Everything You Need to Know About Heat Pumps and How They Work

An Alpha-InnoTec heat pump against the white wall of a house. — *Photo by* *alpha innotec* on *Unsplash*

Heat pumps are a not-so-new technology, but lately they have skyrocketed into the headlines of must-have home appliances for the financially savvy, eco-conscious homeowner looking to save on electricity costs and lower their carbon footprint. Recent consumer reports even show that given the chance, 75% of American homeowners would choose to have heat pumps as their primary heating system.

So what is all the buzz about? To keep you in the loop, here is everything you need to know about heat pumps — how they work, and what they can do for you!

What is a heat pump and how does it work?

A heat pump is a device that can provide both heating and cooling to an indoor space. Using technology similar to air conditioners, a heat pump will absorb heat inside the home and transfer it outside to cool the indoor space, as well as pull heat from the outside and warm up the indoor space.

Most homes have a gas-powered furnace for heating and an electricity-powered air conditioner for cooling. Heat pumps eliminate the need for both of these appliances and are a more versatile system that can run on either electricity or gas if a homeowner wants to factor in their local utility rates and determine the most cost-efficient use of power.

What are the advantages of having a heat pump?

A woman sitting comfortably by the window in her own home. — Photo by Viorel Kurnosov on Vecteezy

Energy Efficiency

The process by which heat pumps warm and cool a space is by transferring heat, rather than creating it through fuel-burning. As a result, heat pumps take much less time to change the temperature of your home than a furnace, boiler, or electric heater might. Its energy output is also far greater than the energy it takes to power it.

Cost-Effectiveness

Ultimately the cost-savings of heat pumps vary and are dependent on several factors, like your home’s current heating system, local utility prices, and what fuel you’ll be replacing. But in the long run, heat pumps are seen by many to be the ideal cost-effective option because they decrease your home’s dependency on fossil fuels, which are associated with extremely volatile prices that will only go up each year.

Improved Air Quality

The heat transfer process of heat pumps can be very simple - and the fewer steps you need to transfer air, the less likely it is for common air pollutants to materialize in your home. That, combined with heat pumps’ built-in air filters and purifiers, makes for a home that’s much more enjoyable to breathe in.

Better Climate Control

At the literal flip of a switch, heat pumps can go from heating to cooling and change indoor air temperatures fast. Unlike other technologies, heat pumps can also adjust humidity - they dehumidify as they cool, and they will not remove moisture from the air as they heat. You may never wake up with a dry face in the winter ever again!

It’s an Eco-friendly Alternative

Heat pumps run on electricity, which is of course much better for the environment than burning fossil fuels like natural gas. They also on average use 3-5x less energy than air conditioners, which has a direct impact on your monthly energy bills throughout the year, hot or cold.

Exactly how much better are heat pumps for the environment?

A blurred eco-friendly home with greenery in the foreground. — Photo by Oleg Gapeenko on Vecteezy

The International Energy Agency (IEA) has identified that today’s heat pumps reduce greenhouse gas emissions (GHGs) by 20% compared to gas boilers, and possibly much more in clean energy-intensive countries where electricity generation has an even lower carbon footprint. While on an individual scale, this may not seem like a drastic change, the IEA estimates a global transition to heat pumps in residential, commercial, and industrial buildings can reduce global GHG emissions by half a billion tons by 2030.

What obstacles come with heat pumps?

Like most home improvement scenarios, the compatibility between your home and the heat pump of your choice will determine how expensive or difficult it is to install it. If you live in a climate that experiences extremely cold weather (say, -10° F or less) for days at a time, for example, you’ll need to shell out for a more powerful pump or have a backup heating system to go along with it.

It may be more difficult to find a heat pump that’s right for you in older homes, especially if the electrical service needs upgrading. The average electrical service for new homes is 200-amp, so extra research may need to go into the compatibility of modern heat pumps with 60-amp or even 100-amp homes. Aside from electrical services, other upgrades that may be required for heat pumps to work with your home may be new pipework, new radiators, or the addition of air ducts if your home doesn’t already have them.

How much is a heat pump ultimately going to cost?

The cost of heat pumps varies based on size, efficiency, and model, which are influenced by the square footage of your home, the type of energy generation your home can accommodate, and your budget/preferences. Typically a heat pump system will cost $4,000 on the low side, with homeowners paying $5,968 on average in the US. In Chicago, the average price of a heat pump drops by nearly $3,000 for an average of $2,857.

Most heat pump installations will likely also include costs associated with labor, installation fees, permitting (if your local ordinances require it), what rebates you’re eligible for, and additional construction costs that the installation might require. Ultimately, the best way to know how much a heat pump will cost for you is to receive a quote from a local HVAC company or consult websites like This Old House for price estimates.

If you like to plan out far ahead, also know that a heat pump will need to be replaced every 10-20 years, and you’ll want to hire a professional to do routine maintenance on your heat pump at least once a year.

Do heat pumps come with rebates?

Since the passing of the Inflation Reduction Act, at a federal level, homeowners can claim a tax credit of 30% of the cost of purchasing and installing a heat pump up to $2,000. This rebate includes any electric system upgrades that are needed to support a heat pump system, depending on how old the home is.

For low- and moderate-income households, rebates can cover the installation costs of up to $8,000.

I want to get a heat pump. Where do I start?

Engineer in a neon orange vest showing blueprints to a homeowner. — Photo by ThisIsEngineering on Pexels

Finding and purchasing the right heat pump for you just requires finding the right contractor. Ask around for referrals from your family, neighbors, and local communities (like the Chicago Environmentalists Facebook Group) where you can inquire about a professional who is familiar with the technology and has a good track record for pricing and installations. For extra security, you can do a quick background check on the companies via sources like the Better Business Bureau, or see if they’re accredited by trade organizations like NATE.

A good rule of thumb is to get quotes from at least three different contractors and to make sure their quotes are specific, including a detailed breakdown of all the factors that went into the pricing.

For our Chicago readers…

Many Chicago homeowners find that heat pumps make sense for them - the winters here are cold enough that a more efficient heating system is a lot more comfortable than traditional ones powered by fossil fuels. Similarly, because Chicagoland summers can rise well into the 80s and 90s, a system that dually accommodates hot weather will save on energy and energy costs.

Whether or not you may need a backup heating source occurs on a case-by-case basis. In particularly cold winters where below-freezing temperatures persist for more than a few days, a backup system may be a necessity. Alternatively, heat pump technology is the most equipped it's ever been for extreme weather conditions, and it will just come down to the brand and model of heat pump you decide to purchase.

If you are a low-income or middle-income earner, the city of Chicago itself may have additional grants for you to help with the cost of heat pumps. Mayor Brandon Johnson’s commitment to reducing citywide carbon emissions has spurred funding for the decarbonization of Chicago households.

Final Thoughts

Heat pumps are a great alternative to your current home heating and cooling systems for many reasons: they improve air quality, are more efficient than traditional HVAC systems, are more cost-effective in the long run, and are significantly more eco-friendly. Upfront costs for a heat pump can seem daunting, but government incentives are increasingly in favor of helping homeowners make the switch.

It’s important to put in a little bit of the groundwork to see if and what kind of heat pump is right for you - each home is different and several factors go into the final price and time commitment of installing one. But more and more people are taking the plunge, and it’ll be worthwhile to see what this new home technology can do for you.