Air Heat Pumps

An Analysis of Air Heat Pumps in Lethbridge, Alberta

There has been a lot of interest in using heat pumps for heating and cooling our homes, thereby reducing energy bills and reducing our carbon emission footprint in Canada. The problem is that each location has its own climate, types of energy used, and energy prices – the decision on how best to heat and cool your home will differ for each location.

How We Heat

The first interesting thing to note, is that we use different fuels for heating and cooling across the country. Alberta mainly uses natural gas for heating, while other provinces may use combinations of natural gas, fuel oil and electricity.

The type of fuel used for heat affects the cost for heating and the greenhouse gas emissions.

But this isn’t the whole story, because electricity is not an energy source, it is an energy carrier. The source of electricity might be coal- or natural gas-fired generation plants, hydropower, or nuclear power. This also has an impact on the energy cost and greenhouse gas emissions for the electricity consumed in the home.

Where Does Our Electricity Come From?

Electricity is an energy carrier, not an energy source. Electricity is generated in a number of ways including:

- using fossil fuels (coal, natural gas, oil) or nuclear power to generate steam that drive turbines;

- converting the kinetic energy in wind or water flowing from a dam (hydro) to drive a generator; or

- using the energy from the sun to produce a DC current that can be converted into AC suitable for the electricity grid.

In Canada, each province uses a variety of technologies to generate electricity. Some rely predominately on fossil fuels, some more on hydroelectricity. Two provinces have substantial amounts of nuclear power generation, while others rely on wind power.


To break this down for Alberta, one can see that most of the electricity in the province is generated from natural gas with a growing contribution from wind power.


Different Electricity Sources Means Different GHG Emissions:

Each province relies on different energy sources to generate electricity. These energy mixes result in differing amounts of greenhouse gas (GHG) emission embodied in the electricity we consume. The following chart reflects the emissions that can be attributed to electricity consumption in each province.

As illustrated, provinces that rely heavily on fossil fuels to generate electricity have high GHG emission intensities, while provinces with more hydroelectricity have much lower emission intensities.

It should be emphasized that emission intensities reflect only one of many environmental and social impacts from our consumption of electricity. Land-use changes, mining of minerals, wildlife deaths and disruption of migration corridors all have negative impacts to society and the environment. Reduction of the consumption of electricity is always best.


As we proceed with the discussion of heat pumps, keep in mind the variety of energy sources used to generate electricity and the related GHG emission. The best solution for heating will vary across Canada – there is no simple answer to the question if heat pumps are suitable for a location.

Cost of Energy

The cost of electricity and natural gas varies widely across the country, and it even varie within a province depending on the type of energy contract one has.

A further complication is that there is a contracted rate and added on to this, fixed and variable charges for transmission, distribution, and a variety of other costs shown on your utility bill. A compilation of electricity prices in Canada (based on 1000 kWh of consumption) is as follows, and includes the fixed and variable charges for each kWh of electricity consumed:

It should be noted that Alberta currently has the highest electricity rates in the country, which is an important consideration when we are transitioning from natural gas to electricity (i.e. gas furnace to heat pump).

My own bills show an average cost of $0.34/kWh for electricity and $14.25/GJ for natural gas (when all of the addition charges are included). These will be used in the following calculations.

Another important consideration, is comparing electricity and natural gas costs directly (kWh and GJ are both units of energy said differently).

Electricity = $0.34/kWh x 1,000,000 GJ/kJ / 3600 seconds/hour = $94/GJ

With all of the fixed and variable costs included, electricity is 6.6 times more expensive than natural gas for each unit of energy delivered to the home.

Why, then, would anybody use electricity if it is so expensive? For one, there are many things that electricity can do more efficiently and safely than natural gas (consider that natural gas used for refrigerators, freezers, and clothes dryers were once not uncommon, but I’ve never heard of a natural gas operated blender or television). But, based on cost alone, you would never use electricity to heat your home. Unless, that is, you can use the electricity much more efficiently. Thus begins the story of the heat pump.

Heat Pumps

Heat pumps are used to move energy from one place to another. The main principle of heat pump technology is no different from your refrigerator.

If you follow the sketch below, there is a fluid that flows in a closed loop. The fluid picks up energy on one side of a wall and drops it off on the other side. The fluid is a refrigerant of some sort which has a boiling point at a temperature and pressure that allows this cycle to work. We will call this 'magic' and focus instead on the mechanism.

Beginning at Point 1, the refrigerant is a high-pressure liquid. We depressurize this fluid across a valve, which causes the liquid to vapourize into a gas. If you have ever held your hand into the stream of Liquid Air or hairspray, you will have noticed how cold the gas is. At Point 2, then, the refrigerant is a cold gas.

Energy always travels in the direction from hot to cold. The cold refrigerant is then put into contact with another fluid (but kept separate) in a heat exchanger. A heat exchanger is often a pipe (with the refrigerant in it) and another fluid flows across the pipe on the outside. The pipe often has fins to improve the transfer of heat (from hot to cold). The heat exchanger allows the heat outside the pipe to move to the colder refrigerant on the inside of the pipe. At Point 3, after the heat exchanger, the refrigerant is a warm gas.

To prepare the refrigerant for the next cycle, it is compressed back up to the high pressure needed at Point 1. Compression requires energy. This energy (in our case) comes from electricity. The act of compression also heats up the refrigerant, so at Point 4 the refrigerant is a hot gas. This hot gas is cooled to a liquid with another heat exchanger. The fluid outside of this exchanger is cooler than the refrigerant, so the heat leaves the refrigerant inside the pipe and heats up the colder fluid on the outside. We have returned to Point 1.

Now, we will relabel the diagram for a device that you are already familiar with – your refrigerator.

The refrigerant crosses the expansion valve. The cold refrigerant pass through a heat exchanger, while a fan in the refrigerator pushes the air across allowing the heat to be taken away by the refrigerant. The inside of the refrigerator remains cool. A compressor below the refrigerator box repressurizes the refrigerant which is cooled down by an exchanger (often mounted on the back of the refrigerator). The refrigerant is ready to make another loop. Overall, the loop removes energy from inside the refrigerator and transfers it outside the refrigerator.

Or, how about an air conditioner? It is the same as the refrigerator, taking heat from inside the home (the exchanger on the right) and puts this heat outside of the home (the exchanger on the left).

And, finally, the heat pump … the same principles apply. In this case, compared to the air conditioner, we are switching the heat exchangers. The cold air takes heat energy from the outside (on the right) and transfers it into the home (on the left).

To understand where the efficiency of a heat pump is derived, follow the units of energy. In our simplified example, one unit of energy in the form of electricity, produces three units of heat to the home. This is called the Coefficient of Performance (COP), in this example the COP is 3:1. And it is this efficiency gain that makes it more attractive to replace natural gas with electricity despite the much higher costs of electricity. We will return to this discussion below.

The actual technologies discussed above have other components including dehumidification or defrosting operations which may affect efficiencies for the devices.

What makes a heat pump interesting, is that it may be used both for air conditioning the home and for heating the home, depending on the season. This is accomplished by simply switching the function of the heat exchangers. This means that you may combine the two duties (air conditioner and furnace) into one device, which may save some money when building a home. You may also use the hot refrigerant (Point 4, or possibly Point 1) to heat or preheat domestic hot water when the heat pump is in operation.

We are discussing the Air Heat Pump, where the heat energy transferred to the home largely originates from outside air. Another style of heat pump is called the Ground-Source Heat Pump (often called ‘geothermal’) which uses a heat exchanger buried in the earth (in Alberta, by drilling into the ground) or submerged in a body of water. The Ground-Source Heat Pump has the advantage of a more constant temperature (compared to outside air) and a more constant COP, but it typically costs more.

How Does a Heat Pump Perform in Lethbridge, Alberta?

To summarize to this point, we know that:
- Different cities have different climates
- Different cities use different fuels for heating.
- Different cities use different fuels for generating electricity.
- Different cities have different costs for electricity and heating fuels.

As such, you can expect that the results for reducing greenhouse gas emissions and the costs to heat your home will vary from city to city. Despite the discussions you might find in sales communications or the media, you have to determine the optimum technologies specific to your city.

Lethbridge Climate Model

To get a representative climate model, we have taken the hourly temperature and humidity for the past ten years for Lethbridge. From those ten years of data, we found the average temperature for each month and then the average of the averages for the ten years. Using the average temperature, we found the most representative month over the past ten years and used that month’s hourly data in the model. For example, we have data for the last ten Decembers. We found the average temperature for each of these Decembers, then found the average for all Decembers – let’s say this was -7 C. We then looked for the December over the past ten years that was closest to -7 C. We used this December’s data in the model. From this data, we calculated the heating degree days for the model which represents the local climate.

This can be simplified by simply taking the average temperature for a month and using the formula: COP = 3.25+0.0875*(Average Temp, C) as derived from recent research on Air Heat Pumps. The model above allows us to control for minimum operating temperatures.

As a reminder, the Coefficient of Performance (COP) represents the units of heat energy delivered to the home for every 1 unit of energy delivered to operate the Air Heat Pump (in the form of electricity).

We are not including the summer months, when we are more likely to be cooling the home. The Air Heat Pump and an air conditioner operate the same way, with the same efficiencies during these months. Because they are the same for both scenarios, we will not include air conditioning in the analysis.

Another important assumption is that the Air Heat Pump will not operate well below -20 C. The actual minimum ambient temperature in which an Air Heat Pump will no longer operate efficiently may vary by technology and humidity, but the limit is generally -20 C. The results from this assumption will, therefore, slightly favour the Air Heat Pump.

The Results

Our model home uses 100 GJ of natural gas energy to heat the home over the period of a year.

Base Case: Using a natural gas furnace with an average efficiency of 85%, the home will consume 117.7 GJ of natural gas.

Air Heat Pump: Using an Air Heat Pump with the above COP values, the home will consume 8600 kWh of electricity.

As a reminder, the energy to cool the home in the summer will be the same in both cases (if there is an air conditioner in addition to the natural gas furnace in the base case).

Greenhouse Gas Emissions:

We began this discussion talking about the different fuels used to heat our homes across Canada. Alberta mainly uses natural gas. The emissions from burning natural gas are roughly 50 kg CO2 for every GJ.

Base Case: At 177.7 GJ of natural gas consumption, the GHG emissions amount to 5880 kg CO2 per year.

Greenhouse gas (GHG) emission related electricity generation also vary widely across Canada. The GHG emission for Alberta’s generation mix is 0.540 kg CO2 / kWh.

Air Heat Pump: At 8600 kWh of electricity consumed for heating, the GHG emissions amount to 4640 kg CO2 per year.

Conclusion: An air heat pump in Lethbridge today will lower GHG emissions from 5880 kg CO2 to 4620 kg CO2 per year, a reduction of 1260 kg CO2 or 21%.

With the phasing out of coal generation of electricity in Alberta, the GHG emissions per kWh have dropped considerably. If we were to reduce the GHG emissions of our electricity to that of British Columbia, an Air Heat Pump will reduce our emissions for home heating by 98%. The results are completely dependent on the GHG emissions attributable to our electricity. Renewable energy like wind and solar represent opportunities for Alberta to lower its emissions, making Air Heat Pumps even more attractive (from an emission perspective) in the future.

Another option is to install your own solar (PV) array on your home to reduce your personal emissions (and costs). Your own solar will make electricity at about 0.2 kg CO2/kWh, which is about 60% better than Alberta’s grid. But we’ll save this for another analysis.


As shown above, the cost of electricity also varies widely across Canada, and even within the province depending on the City and the type of contract from your utility provider (eg. floating vs. fixed). It is difficult to provide a robust economic analysis with the variety of costs, so we will try to show all of our numbers which will allow you to do your own calculations.

Fixed Costs:

Natural Gas Furnace $6000
Air Conditioner $4000
Air Heat Pump $12,000 (but currently a $5000 rebate)

(Assumption that gas line and electricity transmission lines are already in place.)

Since the Air Heat Pump will lose most of its COP by -20C, the home below this temperature may be heated directly by electricity (like floorboard heaters or electric radiators), or the home may require a natural gas furnace to provide home heating during the coldest periods.

A hybrid system might include an Air Heat Pump and a Furnace, or an Air Heat Pump and direct electrical heating. In Alberta, an Air Heat Pump and natural gas furnace backup is commonly recommended.

Variable Costs (Utilities):

Again, the numbers are a bit messy. The actual costs to the consumer are perhaps the most contentious part of the economic analysis. If you were to eliminate gas service to your home, you will save on the fixed additional costs. If you maintain gas service, these fixed costs will always be there regardless of consumption. Furthermore, some of the charges include both fixed and variable rates that are invisible in the bill (and communications with the providers did not result in this information).

We’ve already noted that prices for energy can vary within a city. The other complication are the additional charges (beyond the energy price) that can be fixed (you pay no matter what) or variable (they increase with an increase of energy consumption). We will show the calculations for both scenarios – one with all of the costs in your utility bill and assuming they all rise and fall with consumption; the second using only the energy costs, assuming that a decrease of additional charges for natural gas will increase the additional charges for electricity by the same amount – cancelling each other out.

Scenario 1 (using the costs for the whole bill as a variable cost rising with consumption)
My utility bill in Lethbridge for the past year has an average natural gas price of $26/GJ and an average electricity price of $0.34/kWh.

Natural Gas Furnace = 117.7 GJ of natural gas x $14.25/GJ = $1675

Air Heat Pump = 8600 kWh of electricity x 0.34/kWh = $2925

The Air Heat Pump will cost $1250/year more than a natural gas furnace in Lethbridge, Alberta.

As a reminder, we are assuming the air conditioning costs will be the same for both technologies.

Scenario 2 (using only utility rates, and assuming additional charges will cancel out)

From Enmax in November 2023, one can enter a 5-year contract for electricity at 12.29/kWh and natural gas at $4.89/GJ. Individuals may decide to using the floating rates or use another provider, but we will use these numbers for argument’s sake.

Natural Gas furnace = 117.7 GJ of natural gas x $4.89/GJ = $575

Air Heat Pump = 8600 kWh of electricity x 0.1229/kWh = $1055

The Air Heat Pump will cost $480/year more than a natural gas furnace in Lethbridge, Alberta.

Scenario 1, is likely to be more representative of actual cost differences, and Scenario 2 would be more optimistic if the additional charges on the bill balance in favour of electricity.

Nonetheless, it is fair to assume the Air Source Heat pump will have cost of operation between $500 and $1250 more than a natural gas furnace in Lethbridge, Alberta given current prices.

By way of comparison, if you were paying the utility costs for Ontario, the cost of operation an Air Heat Pump would be half of that of Alberta, making the Air Heat Pump comparable and probably cheaper than a natural gas furnace. In many provinces, the Air Heat Pump would be a great decision based both on emissions and operating costs.

Cost of Carbon:

Taking the more favourable operating costs for an Air Heat Pump and the emission reduction, the cost of carbon would be:

Cost of Carbon = $500/1.26 tonnes = $400/tonne*

*And, please, we emphasize, this is specifically for Lethbridge, Alberta. Air Heat Pumps in other locations with cleaner electricity (with lower GHG emissions) and less costly electricity will make the Air Heat Pump much more attractive environmentally and financially.

But First …!

Before you consider investing in an Air Heat Pump, you can reduce your heat loss (and your personal GHG emission footprint) and save money by doing some simple things:

1. Lower your thermostat when you are not at home (and maybe a little even when you are at home). A couple of degrees drop in your home temperature can save you upwards of 10% of your natural gas consumption.

2. Don’t heat your whole home to the same temperature. Where possible heat the room you are in by shutting doors to your rooms or basement and closing your vents a bit (but don’t shut them off, as you don’t want to cause moisture to condense on or within your walls).

3. Seal your doors and windows. Between a third and half of your heat loss in the winter is due to air being lost to the outdoors (especially in a windy climate like ours). By better sealing around your windows or improving weather stripping on your doors, you can save some energy.

4. Landscape to better protect your home from wind and to shade in the summer (particularly the west-facing windows).

5. Insulate your basement walls and floors (with a subfloor). If you are heating your basement, as much as a quarter of your heat in the winter is being lost through uninsulated walls and floor slab.

6. For new builds or renovations, improve your wall and roof insulation and windows, seal the home tight and ventilate with a Heat Recovery Ventilator. Optimize roof-line for south-facing solar PV installations.


For the next number of years, SAGE would recommend installing an Air Heat Pump if you are going to replace or install a new air conditioning system. New home building should install a heat pump (air or ground-source) in addition to using green building techniques. The current rebate for Air Heat Pumps makes this financially attractive, and you will be in a position to use the Air Heat Pump for heating if the emission intensity of Alberta’s electricity grid declines and if costs for electricity decline relative to natural gas. It will give you some flexibility in the future.

Many installers in Alberta recommend maintaining a natural gas furnace for backup home heating at lower ambient temperatures. This is good advice for the near future. Heating the home at temperatures below -20 C using electricity would be cost prohibitive.

If you are concerned, as we are, about greenhouse gas emissions, there are likely many more effective ways to make reductions for less cost/tonne in Lethbridge, Alberta than an Air Heat Pump.

You may also wish to advocate with government decision-makers to continue efforts to reduce the GHG emission intensity of our electricity. If we are to transition to low-carbon technologies like heat pumps and electric vehicles, it is essential that our electricity generation becomes much cleaner.