Oil to Heat Pump Conversion in Ontario

If your home runs on heating oil, converting to a cold-climate heat pump is the single largest change available to your heating bill. Oil-heated homes also qualify for the highest provincial rebate tier, up to $7,500. There are two routes through the conversion, and which one suits you depends on whether you keep a backup furnace or move the house fully electric.

Heating oil is the most expensive common way to heat a house in Ontario, which is why the saving on conversion is larger here than from any other fuel.

Assumptions: a roughly 2,000 sq ft Southern Ontario home burning 2,000 to 2,800 litres of oil a year, oil priced between $1.40 and $1.70 a litre, heat pump running on standard time-of-use electricity. Figures checked September 2026. Your own numbers depend on the house, the thermostat and your rate plan, which is what the assessment measures.

The cold-climate heat pump becomes the main heating system and carries the house through almost the whole season. Your existing oil furnace stays in place as backup for the coldest nights and for power-outage scenarios where you are running a generator.

This is the least disruptive route. The ductwork stays, the furnace stays, and the work is concentrated outdoors plus the indoor coil.

This route usually suits homes with a relatively young oil furnace that still has years left in it, and rural properties where having a fuel-fired backup independent of the grid genuinely matters.

The oil furnace comes out entirely. In its place goes an electric air handler, which houses the indoor coil and provides backup heat through electric elements when the heat pump needs support. The oil tank is decommissioned and removed.

The house ends up fully electric, with no fuel deliveries and no combustion appliance for heating.

The one thing to check first is your electrical service. An air handler with electric backup draws considerably more power than an oil furnace ever did, and some older homes need a panel upgrade before this route is possible. We check the panel during the assessment rather than discovering it on installation day.

This route usually suits homes with an oil furnace at or near end of life, and owners who want to be finished with oil altogether.

Both routes qualify for the same rebate tier, so the decision is about the house rather than the money available.

If you are undecided, the deciding question is usually the age of the oil furnace. A furnace with ten good years left is worth keeping as backup. One that is near the end is worth removing while the ductwork is already open.

1. Assessment. We measure the heat loss of the house, check the ductwork and inspect the electrical panel, then tell you which route fits and what it involves.
2. Equipment selection. We choose a cold-climate system from Natural Resources Canada’s qualified products list, sized to the house rather than to the old furnace.
3. Rebate pre-approval. The application goes in and approval is confirmed before anything is ordered.
4. Installation. Outdoor unit, indoor coil or air handler, controls and commissioning. Most conversions are a one to two day job.
5. Oil tank decommissioning, on Route 2. The tank is drained, removed and disposed of properly.
6. Documentation and submission. We compile the paperwork and submit the final claim.

1st Heat Home Comfort helps eligible Ontario homeowners access available Home Renovation Savings rebates for qualifying cold-climate heat-pump installations. Our team coordinates the process from eligibility review and pre-approval through installation, final documentation and rebate submission.

Oil-heated homes sit in the higher rebate tier, so the amount available here is larger than for a home on natural gas. The current figures by heating source are on our Ontario heat pump rebate page, and the programme itself is explained in our guide to the Home Renovation Savings Program.

All rebates remain subject to programme eligibility, approval and current HRS terms and conditions.

Oil heating in Ontario is concentrated outside the gas network, so most of this work is in the smaller centres and rural properties around Barrie, Kawartha Lakes, Kingston, Peterborough, Smiths Falls, Ottawa, Guelph and Orangeville. We also cover the rest of our Southern Ontario service area.

If your property is outside the towns listed, call (289) 409-9929 and we will tell you straight away whether your address is in range.

Will a heat pump really heat my house through an Ontario winter?

Yes, if it is a cold-climate model and it is sized correctly. These systems keep producing heat down to roughly minus 30 degrees Celsius, which covers almost every night Southern Ontario sees. Sizing comes from a heat loss calculation, and on both routes there is backup heat for the extremes.

Do I have to remove my oil tank?

Only on Route 2, where the oil furnace is replaced by an electric air handler. If you keep the furnace as backup, the tank stays. Where the tank does come out, we drain, remove and dispose of it as part of the job.

How much rebate does an oil-heated home get?

Homes heated with oil sit in the higher rebate tier alongside electricity, propane and wood, rather than the natural gas tier. Current amounts by heating source are on our Ontario heat pump rebate page, dated and linked to the official programme.

Will I need an electrical panel upgrade?

Sometimes, and only on the fully electric route. An air handler with electric backup draws far more than an oil furnace did. We check the panel during the assessment so it is priced into the job rather than discovered on installation day.

Can I keep my oil furnace as a backup?

Yes, and for some properties it is the better answer. A furnace with years of life left is worth keeping for the coldest nights and for outages where you are on a generator. The system switches over automatically.

What happens to the oil left in my tank?

That is handled as part of decommissioning. Depending on the quantity and the supplier, it can sometimes be credited back or collected. We raise it with you before the tank comes out rather than after.