Is Electrification Worth It in Minnesota?

Minnesota winters are the final boss for heat pumps.

-20°F is normal in January. You'll hit 8,000+ heating degree days in Minneapolis, more up north. Natural gas costs $1.15/therm. Electricity runs $0.13/kWh. This is exactly the scenario where 10 years ago I would have said "just get a gas furnace." But cold-climate heat pumps have gotten really, really good.

You need a true cold-climate model—Mitsubishi Hyper-Heat, Bosch IDS, or equivalent. Installed correctly with proper sizing and backup heat integration, these systems work down to -15°F before supplemental heat kicks in. If you're heating with propane or oil, the savings are massive ($1,500+ per year). With gas, it's marginal—but the air quality and climate benefits might tip the scale.

Updated December 2024Data from EIA, DSIRE, NREL
Heat Pump Payback
Not Recommended
With incentives
Annual Savings
$2,085
Full electrification
Available Incentives
$11,300
Federal + state + utility
CO₂ Reduction
14.3 tons
Per year

Minnesota Energy Costs

Electricity Rate
$0.142/kWh
Natural Gas Rate
$1.25/therm
Average Electric Bill
$135/month
Average Gas Bill
$92/month
Climate Zone
cold
Heating Degree Days
8,000
Cooling Degree Days
750

Visual ROI Analysis

Payback Period Comparison

Lower is better • Shortest payback = fastest return on investment

Annual Savings Comparison

Higher is better • More annual savings = greater long-term benefit

Cumulative Net Savings Over Time

Point where line crosses $0 = payback achieved • Steeper line = faster savings growth

Return on Investment by Upgrade

🌡️

Heat Pump HVAC

Upfront Cost$12,000 - $22,000
Total Incentives-$2,800
Net Cost$9,200 - $19,200
Annual Savings$-109/yr
Payback PeriodNot Recommended
Lifetime ROI-5%
CO₂ Reduction4.7 tons/yr
☀️

Solar Panels

Upfront Cost$15,000 - $30,000
Total Incentives-$4,500
Net Cost$10,500 - $21,000
Annual Savings$920/yr
Payback Period18.0 years
Lifetime ROI119%
CO₂ Reduction3.1 tons/yr
💧

Heat Pump Water Heater

Upfront Cost$2,500 - $4,500
Total Incentives-$2,600
Net Cost$-100 - $1,900
Annual Savings$162/yr
Payback Period8.2 years
Lifetime ROI55%
CO₂ Reduction1.8 tons/yr

EV Charger + Electric Vehicle

Upfront Cost$800 - $2,500
Total Incentives-$1,400
Net Cost$-600 - $1,100
Annual Savings$1,112/yr
Payback Period0.3 years
Lifetime ROI1440%
CO₂ Reduction4.8 tons/yr

Full Electrification Package

Total Upfront Cost
$30,300 - $59,000
Total Incentives
-$11,300
Net Cost After Incentives
$19,000 - $47,700
Annual Energy Savings
$2,085/year
Lifetime Savings (18 years)
$37,524
Simple Payback
18.4 years
💡

Best ROI for Minnesota

Based on your state's energy costs and climate, EV Charger offers the best return on investment with an average payback of 0.3 years and an ROI of 1440%.

0.0 years slower than average compared to the national average.

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