There is no single cheapest way to heat a home in Canada. The running cost of any system comes from three things: the price of the energy it uses, how efficiently it turns that energy into heat, and how much heat the house loses. A Grimsby Beach cottage with little wall insulation, a 1950s Lakemount Terrace bungalow and a new townhouse near the Winston Road Neighbourhood can give three different answers to the same question.
This guide explains how the main options work, where each one makes sense, and how to approach rebates and tax credits without relying on numbers that change from year to year.
The three common types of system
Most homes in Ontario are heated and cooled by one of three arrangements.
- **A split system with a gas furnace and central air.** The furnace burns natural gas and a blower pushes warm air through the ducts. In summer, an outdoor condensing unit and an indoor coil sitting on the furnace cool the same air.
- **A ducted heat pump.** The outdoor unit looks like an air conditioner, but it can run in reverse. In winter it pulls heat out of outdoor air and moves it inside through the same ducts. Many are paired with a furnace as backup, which is called a hybrid or dual-fuel system.
- **A ductless mini-split.** An outdoor heat pump feeds one or more wall-mounted indoor heads through small refrigerant lines. No ductwork is needed, which suits houses where there was never room to run it.
Boilers with radiators, electric baseboard and older oil systems still exist in Grimsby, mainly in the oldest houses, but these three are what most homeowners are choosing between when equipment is replaced.
Why a heat pump can cost less to run
A furnace makes heat by burning fuel. A high-efficiency condensing furnace captures most of the heat from that flame, which is why its exhaust is cool enough to vent through a plastic pipe in the side wall.
A heat pump does not make heat; it moves heat that already exists in outdoor air, using electricity to run a compressor and fans. Because it is moving heat rather than generating it, a heat pump can deliver more heat into the house than the electrical energy it consumes. That advantage shrinks as the outdoor temperature drops, because there is less heat in the air to collect and the compressor has to work harder.
This is where the lake matters. At Vineland, also on the Lake Ontario shore, the lake moderates the local weather and keeps winters warmer than they would otherwise be. Milder winter weather means a heat pump spends more of the season in the range where it works efficiently, and less time relying on backup heat. Cold-climate heat pumps are built to keep producing useful heat at lower outdoor temperatures than older models, so for many Grimsby homes they can carry most or all of the heating load.
Whether that works out cheaper than gas depends on current electricity and gas rates, and those move. A hybrid system lets the controls switch to the furnace when gas becomes the cheaper or more comfortable option on the coldest days.
How the house changes the answer
The same equipment behaves differently depending on the house it is fitted to.
- **Grimsby Beach and Main Street East and West.** These older wood-frame houses often have retrofitted ductwork squeezed in after the fact, little wall insulation and chimneys that may need relining before new gas equipment can vent into them. A ductless heat pump can avoid both the duct problem and the chimney problem. A heat pump in a leaky house will still work, but sealing and insulating usually lowers running costs more than any equipment change.
- **Lakemount Terrace and the north end.** Post-war homes that were converted from oil or coal often have undersized ducts and weak return air. A ducted heat pump moves larger volumes of gentler warm air than a furnace does, so restricted returns can leave it noisy and short of capacity. Removing the furnace from the chimney can also leave a gas water heater alone in an oversized flue, which may not draft properly.
- **The west end, around the Winston Road Neighbourhood, the Casablanca Road interchange and the GO Station Secondary Plan Area.** These tighter, newer homes usually already have condensing furnaces, side-wall vents and heat-recovery ventilators. Their ducts are typically closer to what a heat pump needs, which makes adding one alongside the existing furnace a fairly direct project.
What gets measured before a price is written
A sound recommendation comes from the house, not the label on the old furnace. Before giving a written price for a heat pump, furnace or hybrid system, the technician should:
- Calculate the heat loss of the house room by room, so the equipment is sized to the actual load rather than oversized and short cycling.
- Measure the static pressure in the duct system and check return-air sizing, to see whether the ducts can carry the airflow a heat pump needs.
- Check the electrical panel and available capacity for an outdoor unit and any backup heat.
- Inspect the existing venting and chimney, and say whether a liner is needed if a water heater would be left on its own.
- Find a sensible spot for the outdoor unit, clear of snow drift, roof runoff and bedroom windows.
Any gas work involved, such as moving, capping or replacing a furnace, falls under Ontario Regulation 212/01 and the CSA B149.1 installation code. Work is performed by TSSA-certified gas technicians. Heat pumps and air conditioners contain refrigerant and are a compulsory trade in Ontario. Work is performed by 313A refrigeration and air conditioning mechanics.
Rebates for furnaces, heat pumps and air conditioners
Provincial, federal and utility incentive programs in Ontario open, change and close regularly, and the rules about which equipment qualifies change with them. In general terms:
- Programs tend to favour equipment that lowers energy use, so heat pumps have been the more common target than standard gas furnaces or central air conditioners.
- A plain like-for-like furnace or air conditioner replacement is less likely to qualify than a heat pump or a hybrid system.
- Many programs require an energy assessment before the work and another after it, so the order of steps matters. Installing first and applying later can disqualify the project.
- Equipment often has to appear on a specific qualifying list, by model number.
The practical advice is to check what is open at the time you get a quote, read the eligibility conditions in full, and keep every invoice and model number. A good contractor checks current programs when preparing the quote and tells you which conditions apply to your job.
Tax credits for a new furnace
Tax credits for home heating equipment in Canada have been offered at different times by different levels of government, and they change more often than most people replace a furnace. A new furnace on its own is not usually something you can claim on a personal return, but rules differ for rental properties and for specific programs. Confirm the current position with the federal and provincial government sites or your tax preparer before counting on a credit in your budget.
If you are not on natural gas yet
Enbridge Gas supplies natural gas in the Town of Grimsby. If your house is not connected, Enbridge Gas has a form you can fill out, and it will confirm whether gas is available or coming to your street and explain the next steps. That answer often decides whether a heat pump, a hybrid or a gas furnace is the realistic choice.
A note on safety when the furnace stays
If you keep a gas furnace, as a primary system or as backup to a heat pump, it still needs its heat exchanger and venting inspected. A cracked heat exchanger can let carbon monoxide into the air the blower circulates. The Ontario Fire Code requires a working carbon monoxide alarm next to each sleeping area in any home with a fuel-burning appliance, a fireplace or an attached garage. If your furnace is old enough that you are weighing all of this, see should a 25-year-old furnace be repaired or replaced.
To have your house measured for a cold-climate or hybrid system, see heat pumps.