Essential Questions to Consider Before Investing in a Heat Pump

Heat pumps are an effective way to reduce your home's carbon footprint and your utility bills. The technology can heat and cool homes, and supply hot water.

An electric heat pump that is high-efficiency and replaces a fossil fuel furnace or boiler is installed outside of the house and is similar to an air conditioner unit. To heat the home, a liquid refrigerant in a copper coil extracts heat from the atmosphere as warm air moves towards the cold naturally. The heat transforms the refrigerant into a cold gas; then, a compressor pressurizes the gas, raising its temperature and heating the air inside the house. In the summer, the appliance cools a home by absorbing heat from inside and transferring it outside. Heat pumps are more efficient than natural gas furnaces since they move heat from one place to another instead of burning fuel.

A heat pump water heater is up to four times as efficient as a conventional gas or electric water heater. It can also act as a "thermal battery," heating water when electricity rates are low for use later in the day when prices rise. Many models are Wi-Fi-enabled, allowing homeowners or utilities to control when water is heated.

If you're undecided about whether or not to get a heat pump, keep in mind that some countries are offering significant incentives to encourage people to make the switch. In the UK, for example, you could receive up to £5,000, while in the US the figure could be as high as $8,000. However, before making a decision, be sure to ask the following five questions:

The average lifespan of a natural gas furnace is 15 to 20 years, though some can last as long as 30 or more. If you've recently replaced a natural gas furnace with another one, you probably won't want to scrap it for a heat pump. Likewise, gas water heaters usually only need to be replaced after 12 to 15 years.

If you're planning on installing an air conditioner, it could make sense to switch to a heat pump. This is especially true if you're in the US and your home is already powered by solar panels. Not only will you avoid paying for increasingly expensive natural gas, you'll be tapping into low-cost electricity to power the heat pump.

Water heaters can fail suddenly as they age. Most people don’t want to go without hot water, so if your gas or electric water heater is getting old, now would be the time to replace it with a heat pump. Another reason to avoid buying a heat pump under duress is that installing one can be complicated and time consuming, and they can be in short supply.

If your house is drafty, it means that heat is escaping from the doors, windows, walls, and attic. This makes it harder and more expensive to keep the house warm. To save money in the long run, it is worth it to hire an energy auditor to identify where the heat is escaping and plug the leaks. This will help you properly size the heat pump, which will lower your electricity bills.

If you have central heating, you’ll most likely want a heat pump that distributes air through the existing ducts. (However, the ducts may need to be replaced if they’re old, which can be expensive.) Alternatively, you can install a ductless heat pump, also called a mini-split. This circulates warm or cool air through wall-mounted units. One advantage of the mini-split is that you don’t have to worry about maintaining ductwork, which can become leaky over time.

Heat pumps require a circuit panel that can handle multiple 240-volt devices. If you live in an older home and are replacing lower-voltage furnaces and gas water heaters, you may need to upgrade your circuit panel to 200 amps. This can cost several thousand dollars. If a utility “supply” wire to your home must be replaced, costs can balloon to $10,000 or more.

There are some ways to get around the problem. One option is to install a “smart panel” that manages all the circuits in the home, balancing electrical demand so that appliances like heat pumps can be added without overloading the system. Smart panels made by Span and Schneider Electric can cost $3,000 or more, but the Inflation Reduction Act offers Americans a $4,000 rebate for electrical upgrades, so it may be worth it in the long run.

One way to reduce the electrical load is to install a lower-voltage heat pump water heater. Right now, there are just a few 120-volt models available, from Rheem and Ruud. But other major manufacturers are expected to bring 120-volt versions to market in the next year or so.

Some home electrical upgrades can take months to complete, so it's important to answer this question as soon as possible and make any needed improvements well in advance of installing a heat pump.

There are many plumbing companies that can install a gas furnace or water heater. However, it can be difficult to find one that is knowledgeable about heat pumps and how to replace gas appliances. In the US, your state or utility rebate program may have a list of recommended contractors. Otherwise, you can check out plumbing contractors' websites and see how much they promote heat pumps and the depth of their expertise.