A dual-fuel or "hybrid" system actually uses a heat pump with a gas furnace. The outdoor system is the heat pump, and instead of an air handler, the indoor section uses a gas furnace with a coil. The heat pump is set to heat the home until the outdoor temperature reaches a specific degree. Once below the set outdoor temperature, the system switches to gas heat.

The contractor simply installs a compatible, programmable thermostat featuring dual fuel mode and an outdoor temperature sensor on the heat pump. The installer or homeowner can enter the “set-point” in the thermostat, which becomes the trigger temperature to change from electric to gas heat. The dealer should be able to provide the most efficient “set-point” based on the system’s capacity, efficiency and regional climate requirements. During heating season, when the outdoor temperature falls below the set temperature for the heat pump, the system will switch over to gas furnace heating.