What to Consider Before Upgrading to a Heat Pump

"This winter is set to be one of the most expensive in recent history to heat a home.

For the roughly half of U.S. households that rely on gas furnaces, heating costs are estimated to rise 28% to an average of $931 this winter, according to the U.S. Energy Information Administration.

Energy costs have been climbing across the board. Natural-gas prices have more than doubled in three years. And for the 12% of Americans who use propane, kerosene or firewood to heat their homes, heating costs are up 43% over the past three years, according to the consumer-price index.

Heat pumps are a potential solution. President Biden's Inflation Reduction Act recently thrust the devices into the spotlight as part of a string of clean-energy investments, promising rebates and tax breaks to help offset the cost of installation. One portion of the bill offers as much as $8,000 to low-income homeowners for swapping their furnaces for qualifying heat pumps. (States will need time to roll out these incentive programs.)

We asked home-efficiency pros, engineers and scientists to assess the pluses and minuses of making the switch to a heat pump.

What is a heat pump?

In cooling mode, a heat pump works just like your air conditioner, using a refrigerant to absorb heat from your room and moving it outside. When heating, the pump does the opposite, moving heat from the outside to the inside.

The systems often have three main components: an outdoor unit, an indoor unit and an air handler or ductwork to move the temperature-controlled air around your house. (One version, called a split, doesn't require a separate air handler.) If you already have central air conditioning, you probably won't need to install new ductwork.

How much will installing one cost?

Heat pumps are available at a range of prices.

The least expensive cost roughly as much as installing a central-air-conditioning system plus a furnace, says Ben Schoenbauer, assistant director of research at the Center for Energy and Environment, an energy-efficiency nonprofit. Think about $10,000 for an average-size house, he says, for a heat pump likely to last about 15 years.

Higher-end models capable of operating in extreme cold can run as much as $20,000, with a more typical cost around $15,000, Mr. Schoenbauer says. One option, known as a geothermal heat pump, costs in the $20,000-to-$30,000 range to install, but promises to slash electric bills down the line. These models rely on a tube that runs deep into the ground, rather than drawing on the variable outside air. The Inflation Reduction Act provides a tax break of as much as 30% of the cost to install this type of heat pump.

Can I get one by this winter?

Many heat pumps are manufactured domestically, says Parth Vaishnav, assistant professor of sustainable systems at the University of Michigan, so you shouldn't have too much trouble getting one.

Labor shortages might make it difficult to get a contractor in time. Many contractors outside of the South are still ramping up their heat-pump installation operations, says Dr. Vaishnav.

What powers a heat pump?

The biggest difference between a heat pump and a furnace is their energy source. Heat pumps use electricity, and furnaces burn natural gas. Furnaces are 80% to 90% efficient in converting the energy in the natural gas into heat.

A heat pump uses electricity to move heat that already exists in the outside air, so you get two to four units of heat for every unit of electricity supplied. "This means that heat pumps give you more than 100% of the heat that was originally contained in the fuel that produced the electricity," Dr. Vaishnav says. The energy efficiency depends on factors such as outside air temperature and quality of the unit.

Does higher efficiency mean lower cost?

Not exactly. In much of the country, natural gas is significantly less expensive than electricity. Even though heat pumps require less energy to produce the same amount of heat, the difference isn't necessarily enough to offset the higher baseline price of electricity, says Christopher Dymond, a senior product manager for the Northwest Energy Efficiency Alliance, which represents utilities and energy-efficiency organizations.

"If the energy costs of your fuel were the same, it would be a no-brainer," he says.

Then why all the hoopla?

Higher efficiency means that heat pumps are much better for the environment than other options -- especially if your electricity comes from solar or another green alternative, researchers say. Heat pumps can also give homeowners more control over their air quality and indoor climate, Mr. Dymond says, and can be considerably quieter than furnaces.

Heat pumps can save homeowners more money in moderate climates. The colder it is outside, the more energy they use to warm the air.

In places where the weather rarely dips below freezing, swapping an outdated air conditioner for a heat pump is almost guaranteed to save you money, Mr. Dymond says.

Should I get a heat pump if I live somewhere colder?

A heat pump could still make sense in a northern city, but you might want to consider a dual-fuel option that switches to gas when the temperature drops below 40 degrees. (Or keep your furnace and supplement with your heat pump during the spring and fall.)

If not, energy experts suggest springing for a top-of-the-line model that can still warm efficiently at below-freezing temperatures.

When is a heat pump worth the investment?

For homeowners who heat with electric baseboards, oil or propane, upgrading could save a lot of money. Replacing your air-conditioning system with a heat pump and using it for heating in spring and fall will also save money virtually everywhere, says Abigail Daken, heating and cooling product manager for the Environmental Protection Agency's Energy Star program.

Whether the devices lead to a lower bill than with natural gas, however, depends on factors such as the current state of your system, your area's climate and local prices for electricity compared with natural gas.

In most cases, energy experts say you are likely fine sticking with your current setup until it is time to upgrade your furnace or air-conditioning system." [1]

1. What to Consider Before Upgrading to a Heat Pump
Wolfe, Rachel. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 25 Oct 2022: A.10.