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How much does an air source heat pump cost?

Last updated 5/17/2022

costs and benefits of air source heat pumps

Converting your home's HVAC system to air source heat pumps includes equipment and installation costs that depend on a few factors. These include the type of heat pump system you're installing (ducted vs. ductless or mini splits), your existing heating and cooling setup (e.g., if you already have ducts), how many rooms and floors you need to heat or cool, and the total size of your living area. 

While the initial installation cost is usually higher than other HVAC alternatives, the operating cost of air source heat pumps is lower than traditional home climate systems that run on gas, oil, or other common fuels. This makes air source heat pumps a smart financial decision for many homeowners. Their high efficiency also comes with environmental benefits – especially if you power them with solar.

Air source heat pump costs

How much does an air source heat pump installation cost?

As a rough estimate, you can expect a ductless air source heat pump installation to cost between $3,500 and $6,000 per indoor unit installed. Central heat pump systems (using ducts) usually cost between $12,000 and $20,000. Depending on where you live and the specific equipment you’re installing, there may be incentives and rebates available to decrease your upfront costs. Local installers will be able to provide more information about the incentives available to you and what the correctly sized heat pump system will cost in your home.


Monthly air source heat pump costs: What can you save on utility bills?

Aside from the initial one-time installation costs of heat pumps, it's also important to know what to expect to pay each month to heat and cool your home. According to ENERGY STAR, the average U.S. household spends more than $2,200 a year on energy bills, with heating and cooling accounting for nearly half of that amount. Heat pumps are more efficient at heating and cooling than other common systems, so usually, you'll see lower monthly utility costs.

A well-installed air source heat pump system can provide 1.5 to 3 times the electrical energy it consumes. This is possible because air source heat pumps move heat rather than burning fuel. The best oil-fueled furnaces can only approach a 1-to-1 ratio of energy consumed to heat energy provided.

Your exact savings vary depending on where you live but can be significant. According to the Northeast Energy Efficiency Partnerships (NEEP), air source heat pumps installed in the Northeast and Mid-Atlantic regions offered $459 in annual savings compared to electric resistance heaters and $948 annually compared to oil furnaces. Even if an oil system was displaced, so it operated less frequently, it still saved approximately $300.These savings will likely continue to rise over time as air source heat pump technology improves and energy rates rise.


Comparing heat pump costs to those for other HVAC systems

The true cost of installing your heat pump system is really the difference between its total cost and the cost of what you would have spent on a new boiler or furnace along with a new air conditioning unit. When replacing oil systems, you'll realize some of the most significant returns on investment with a heat pump. However, you can usually save on monthly utility bills regardless of your existing system.

You also may be able to save money overall when comparing total costs to what you'd pay to install a new heating and cooling system separately. Air source heat pumps provide both heating like your central heat, forced air, oil, or baseboard heating as well as cooling like an air conditioner, so that system covers all of your home HVAC needs throughout the year.


Saving money on air source heat pumps through incentives and rebates

If you're checking out new HVAC options, look to see if your state, city, or county offers any special programs or incentives for heat pumps. You can also see if the manufacturer has any rebates. Usually, your heat pump contractor can help you with anything available in your area for the equipment you're installing.

Various states, cities, and utilities offer air source heat pump incentives, special programs, or even loans to help reduce installation costs of air source heat pumps, including:

  • California
  • Colorado (Boulder)
  • Connecticut
  • Idaho
  • Maine
  • Massachusetts
  • Michigan
  • Minnesota
  • Montana
  • New Hampshire
  • New York
  • Oregon
  • Rhode Island
  • Vermont
  • Washington
  • Washington, D.C.

Note that each state and local program has different guidelines and parameters, so you’ll still need to confirm the incentive or program is offered with your utility, in your specific area, and with the equipment and setup you’ll have in your home.


Manufacturer rebates on air source heat pumps

Manufacturer rebates may change frequently, so you’ll want to check directly with your heat pump contractor or the manufacturer to confirm availability, amounts, and models with applicable rebates.


Do air source heat pumps increase your home’s value?

Another factor to consider is that upgrading to a more efficient HVAC system may benefit you if you sell your home in the future. Like many clean energy upgrades such as solar panels, heat pumps have shown to provide an increased home value. One October 2020 study showed a positive home price premium associated with air source heat pump installations across 23 states at an average of 4.3 to 7.1% ($10,400 to 17,000). The most substantial increases were shown in middle-class neighborhoods in mild climates.

What factors impact air source heat pump installation costs?

The total installation cost for heat pump systems depends on the type of system (central vs. ductless), system size, quality of equipment, the complexity of the installation, other services included, and any extras that you may want to add.

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Size and layout of your system

Your installation cost will depend on the size of the area that you want to heat and cool as well as how your home is laid out. For ductless systems, higher costs are driven by the use of more internal heads and possibly the use of equipment that produces a higher level of BTUs per unit.

For example, if your project is a small one that is focused on simply heating and cooling a couple of rooms with ductless units (mini splits), the overall system size will be low and so will the costs. If you are planning to heat and cool your entire home with ductless units, a much larger system will be needed. For central heat pump systems, the primary drivers of installation costs will be the size of the total living space that the system is heating and cooling, the number of floors in your home, and the state of existing ductwork (basically if it can be reused or if it needs to be updated prior to installing heat pumps).


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Equipment quality and capacity

Any home technology upgrade will come with a range of equipment options to choose from — both the quality of the technology and the capacity of output for heating and cooling. Some equipment is on the lower end of the quality scale, which may be driven by the efficiency of the system and the manufacturer’s reputation. To measure quality, air source heat pumps have several ratings and measurements  associated with them, including:

  • Heating Seasonal Performance Factor (HSPF): measures the ability to heat an area efficiently
  • Seasonal energy efficiency rating (SEER): measures ability to cool efficiently
  • Sound rating: indicates how much noise it produces when operating
  • Rating capacity for both heating and cooling based on AHRI guidelines and certification (Air Conditioning, Heating, & Refrigeration Institute): usually measured in BTUs per hour per Watt (BTUs/hr/W)
  • ENERGY STAR rating: air source heat pumps can earn ENERGY STAR certification for energy efficiency like many major appliances

In general, equipment with higher ratings in these areas will cost more. The increased capacity will also usually mean a higher cost.


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Installation complexity

The installation of ductless systems in each living space creates challenges for installers to effectively design your system, place the internal and external units, and route the lines through the house to connect the components of your air source heat pump system. Sometimes, there is easy access to an attic or crawl space for running the lines, but other times a much more complicated installation process is required. Jobs that are on second and third floors can also require the use of special equipment that can come at an added cost.

As noted above, central systems do not usually vary as much in cost since they are simply integrating with an existing distribution system. That said, if any adjustments to the ductwork are required (this may be the case for updating to any other HVAC option as well such as forced air), the cost may increase considerably.

If your home is historic or you’ve had an addition or renovation previously, there may also be added complexities to consider and plan for, which usually mean an increased price of your heat pump installation. Working with a trusted, experienced heat pump installer is the best way to understand the scope of your heat pump system design and project. Like with many big ticket items, you should also compare quotes and ask questions to better understand their equipment recommendations and the proposed sizing of your heat pump system.


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Other services and upgrades

Heat pump contractors will often include the removal and disposal of existing equipment in their installation pricing. For those replacing an oil heating system, some installers may include the removal and disposal of the oil tank, but others will charge extra for that. This can cost $500 to $1,000 and may be a good investment as it may be difficult to sell a home that includes an unused oil tank (since this is technically hazardous waste).

Central systems have a host of bells and whistles that you can elect to include such as humidifiers and air filtering systems. Humidifiers tap into your water system to ensure that your home’s humidity levels are in line with your preferences. This can be especially valuable in the winter months. Air filtration systems can include thicker filter cartridges or can leverage UV lighting to purify the air. All of these add-ons come at a cost, usually between $250 and $1,000 extra for each feature.


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Type of system: ducted vs. ductless

The cost of your air source heat pump system will depend on the type of air source heat pump you install, and whether that system is ducted or ductless.

Ducted (or central) systems tend to be more expensive, but more standardized in cost since the installer will usually just need to replace your old air handling unit that is already connected to your existing ductwork with an air source heat pump. If your home does not have a duct system already, installing a complete duct network in your home will add a significant extra cost ($15,000 to $30,000). However, you can always opt to install a ductless heat pump system if you don’t want to pay the extra money, or if you’re only looking for supplemental heating for smaller areas in your home. As mentioned previously, you may also be in need of ductwork updates, so it’s not always the case that existing ductwork can be used as-is.

If you're installing a single ductless air source heat pump, it will be less expensive than a ducted system. But, one indoor ductless air source heat pump will not be sufficient to heat or cool your entire home. If you're looking to use this technology as your sole source of heating and cooling, an entire ductless system is going to be much more varied in cost because the number of internal and external units needed will change based on the unique characteristics of your home. These units will have to be installed throughout the home in each zone you're looking to heat or cool, so overall costs can range considerably from a single-story ranch home to a three-story townhouse.

Should you install ducted or ductless air source heat pumps?

The type of air source heat pump you should get for your home depends on your goals, as well as the set up of your home. If you have existing ductwork and are looking to heat or cool your entire home, then a ducted system may make sense. Alternatively, if you don’t have existing ductwork, or are only looking to provide supplemental heating and cooling to a small area of your home, ductless air source heat pumps will get the job done.

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