Switching From Oil Heat to a Heat Pump in Canada

Key takeaways

Oil heat is typically among the most expensive ways to heat a Canadian home.

A cold-climate heat pump typically delivers the same heat for roughly half the cost or less.

OHPA is open in BC, MB, ON, NB, PE, NL and Yukon, and scheduled to end in 2027.

In Nova Scotia, OHPA federal funding is fully committed and new applicants go on a standby list.

Plan for safe oil tank removal, and tell your insurer once it is gone.

Switching from oil heat to a heat pump is one of the clearest energy upgrades for a Canadian home. Heating oil at about $1.65/L costs roughly $180 to $195 for every 1,000 kWh of heat your home receives, depending on your furnace or boiler. A cold-climate heat pump typically delivers that same heat for about $35 to $110, depending on your province's electricity rate and climate.

Federal help is still available in several provinces through the Oil to Heat Pump Affordability (OHPA) program, scheduled to end in 2027. Combined with provincial programs, it can cover a large share of the cost for eligible households.

Why oil heat costs so much

One litre of heating oil holds about 10.7 kWh of energy. An oil furnace or boiler typically converts 80-85% of that into heat. At about $1.65/L, that works out to roughly $0.18 to $0.19 per kWh of heat. Older equipment can be less efficient, which pushes the cost higher. Oil prices also swing widely from year to year.

Typical savings by province

The table compares oil with a cold-climate air-source heat pump, using approximate all-in electricity rates and a typical seasonal COP for each region.

Province	Approx. electricity $/kWh	Assumed COP	Heat pump, per 1,000 kWh of heat	Oil at 80-85%, per 1,000 kWh of heat
British Columbia	0.135	3.0	About $45	About $180-$195
Manitoba	0.115	2.2	About $52	About $180-$195
Ontario	0.17	2.6	About $65	About $180-$195
Quebec	0.085	2.4	About $35	About $180-$195
New Brunswick	0.165	2.5	About $66	About $180-$195
Nova Scotia	0.195	2.7	About $72	About $180-$195
Prince Edward Island	0.18	2.6	About $69	About $180-$195
Newfoundland and Labrador	0.155	2.5	About $62	About $180-$195

A home that burns around 2,000 L of oil a year receives roughly 17,000 to 18,000 kWh of heat. Replacing most of that with a heat pump typically saves well over $1,000 a year in most provinces. Your results depend on how much of the load the heat pump carries and on oil prices.

The OHPA program in 2026

The federal Oil to Heat Pump Affordability program helps low- to median-income households that heat with oil switch to a heat pump. Its status as of November 2026:

Open in British Columbia, Manitoba, Ontario, New Brunswick, Prince Edward Island, Newfoundland and Labrador, and Yukon.
Nova Scotia: federal funding is fully committed. New applicants are placed on a standby list.
Scheduled to end in 2027, so apply early if you qualify.

OHPA often works alongside provincial programs. Confirm current eligibility and amounts with the program and your provincial agency before you sign a contract. Our rebates page links to each province, such as New Brunswick and Nova Scotia. The Canada Greener Homes Grant and Loan are both closed to new applicants.

Choosing the right heat pump setup

Homes with ducts (oil furnace)

A ducted cold-climate heat pump can replace the oil furnace, with electric backup strips for deep cold. This lets you remove oil entirely.

Homes with radiators or baseboards (oil boiler)

Ductless mini-splits are the usual choice. They heat the main living areas, and the boiler or electric baseboards cover bedrooms and the coldest nights. Air-to-water heat pumps that feed existing radiators exist but cost more and are less common. Read our ductless mini-split guide.

Keep oil as backup or remove it?

Keeping oil as backup lowers the upfront cost, but you still maintain the tank and buy some oil. Many programs, including OHPA, are designed around fully or mostly replacing oil. Check the rules before deciding.

Oil tank removal

If you remove oil heat, plan for the tank too.

Hire a licensed contractor. They pump out remaining oil, clean and remove the tank and cap the fill and vent pipes.
Check for leaks. Underground or older tanks may need soil testing. Costs rise if contamination is found.
Get paperwork. Keep the removal certificate. Buyers, lenders and insurers often ask for it.
Tell your insurer. Many insurers charge more for oil tanks or require replacement after a set age. Removing it may lower your premium.

Next steps

Enter your annual oil use in the heat pump calculator to estimate savings. Read heat pumps in a Canadian winter for cold-weather performance, and consider an EnerGuide home evaluation if a program requires one.

Frequently asked questions

How much can I save switching from oil to a heat pump?

Oil heat typically costs about $180 to $195 per 1,000 kWh of heat, while a cold-climate heat pump typically costs about $35 to $110. A home using around 2,000 L of oil a year often saves well over $1,000 a year.

Is the Oil to Heat Pump Affordability program still available?

As of November 2026 it is open in BC, Manitoba, Ontario, New Brunswick, PEI, Newfoundland and Labrador and Yukon, and is scheduled to end in 2027. In Nova Scotia federal funding is fully committed and new applicants go on a standby list.

How much does oil tank removal cost in Canada?

Costs vary with tank size, location and whether any contamination is found. Get quotes from licensed contractors, and keep the removal certificate for insurance and resale.

Can a heat pump fully replace an oil furnace in Canada?

In many homes, yes, with a cold-climate model and electric backup for the coldest nights. Homes with oil boilers and radiators often use ductless mini-splits with some backup heat.