Heat pump vs furnace + AC
| Ducted heat pump | Gas furnace + AC | |
|---|---|---|
| Heating | Moves heat from outdoor air indoors; electric | Burns natural gas |
| Cooling | Yes, same unit runs in reverse | Needs a separate AC condenser |
| Equipment | Outdoor unit + indoor air handler | Furnace + AC condenser + coil |
| Installed cost (Bay Area) | $14,000–$22,000+ | $12,000–$20,000+ |
| Operating cost drivers | Electric rate, efficiency (HSPF2/SEER2), duct leakage | Gas rate + electric rate for AC, furnace efficiency |
| Air district rule | No combustion; rule doesn't apply | Zero-NOx standard for new furnaces from 2029 |
| Venting | None (condensate drain only) | Flue through the roof |
Costs: Galaxy Heating & Air, Feb 2026 (contractor). Ask the installer to compare running costs using your actual utility rates.
What changes in the house
Outdoor unit
The heat pump replaces the AC condenser, usually in the same spot. Check setbacks and noise rules if it moves.
Air handler
A fan coil goes where the furnace was, in the attic, garage, closet or crawlspace. The gas line is capped and the flue removed.
Ducts + electrical
Ducts are tested and sealed or replaced. The air handler and outdoor unit need 240V circuits, which can raise panel questions.
Duct testing on change-outs (Title 24)
Under California's 2025 Energy Code, replacing an air handler or outdoor unit triggers duct leakage testing. The target is no more than 10% total leakage or 7% leakage to outside, and an ECC-Rater (formerly HERS) verifies the result. Heat pumps also need refrigerant charge verification. The code also limits electric-resistance heat in heating replacements, so heat strips shouldn't be the main heat source (California Energy Commission).
The BAAQMD rule: furnaces from 2029, on burnout
The Bay Area Air District's Rule 9-4 sets a zero-NOx standard for new residential furnaces with a 2029 compliance date. It governs which furnaces can be installed, not whether you must remove a working one. If your furnace is 15–20 years old, the rule is a reason to plan rather than replace in an emergency. Details: Bay Area gas appliance rules.
When dual-fuel makes sense
A dual-fuel (hybrid) system keeps a gas furnace as backup and lets the heat pump do most of the work. It can suit homes with a newer furnace and an AC that has failed, or owners who want gas backup. In mild Walnut Creek winters a correctly sized heat pump rarely needs it, and the furnace will still face the 2029 standard when it is replaced.
Check the panel early
Many 1960s and 70s homes still have 100A service. A load calculation tells you whether the heat pump fits or whether you need a panel upgrade first. Our sister site covers that decision: do I need a panel upgrade?
Timeline
| Step | Typical timing |
|---|---|
| Site visit, load calculation, quote | About a week to compare two or three bids |
| Permit (Walnut Creek) | Over the counter for furnace replacements, about 3–5 business days per the city |
| Install | Usually 1–3 days for a straight swap; longer with duct or panel work |
| Duct test, charge check, final inspection | After install, scheduled with the ECC-Rater and building inspector |
Permit timing: City of Walnut Creek Building Permit FAQs. Other cities differ; see the area pages.
What it costs
Bay Area whole-home installs typically run $14,000–$22,000+; the full breakdown, home-size examples and rebate math are in the cost guide.
Rebates as of Oct 2026: MCE customers can get up to $400 per 500 sq ft for heat pump heating and cooling and up to $675 for a heat pump water heater; most other programs are closed or ended. See the dated rebate table.
Furnace and heat pump questions
Heat pump vs furnace: which is better for Walnut Creek?
For most homes here, a heat pump makes sense because one system covers both the hot summers and the mild winters. A furnace only heats, so it still needs an AC. Operating cost depends on your gas and electric rates; ask the contractor to model them for your home.
Can I keep my ducts?
Often, if they pass the leakage test that Title 24 requires on a change-out (no more than 10% total leakage or 7% to outside, verified by an ECC-Rater). Old flex duct in hot attics frequently needs sealing or replacement.
Do I have to replace my furnace in 2029?
No. BAAQMD's furnace standard applies to new furnaces installed from 2029. A working furnace can stay; the rule matters when it fails and you choose a replacement.
What is a dual-fuel system?
A heat pump paired with a gas furnace that takes over on the coldest days. It keeps a gas appliance in the house, and a new gas furnace will face the 2029 zero-NOx standard when it is eventually replaced.