Everything You Need To Know About Heat Pumps

Summer is just around the corner! With recent temperatures hitting 80 in New York, it’s time to consider some cooling technologies.
May 6, 2024

In recent years, heat pumps have been all the buzz with high incentives for their adoption, potential cost savings, and environmental benefits. According to The Air-Conditioning, Heating, and Refrigeration Institute, Americans bought 21 percent more heat pumps in 2023 than fossil gas furnaces, making heat pumps the most popular heating and cooling appliance.

Heat pumps heat by drawing heat from outdoor air and moving it indoors, and they cool by moving heat from indoors to outdoors. Rather than generating heat themselves, heat pumps are three times more efficient than heating systems that burn fossil gas.  (Many people don’t realize that their old air conditioner is a heat pump, but it only works in 1 direction.)  And, though a good furnace vents to the outside, if you ever develop a leak, those exhaust fumes can go right into your living space.

Even though heat pumps are good at energy efficiency, they are found in only 16 percent of U.S. homes. Consumers are concerned about the cost of installation and maintenance and often doubt that heat pumps save them money. So, should you jump in? Here are some tips if you are wondering about the pros and cons of jumping to a heat pump:

On the federal level, the U.S. government has put out many incentive policies for heat pump installations. You can get up to $2,000 federal tax credit annually for qualified heat pumps. This year, the U.S. federal government is issuing another $ 8.8 billion for Home Energy Rebates programs, with consumers receiving up to $8,000 if they buy an ENERGY STAR electric heat pump for space heating and cooling.  

State, local, and utility programs across the US also offer heat pump incentives. For residents in New York, heat pump systems are eligible for rebates through NYS Clean Heat. Savings on these efficient, emission-free systems are, on average, $2,000-$3,000 for whole-home solutions and $100-$400 for partial solutions.

Many homeowners might consider costs when considering adapting (or changing) to heat pumps. Typically, heat pump installation costs range from $4,200 to $7,600, and the average is around $5,900. If you are not sure which heat pump system is the best for your home, check out the Heat Pump Planner tool developed by the New York State Energy Research and Development Authority (NYSERDA).

With warmer temperatures upon us, switching to electric heat pumps can efficiently lower your energy costs. Research has shown that the right heat pump can save households hundreds of dollars or more annually. How much you save also depends on the fuel you are switching from. An analysis calculates that switching from a fuel oil furnace to an air-source heat pump for the average homeowner will save about $950 annually in utility bills. Switching from an electric or propane furnace to a heat pump will save you more than $800 annually.  

Apart from houses, heat pumps are also being applied to more commercial buildings and apartments. Retailers, including Amazon, Ikea, Target, and Whole Foods, have joined the Commercial Building Heat Pump Accelerator to create more cost-effective and efficient rooftop heat pump units. Once heat pumps are deployed on commercial buildings nationwide, the Department of Energy estimates they could save around $5 billion on utility bills annually.

In recent years, geothermal heat pumps have been used to replace polluting fossil fuels with emissions-free energy for urban buildings. Unlike air-source heat pumps generally used for houses, geothermal heat pumps use underground energy as the “clean, firm” energy source. In Brooklyn’s Greenpoint neighborhood, New York State’s largest geothermal residential building is under construction. The building will be fully electric and use no natural gas. Upon completion in 2025, the building will set aside 30% of units as affordable housing under the Affordable New York Housing Program.

An illustration shows how the geothermal system uses the stored temperature in the ground for heat exchange to operate the buildings' HVAC systems.