructure.
NJ pays ~$0.26/kWh after 2025 rate increases (PSE&G +17%, JCP&L +20%). The electric-to-gas price ratio is less favorable here than in states with pricier gas or cheaper electricity.
Heating-only savings (~$250/year) do not tell the whole story. The heat pump replaces your AC, saving an additional $300-500/year on cooling. Total benefit: $550-750/year. That changes the math.
MA has much pricier gas, making the conversion more dramatic. NJ savings are real but more modest.
Pure heating savings do not tell the whole story. Here are the real reasons NJ homeowners are making the switch.
This is the big one. A heat pump replaces both systems with one unit. If you would buy a furnace ($4,000-$7,000) + AC ($5,000-$8,000) separately, a heat pump at $12,000-$18,000 costs about the same while cutting operating costs.
The NJ Clean Energy Whole Home program offers up to $7,500 cash-back based on Total Energy Savings percentage. Stack this with utility rebates ($500-$1,400) and your net cost drops dramatically.
PSE&G raised gas rates 15.8% this winter alone. As NJ electrifies and gas customers shrink, distribution costs will be spread over fewer homes. Electricity rates are more stable and regulated.
Heat pumps provide even heating (no hot blasts), better humidity control, continuous air filtration, and no dry winter air. Many NJ homeowners report better comfort even before considering cost savings.
A heat pump removes all combustion appliances from your heating system. No gas leak risk, no carbon monoxide risk, no annual furnace inspection requirement.
A working modern gas furnace (95%+ AFUE) paired with existing AC is already efficient. At ~$250/yr heating savings, the economics do not justify early replacement. Wait until your furnace or AC needs replacement, then switch.
Fix insulation and air sealing first. A heat pump in a leaky home will not achieve the savings shown here. The NJ Whole Home program actually requires energy improvements, so address the envelope first.
Heat pumps typically need a 30-40 amp dedicated circuit. If your panel is maxed out, a panel upgrade ($2,000-$4,000) adds to the conversion cost. Factor this into your decision.
The best time to switch from gas to a heat pump is when your furnace OR your AC needs replacement. That is when the economics work best in NJ's cheap-gas market.
While gas is cheap today, rates are climbing fast. PSE&G raised rates 15.8% this winter alone.
| Utility | Rate Increase | Period |
|---|---|---|
| PSE&G | 15.8% | Winter 2025-26 |
| JCP&L / NJ Natural Gas | 12-14% | Winter 2025-26 |
| South Jersey Industries | 10-13% | Winter 2025-26 |
As more NJ homes electrify, gas distribution costs get spread across fewer customers. Connection and distribution charges rise for remaining users. This is called the "gas utility death spiral" and it is already happening in NJ. Electricity, which is regulated and shares infrastructure, has more stable price increases.
Not ready to fully commit? A hybrid (dual-fuel) setup is the most popular option in NJ — the lowest total energy bill in our climate.
The heat pump handles 80%+ of heating hours. It runs efficiently above ~25-30 degrees F, which covers most NJ winter days.
Your existing gas furnace activates during extreme cold snaps (polar vortex days) or if the heat pump cannot maintain setpoint. Peace of mind for northern NJ.
Hybrid captures 80-90% of total savings ($440-$670/year) while keeping the gas safety net. Most NJ homeowners decommission the furnace after their first winter.
Your thermostat manages the switchover automatically. When outdoor temperature drops below the balance point (typically set at 25-35 degrees F), the system switches from heat pump to gas. Most modern smart thermostats can manage dual-fuel systems. Your installer configures the balance point during setup. In southern NJ (Zone 4A), the gas backup barely activates. In northern NJ (Zone 5A), it may kick in 10-20 days per winter.
Camden, Cherry Hill, Atlantic City, Vineland. Milder winters (12-15 degrees F design temp). Standard models perform well year-round. Hybrid is nice but full heat pump also works.
Newark, Morristown, Sussex, Paterson. Colder winters (5-10 degrees F design temp). Cold-climate heat pump or hybrid recommended. Gas backup provides peace of mind on the coldest days.
Enter your current fuel type and annual usage to see how much you could save with a heat pump. The calculator uses current NJ fuel prices and electricity rates.
NJ is natural gas dominant — ~75% of homes heat with gas. At NJ electric rates ($0.26/kWh), gas-to-heat-pump savings are modest. The biggest savings come from switching off heating oil, propane, or electric resistance.
~815 therms/year (typical NJ gas-heated home)
COP 3.0 (2.0 = basic, 3.0 = typical, 4.0+ = high-efficiency cold-climate)
Natural Gas @ $1.35/therm
COP 3.0 @ $0.26/kWh
10 and 15-year projections include fuel price inflation (3%/yr) vs electricity (2%/yr).
Note: At NJ electricity rates (~$0.26/kWh), natural gas to heat pump savings are modest (~$250/yr). The decision to switch often comes down to comfort, equipment lifespan, and emissions reduction rather than cost savings alone.
Based on NJ energy prices as of February 2026 (gas $1.35/therm, oil $3.70/gal, propane $3.20/gal, electricity $0.26/kWh). Based on a typical 2,000 sq ft NJ home (~50M delivered BTU/yr). Actual savings depend on home size, insulation, climate zone, and usage patterns. Federal 25C tax credit expired Dec 31, 2025.
NJ rebate programs are the key to making gas-to-heat-pump conversions financially attractive.
When compared to replacing a furnace ($4K-$7K) + AC ($5K-$8K) separately, the effective heat pump cost is comparable or lower.
Natural gas is cleaner than oil, but a heat pump still reduces your carbon footprint — even when accounting for electricity generation.
Typical NJ gas-heated home (815 therms x 11.7 lbs CO2/therm)
Heat pump using PJM grid electricity (improving yearly as grid gets cleaner)
Per household — equivalent to removing half a car from the road per year
A heat pump eliminates gas leak and carbon monoxide poisoning risk from your heating system. NJ has aging gas infrastructure. Every year there are gas leak incidents in NJ homes. Even hybrid systems reduce gas usage by 80%+.
NJ has an 80% emissions reduction mandate by 2050. Building regulations are moving toward electrification. New construction in NJ is already choosing heat pumps over gas heating. Switching now positions you ahead of the curve.
Detailed costs by type and NJ region
Read guideWhole Home, utility rebates, HEAR status
Read guideAll NJ energy guides in one place
Read guideNational heat pump guides by state and type
Read guideHeat pump + solar + battery bundle
Read guideMore dramatic savings than gas in NJ
Read guideNuWatt Energy helps NJ homeowners make the right decision about switching from gas to a heat pump. Get a free assessment, see your personalized savings estimate, and find out which NJ rebates you qualify for.