You can also choose to install electric heat, which comes from small registers located around the border of each room. Although the cost of installation averages between $1,000 and $2,000, this type of furnace isn't a good idea for heating large spaces and comes with high energy costs. One newer option gaining popularity is a heat pump, which pulls in heat from the air or ground using refrigerant coils. Air source heat pumps cost $1,500 to $7,000, while ground source may cost $7,000 to $25,000. These furnaces can be used as air conditioning units in summer, but many can't operate in extremely cold climates, limiting their efficacy.