Residential space heating dominates home energy use in Canada (~60% of total energy) energyrates.ca . Modern cold-climate air-source heat pumps deliver roughly 2–4× the heating output per unit energy of conventional systems cer-rec.gc.ca . In practical terms, this means a heat pump typically uses only about 25–50% as much energy to meet the same heating load (roughly 50–75% reduction in heating energy use) cer-rec.gc.ca. Savings depend on climate, home size, insulation, and the old fuel’s price. For example, the average Canadian household used about 88.4 GJ/year (~24,500 kWh) of natural gas for heating energyrates.ca; replacing that load with a heat pump (coefficient of performance ~3) would need only ~8,200 kWh of electricity (a ~67% cut in delivered energy). Likewise, electric baseboard heat (COP≈1) replaced by a COP≈3 heat pump cuts heating electricity by ~65–70%. These efficiency gains translate into large bill savings, especially for expensive fuels. Heat pumps also provide cooling (often replacing window or central A/C units) at high efficiency. If they replace older central A/C, cooling energy use stays similar but may be slightly higher in summer since heat pumps tend to run longer for dehumidification. We focus here on heating (plus any offset of existing cooling cost); dedicated heat-pump water heaters (for DHW) are a separate topic.

Savings by fuel type

The energy- and cost-savings from switching to a heat pump vary by the old heating system:

• Electric baseboard (resistance heat): Baseboards are 100% electric with COP≈1. A modern cold-climate heat pump has a seasonal COP often ~2.5–3.5. This implies roughly 60–70% less electricity for the same heat (using only ~30–40% of the energy) cer-rec.gc.ca . In dollar terms, an Ontario home using 15,000 kWh/yr for heating (≈$1,800 at $0.12/kWh) would use ~5,000 kWh with a heat pump (≈$600), saving ~$1,200/yr (about 67%). In Nova Scotia (higher electricity rates, ~16¢/kWh), the same switch could save ~$1,200–1,600/yr on heating. (If the home also used electric A/C, a heat pump adds cooling with similar efficiency, but total electric use still falls.)
• Oil furnace or boiler: Fuel-oil heating is costly and furnace efficiency is ~80–90%. A heat pump replacement typically cuts heating energy use by around 50–70%. For example, a home burning 2,000 L oil/yr (≈77 GJ) at ~90% eff uses ~19,000 kWh of heat. A COP≈3 heat pump would need ~6,300 kWh, ~33% of the original energy. If oil costs ~$1.40/L, the old bill is ~$2,800; replacing it with $0.15/kWh electricity is ~$945 – a saving of ~$1,850 (66%). Published programs note roughly $1,500–$4,500/yr savings for oil-heated homes switching to heat pumps rbcroyalbank.com, depending on house size and oil price. In Ontario, typical oil-heated homes might save on the order of $1,000–$2,500 annually. In Nova Scotia (colder winters and similar oil prices), savings can be somewhat higher, often $1,500–$3,000/yr.
• Propane furnace: Propane is similar to oil in price and furnace efficiency (~80–90%). Savings are comparable to oil. For instance, a house using 1,500 L propane/yr (≈54 GJ) might spend ~$2,000 on heat; a heat pump would cut that by roughly 50–70%. We estimate ~$1,000–$2,000 per year saved in Ontario and slightly more in Nova Scotia, roughly 60% reduction. Exact values depend on local propane prices (often ~$1.30–1.50/L) and heat pump COP.
• Natural-gas furnace: Natural gas is relatively cheap per unit heat. A new high-efficiency gas furnace (95% eff) vs a heat pump (COP3) yields smaller percentage savings. Roughly, switching from gas to heat pump can reduce heating energy by ~50–60% (since 2–3× efficiency) but the cost saving is lower because gas is cheap. In Ontario, an average gas-heated home might save on the order of 25–40% on heating costs. If an average Ontario home spends ~$1,200–$1,500/yr on gas heat, the heat pump might cut that by ~$300–$600. Nova Scotia homeowners with gas (via the Maritimes pipeline) see similar or slightly higher savings since electric rates are higher: roughly 30–45% fewer dollars spent, e.g. $400–$800/yr saved for an average use. (In practice some gas areas have very low baseload or different rate structures; savings will vary.)

These ranges are approximate; min–max savings can vary widely. For example, a very leaky home or very cold winter could reduce COP (pushing savings to the low end, ~40% for oil/gas), whereas a mild home might see up to ~80% energy reduction (especially vs electric heat). In general, published analyses note typical heat pump replacements yield savings of 50–75% compared to resistance heat or oil, and 20–50% compared to gas cer-rec.gc.ca.

Table: Estimated annual bill savings by replaced system. “% Savings” refers to heating energy reduction (heating + cooling); dollar ranges assume typical provincial energy prices and an average-sized home. Values vary with home characteristics.

Regional factors and incentives

Savings also depend on local energy prices and incentives. Ontario’s electricity prices (~11–13¢/kWh plus delivery) are moderate, and the province has no carbon tax, whereas Nova Scotia’s electricity (~14–16¢/kWh) and fossil fuels carry carbon charges (raising oil/propane/gas costs). This tends to make percentage savings slightly larger in Nova Scotia for the same heat output. For example, a given heat output replaced by electricity costs more in NS, but the old oil/gas was also pricier per kWh of heat. Both provinces offer programs that affect net costs: Efficiency Nova Scotia provides rebates (e.g. up to $2,000 for air-source heat pumps rbcroyalbank.com) and NS homeowners switching from oil can get up to $15,000 via the federal Oil-to-Heat-Pump program rbcroyalbank.com. (In fact, the federal grant is $10,000 plus an extra $5,000 top-up in NS rbcroyalbank.com.) In Ontario, low-income and other eligible residents can receive free cold-climate heat pumps through SaveOnEnergy’s Energy Affordability Program. Additionally, federal initiatives like the Canada Greener Homes loans (interest-free financing for retrofits) apply in both provinces. These incentives reduce upfront costs, effectively boosting the return on investment and shortening payback of the heat pump. For example, if a Nova Scotia homeowner switches from an oil furnace, they might save ~$1,800/yr on fuel (as above) and also receive up to $15,000 in rebates rbcroyalbank.com, making the financial benefit very large. In Ontario, a gas-heated homeowner might only save a few hundred dollars per year, but could apply for any available Ontario rebates or federal loan to defray costs.

Conclusion

In summary, cold-climate air-source heat pumps typically cut space-heating energy use by about half or more cer-rec.gc.ca. For homeowners in Ontario and Nova Scotia, this generally means total heating bill savings on the order of 30–60% for oil/propane/electric systems and 20–40% for gas systems. Translated to dollars, many households see hundreds to a few thousand dollars per year saved on energy costs after switching. The exact savings depend on the old system and energy prices, but official analyses consistently show substantial reductions in bills for oil-, propane-, or electric-heated homes( cer-rec.gc.ca, energyrates.ca). Combined with current provincial and federal incentives, heat pump retrofits are a strong economic and environmental upgrade for cold-climate homes in Ontario and Nova Scotia. 

Sources: Government and utility reports and programs (Natural Resources Canada, Canada Energy Regulator/CER, Efficiency Nova Scotia, SaveOnEnergy, etc.) provide efficiency metrics and incentive details. These indicate that heat pumps are roughly 2–4× more efficient than conventional furnaces and that typical heating cost reductions fall in the ranges shown above.

Citations

1. https://energyrates.ca/how-much-do-natural-gas-and-electricity-affect-the-cost-of-living-in-canada/ 
2. https://www.cer-rec.gc.ca/en/data-analysis/energy-markets/market-snapshots/2023/market-snapshot-heat-pumps-could-significantly-reduce-ghg-emissions-from-canadas-buildings.html
3. https://www.rbcroyalbank.com/en-ca/my-money-matters/goals-aspirations/buying-a-home/home-building-and-renovations/which-rebates-and-grants-are-available-for-heat-pumps-in-canada/