Heat pumps. That’s the answer, and by a fair margin too!
Heating costs climb every year, and everyone wants to know the most affordable option. But “cheapest to buy” and “cheapest to run” are completely different things. That’s where a lot of people get confused.
At Varcoe, we’ve installed over 12,000 heating systems across Auckland since 1975, so we’ve seen firsthand what actually saves money over time versus what just looks cheap upfront. Here’s what you need to know about all your heating options!
| Heating Type | Cost per kWh of Heat | Monthly Running Cost (Example) | Notes |
| Heat pump | 3-7 cents | $60-$70/month | Based on 6kW unit running 8 hours daily |
| Electric heater | 25-40 cents | $75/month | Based on 2kW heater running 5 hours daily (~$2.50/day) |
| Gas heater | Lower than electricity | $65+ fixed charge plus usage | Creates dampness, emits nitrogen dioxide. Fixed connection fees eat into savings |
| Wood burner | Competitive if wood is free | Varies widely | Not cost-effective at current firewood prices. Wet wood causes heavy pollution |
| Wood pellets | Moderate | Higher than free wood | Better emissions than wood burner, but pellet costs add up |
The reason heat pumps win comes down to basic physics. For every kilowatt of electricity you feed into a heat pump, you get 3-4 kilowatts of heat back. An electric heater? You get 1 kilowatt of heat per kilowatt of electricity. Heat pumps are literally three times more efficient.
Heat pumps cost $3,500-$7,500 fully installed. That’s the catch. Meanwhile, an electric heater can cost anywhere from $50-$300.
But this shouldn’t be the figure you focus on. After you’ve had a good heat pump installed and run it for approximately 6 months a year heating a room, you’d be saving about $500 compared to an electric heater. Spread that over a few years and the initial cost gets absorbed fast.
EECA’s Gen Less program calculated that for an average Auckland household, a heat pump saves $122 a year compared to gas heating, and $352 a year compared to bottled LPG. Those savings add up to $600-$1,700 per year depending on your current heating method.
If your old heater’s on its way out anyway, the choice becomes straightforward: get a heat pump.
Some parts of New Zealand get cold enough that basic heat pumps lose efficiency. Below 0°C, heat pumps don’t perform at rated capacity (University of Illinois). If you’re in Christchurch, Dunedin, or down south, for example, where winters regularly dip below zero, you either need an oversized unit or a Mitsubishi HyperCore rated to -15°C.
That costs more upfront. The economics shift slightly in these regions, but heat pumps still remain the cheapest to run.
The cheapest heating in the world does you no good if your house leaks heat everywhere. Proper insulation, double glazing, and draft sealing around doors cut your heating needs by 30-50%. A heat pump in a badly insulated house has to work twice as hard and uses twice as much power.
If you’re working with a $5,000 budget, you’re usually better off fixing air leaks and insulation than splurging on the biggest heat pump available. Even a small unit will work better in a tight, insulated room than a huge one battling drafts.
Heat pumps work both ways – they heat in winter and cool in summer. You don’t need separate equipment. This dual functionality is another reason they’re cost-effective long-term. You’re getting two appliances’ worth of performance from one installation.
You’ll need landlord permission, which varies by lease agreement. Many landlords see heat pump installation as adding property value, so it’s worth asking. If they won’t allow it, a portable electric heater is your realistic option, even though it’s more expensive to run. Document any permission in writing.
Oversizing wastes money. A heat pump that’s too large cycles on and off frequently, using more power and wearing out faster. We size units based on your room’s square footage, insulation, and climate zone. A properly sized unit runs more efficiently and costs less over its lifetime than an oversized one.
If your home has significant drafts or poor insulation, addressing those first can reduce heating needs by 30-50%. This means you can install a smaller, cheaper heat pump that will still keep you comfortable. If you’re working with a limited budget, insulation improvements often deliver better ROI.
Yes, because heat pumps remain 3-4 times more efficient than electric heaters regardless of price per kWh. Even if electricity rates double, a heat pump would still use a third of the power of a standard heater.
The most cost-effective option remains a heat pump sized right for your space and installed properly. The initial cost hurts, but running costs make it economical within 3-5 years.
For short-term needs, an electric heater works for small rooms or temporary use. You’ll accept higher power bills as the trade-off, but sometimes that’s the more practical choice. Ducted heat pumps for whole-house heating only make sense if you can afford the premium upfront cost. They’re the most expensive to install, but heat everything with the lowest running cost per room.
One thing to avoid: portable gas heaters. They’re expensive to run, dangerous if not vented properly, and they make your house damp.Want to talk through what makes sense for your Auckland home specifically? Your budget, your space, your current heating situation? Ring Varcoe on 0800 088 888. We’ll break down actual numbers for your situation instead of generalizations.
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