Heat pumps: The clean technology changing home comfort

Heat pumps have quickly become the global standard for heating and cooling, outselling gas furnaces yearly in the U.S. since 2022. This isn’t much of a surprise: These all-electric appliances are more efficient and environmentally friendly than most HVAC systems, reducing your energy use for heating by up to 75%. Plus, some top models are eligible for big government rebates and incentives.

Often called mini-splits, heat pumps use electricity to transfer heat from a cool space to a warm space to cool or heat your home. They improve indoor air quality and have been shown to shrink carbon emissions from space heating—some homeowners even save hundreds of dollars by switching to a heat pump.

A heat pump is an all-in-one home heating and cooling system. We dive into how heat pumps work in another article, but in short, they’re like an air conditioner that can run backward:

• In cooling mode, a heat pump absorbs heat from your warm, stuffy house and dumps it outside using all the same components and tricks of physics as a traditional AC system. It also reduces indoor humidity.

• In heating mode, it runs in reverse, soaking up heat outside your home (yes, even when it's really cold outside), and moving it indoors.

This process will look different depending on what type of heat pump you have. Generally, heat pumps use less than half the energy of traditional air conditioning and heating systems, which often translates into cash savings.

Types of heat pumps

There are two main categories: air-source and ground-source heat pumps. The name tells you where the heat pump collects or rejects heat. (There are also absorption heat pumps that are powered by various heat sources, but these are mainly used in commercial buildings, so we won’t focus on them.)

The chart below explains the most common types of heat pumps you’ll likely hear about when upgrading your HVAC system.

How long have heat pumps been around?

It feels like everyone’s been talking about heat pumps in the last few years, but basic heat pumps have been common in the U.S. since the 1970s. About a quarter of all households in the southern U.S. already use a heat pump as their main heating and cooling system, according to 2020 data from the Energy Information Administration, as warm climates are a natural fit for these systems.

Heat pumps have become more popular thanks in part to advancements in technology that have brought cold-climate heat pumps onto the market, which can heat homes when outside temperatures drop well below zero.

Ductless mini splits have also made it easy to add built-in cooling without existing ductwork (say goodbye to those noisy window AC units). If you’re building an extension, finishing a basement or attic, or just trying to get more heating or cooling to a part of your home, a ductless heat pump is usually the most cost-effective choice.

Heat pumps provide many benefits, including cleaner air, increased home comfort, and a reduced carbon footprint.

“Heat pumps can reduce people’s exposure to leaking pollutants like carbon monoxide. They can also increase indoor air quality by adding air filtration and reducing humidity, which can reduce the likelihood of things like mold growth,” said Anna Keleher, a senior researcher with the Behavioral Insights Team.

Heat pumps are heavily incentivized now because they’ve been shown to shrink carbon emissions from space heating (even when they run on electricity generated partly by fossil fuels). The environmental upside is similar to ditching a gas car for an EV or adding solar power to your home. The benefits will increase over time as the electrical grid gets cleaner.

Of course, many people want a more efficient system to lower their utility bills, but do heat pumps actually save you money? Truthfully, it depends.

Who saves money by switching to a heat pump?

Heat pump cost savings will vary based on specifics like your home, climate, what kind of system you’re replacing, and local energy prices and policies. A recent study found that air-source heat pumps lead to savings for about half of U.S. households. Here are the most likely scenarios where a heat pump will save you money:

• If you switch from an electric, fuel oil, or propane heating source. A 2024 heat pump study by the National Renewable Energy Laboratory (NREL) found that homeowners saw a median annual savings of $300-$650.

• If you live in a warm climate. Heat pumps are very efficient in warm climates.  You can invest in a more affordable model because you don’t need to splurge on the high-performance heat pumps that heat homes in colder climates.

• If you want built-in cooling but don’t have ductwork. Installing a ductless mini-split is cheaper and less invasive than retrofitting all new ductwork and adding a central air conditioner.

• If you pair your heat pump with solar panels. You could run your heat pump for free by generating your own electricity with solar power.

What are some of the best heat pumps?

Don’t get too fixated on this; the best heat pump for one home might be wrong for another. Even if you identify what you think is the perfect heat pump, it might not be available when you want to install it. Or it might not be eligible for the rebate that you wanted. Or the installer might instead offer an equally good option for a much better price. (And so on and so forth).

The point is that finding a great installer is much more important than picking the perfect product. A reputable company will ensure you have a well-designed HVAC system that will work efficiently and bring the most significant benefit to your home.

A sound heat pump installation starts with finding the best HVAC contractor for the job. An installer may give you a general idea of what a heat pump installation could cost without visiting your home, but the majority will need to make a site visit to provide any specifics. The process of getting a heat pump installed generally looks like this:

1. Schedule an appointment through the installer’s website or over the phone. If it’s an emergency heater replacement (say your system dies during a cold snap), you can usually find a contractor who will arrive on the same day.

2. The first site visit will involve a company representative (contractor, consultant, or salesperson) surveying your home and potentially providing an initial installation quote.

3. A property walkthrough with a contractor (this may or may not be the first site visit) so they can see your existing heating system and ducts (if applicable). They’ll take measurements and scope out where to place the new equipment. They’ll also check your electrical panel to make sure it can support a heat pump—if not, you may need an electrical upgrade first.

4. Get a quote. Some installers will give you a quote on the spot, while others will follow up with a quote later.

We recommend reaching out to at least two installers to compare heat pump installation quotes. You can request them from vetted heat pump contractors on the EnergySage Marketplace.

How much does a heat pump cost?

The majority of heat pump installations cost between $13,645 and $28,657 after incentives, according to data from EnergySage. It’s a big range because several factors affect the cost, including where you live, climate, size and layout of the heat pump, product model, incentives, and more. We’ve seen huge retrofits that cost as much as $66,000, and some tiny projects with no out-of-pocket costs, thanks to really generous incentives in one city.

Based on hundreds of real-world quotes through the EnergySage Marketplace, the median cost to install a new heat pump in the second half of 2024 was $19,572 after incentives. That includes ducted heat pumps and ductless mini-splits.