Heat Pumps: The Holy Grail of Energy Efficiency
For most American homeowners the best way to save energy is to switch to a heat pump to heat and cool their home.
According to the Department of Energy, many homeowners can save $1,000 per year, and cut their electricity bills by up to 50%.
In addition to saving money, heat pumps can cut the average homeowner’s carbon footprint by 4 tons of carbon emissions per year, the equivalent of an international flight from New York to Seoul, Korea.
And while heat pumps cost more upfront than less efficient alternatives, most homeowners can get more than $1,000 in rebates and incentives from federal, state, and utility programs to get a new heat pump.
In this article we’ll cover the basics of heat pump technology, and considerations for homeowners that want to switch.
How much can you save per year with a heat pump?
As with all energy upgrades, your annual savings will vary based on the following factors:
- The size of your home
- Your local climate
- How many people live in your home
- How old your home is
- How many energy efficiency upgrades you’ve already done
But there’s nothing worse than asking how much you’ll save and getting an answer like “It depends.” So let’s look at how much the average homeowner can save.
In 2017 the NREL — the best energy modelers in the country — ran a two year study in which they looked at how much the average homeowner could save by upgrading to more efficient heating and cooling systems.
Below are the annual savings for the most common existing heating systems:
- Electric baseboard heat — $1,287 per year
- Fuel oil boiler — $843 per year
- Electric furnace — $815 per year
NREL also evaluated natural gas boilers and furnaces, but found that generally the savings aren’t worth the investment upfront.
How much do heat pumps cost?
As with the annual savings, the installation cost of a heat pump will depend on a lot of factors. So once again we’ll use some averages.
According to HomeAdvisor, the average ductless heat pump costs $3,350 (they give a range of $1,500 to $8,000).
So that means that the average homeowner that switches from baseboard heat to a heat pump can pay off the investment in less than 3 years.
How about if you want to switch from fuel oil heat to a heat pump?
Some fuel oil users will be able to switch to ductless heat pumps. But for homes with worse insulation (older ones generally), HVAC installers usually recommend an air source heat pump.
A recent study by New York State Energy Research and Development Authority (NYSERDA) found that the average air source heat pump cost $12,000.
That same study found that customers that switched from fuel oil could save between $1,000 (in NYC) to $2,000 (in upstate NY) per year on average.
In other words homeowners in New York can pay off their investment in 6-12 years. Studies of fuel oil customers in the rest of the Northeast have found similar results.
How much can you reduce your carbon footprint?
The same NREL study mentioned above looked at the carbon reductions possible with heat pumps. Here’s how many tons of emissions can be reduced depending on what heating system a heat pump replaces:
- Electric baseboard heat — 7.6 tons per year
- Fuel oil boiler — 4 tons per year
- Electric furnace — 5 tons per year
This is an unbelievable amount of carbon reductions — especially for an investment that pays itself off.
For reference going vegan will cut your carbon footprint by 1 ton per year. Cutting international trip from the US to Europe will cut your carbon footprint by 1 ton. Most people consider those big sacrifices. Switching to a heat pump by comparison is something that takes a bit of time upfront, but afterward its installed it doesn’t change your life in any way.
Considering that the average heating system lasts 15-30 years, investing in a heat pump is a way to guarantee anywhere from 60 to 228 tons of emissions reductions.
What to consider before switching to a heat pump
How your local climate affects heat pump savings
Heat pumps work best in warm weather, where the temperature is not too extreme, but there are now models of heat pumps that work everywhere from North Dakota to Maine. The amount of saving, however, will not be the same. This is because the colder it gets, the more energy heat pumps require to keep the temperature warm, thus the less money the system will save.
Thus, a good rule of thumb is, if you live in the southern half of the United States (or realistically, anywhere in which temperature rarely goes below 20 degrees Fahrenheit), you will be saving money switching. (In fact, reports are showing that even if you go below 5 degrees Fahrenheit, the system is still superior in terms of efficiency, with a few models working even at -13 degrees Fahrenheit, but we will stay on the safe side).
Here are a couple other rules of thumb:
- If you are using electric baseboard heat you will save a lot of money.
- If you are using fuel oil or propane furnaces, you will probably save money because the efficiency of these heat sources is so low.
- If your home has an electric furnace, you will likely save money, but may need to improve your home’s insulation first if you live in a cold climate.
If you are using natural gas, you will probably not be able to save money (but will be able to cut your carbon footprint and improve your home’s safety and air quality).
How insulation affects heat pump savings
As another rule of thumb, the less insulated your home is, the higher capacity heat pump you’ll need. Higher capacity means higher upfront cost.
How do you know if your home is well insulated? The age of a house is a good indicator: modern houses tend to be more well-insulated, so if you are living in an older home that has not been remodelled, you will likely need a bigger heat pump.
If your home has low insulation and you live in a cold climate, your best choice might be a hybrid system or dual-source heat pumps. This means your home will be heated by the heat pump most of the time, with the occasional switch to gas or electric furnace when it gets really cold.
Heat pumps are healthier than gas, propane and fuel oil
Fossil fuel heavy heating systems aren’t just inefficient, they are unhealthy, dangerous, and require more maintenance.
Compared to natural gas, propane and fuel oil systems, heating your home with electricity doesn’t carry a risk of gas or carbon monoxide leaks.
Recent studies have also found a link between rates of asthma and natural gas use in the home.
And finally, heat pumps require less maintenance than combustion heating systems, which means less repair and maintenance costs.
How to find rebates and incentives for a heat pump
The only downside of a heat pump is its upfront cost. But in many states homeowners can get thousands of dollars in rebates and incentives from their local government and utility.
To see if your state or utility offers rebates go to the DSIRE website and search for your state and filter for residential energy efficiency. Or search Google for “[state] heat pump rebates and incentives.”
For air source heat pump specifically, you can also use the Federal Equipment Tax Credits for up to $300 tax credit.