How do heat pumps work? What to know about installation, extreme cold

Sara Edwards

Air conditioning bills are spiking and as climate change starts to impact more parts of the country, air conditioners are running for longer periods.

Now millions of Americans are starting to install heat pumps into their homes, a sustainable heating/cooling system that doesn’t burn fossil fuels to operate. According to Statista, 3.42 million air-source heat pumps were shipped to the U.S. in 2020.

The technology that fuels heat pumps has been used in mild climates, such as the South, for decades. But the technology has advanced to dramatically improve performance in colder climates like the Midwest, says Jeff Vivant, a sales manager at Minneapolis-St. Paul Plumbing, Heating and Air.

A heat pump provides cool air in the summer and heat in winter.

In June, the Biden Administration proposed new energy-efficiency standards that “will save consumers billions on annual energy bills, reduce emissions and build on actions to support heat pump deployment.”

The proposal is part of 100 actions from the administration “to save the average family $100 a year,” according to a release on the Department of Energy’s website.

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Why does my heat pump blow cold air? 

A heat pump provides cool air in the summer and heat in winter. In cooling mode, a heat pump works like a refrigerator, using a refrigerant to cool hot air pulled from outdoors. To provide heat, it draws warm air from outdoors, even in low winter temperatures. A heat pump will sometimes blow cold air in the winter to protect coils from freezing.  

“(Heat pumps) are basically a magic box,” said Sam Calisch at Rewiring America, a nonprofit promoting electric power for commercial and residential use.

“Even though it feels cold outside, there is heat out there that the heat pump can harvest and concentrate to raise the temperature and put it in your house to function like a furnace, except it doesn’t burn any fuels,” Calisch said.

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Owners of historic homes that lack ducts can opt for a ductless heat pump, Vivant said.

“There’s an outdoor unit and then we put an indoor, wall-mounted unit in each room, but not like a window air conditioner or a wall unit in a hotel or apartment,” he said.  

How much does a heat pump cost? 

Heat pumps are more expensive than traditional AC/furnace systems.

The cost of a heat pump can also depend on the type of heat pump and the size of the house. In Minneapolis, Vivant said installing a heat pump for a single-family home can cost between $14,000 to $20,000. 

For ductless heat pumps, the most popular in Minneapolis, it's $6,000 to $7,000 per house zone, while forced air heat pumps cost between $10,000 to $20,000, depending on the model.

A traditional forced-air system costs $11,000 to $18,000.

“But they operate on a month-to-month basis at a much lower cost than any other style of heating or cooling system,” Vivant said. 

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What are the heat pump tax credits under the Inflation Reduction Act?

The Inflation Reduction Act of 2022 includes tax credits effective in January for homeowners who purchase high-efficiency furnaces, air conditioners and heat pumps.

The tax credit covers installation costs up to $2,000 for qualified heat pumps.  

How much money could it save me? Will my electricity bill go up?

Probably, but according to a Rewiring America database, the average U.S. household would save $356 on its energy bills and avoid emitting 166 million metric tons of greenhouse gases into the environment by using a heat pump.

An estimated 87% of U.S. households could save a combined $37.3 billion a year on energy bills using modern, electric appliances.

Calisch said heat pumps could offset inflationary prices hurting households. 

"In the face of rising fossil fuel prices and volatility, the added benefit is long-term stability in bills," he said. "In the last year, we've seen a 30% to 80% increase in fuel prices  while only a modest change in electricity prices."

How do I prepare my house for a heat pump? 

Dar-Lon Chang moved his family to the sustainable Geos Neighborhood in Arvada, Colorado, after closing on their eco-friendly house in 2018. The former Exxon Mobile researcher joined GeoSolar Technologies in January as an advisor for research and development. 

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He sold a traditionally-heated home in Sugar Land, Texas. 

“At Geos, we have homes that are typically sealed to the point where you have about 20 hours before all the air in your house is leaked out,” Chang said. 

Do I need a furnace with my heat pump?

Chang said consumers should opt for adding insulation and sealing against drafts instead of a backup gas furnace.

“(A furnace) kind of defeats a lot of the purpose of a heat pump which is to eliminate the need for gas,” Chang said. “Before a homeowner gets to the point of swapping out the gas furnace with a heat pump, the house needs to be better sealed and better insulated.” 

 A heat pump as a primary heating source may not be able to provide sufficient heat during extreme, below-zero temperatures, Vivant said.  

"In our area, it's not code to install a heat pump as a primary heat source without a backup heating source of some kind like a forced air furnace or electric baseboard heating, for example," he said.

Chang said homeowners should also consider installing a recovery ventilation system, which turns on after its sensor detects a certain level of carbon dioxide and trades the stale air inside for the fresh air outside. 

“It’s better than just opening the windows because when you do, you’re bringing in fresh air but you’re losing all that heat and cooling inside your house,” he said.

By using the recovery system, the home can bring in fresh air as if a window has been opened, but the cool air or heat already produced stays in the house.

That method is preferred for heat pumps in colder climates where excess moisture in the home like condensation is much more common. An energy recovery ventilator is preferred in warmer climates.

They both move fresh air through the home without losing heat or cool air.

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What is the downside to a heat pump?

Vivant said the initial investment cost and the demolition work that comes with some installations are the main drawbacks.

He said the process of installing a heat pump can be somewhat invasive due to the drilling and demo work with the walls that can take place for some of the installations.

Chang said one of the obstacles keeping heat pumps from being widely adopted is the lack of experience from many service providers and contractors. While the market for heat pumps has ramped up, he said there are not enough service providers to keep up with the demand. 

"(We need) some kind of training program that gets contractors up to speed and incentives to promote builders and contractors wanting to adopt heat pumps," Chang said. "Otherwise, when people call them up asking for their (heat pump) options, those contractors are going to steer them away."

Amanda Perez Pintado contributed