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The Benefits of Air-Source Heat Pumps

Updated: Nov 21, 2022

Photo of two men working on an air source heat pump

Our co-op staff are frequently asked about options when members are contemplating the replacement of a furnace and air conditioning unit. A common question is, “Would a heat pump help us save money?”

This question is an excellent one since, for most of us, heating and cooling accounts for the largest chunk of our household energy use.

An electric air-source heat pump can be a good alternative to a furnace system that runs on propane or fuel oil. A heat pump is also a cost-effective alternative to electric resistance heat that is used in electric furnaces and in baseboard and wall units.

How heat pumps work In the summer, an air-source heat pump acts as an air conditioner (AC) that draws heat from your home’s air and transfers it outside. In the winter, the system’s direction is reversed so that heat is pulled from the outside air and moved into your home.

The heat pump has two major components: the condenser (also called the compressor) that circulates refrigerant through the system and an air handler that distributes the conditioned air. Most heat pumps are split systems, with the condenser located outside and the air handler inside. A packaged system contains both components in one unit that is placed outside your home. Heat pumps usually distribute the hot or cold air through the duct system.

In the past, heat pumps weren’t efficient enough to work in colder climates. In recent years, however, technology has advanced to make them viable in climates with long periods of sub-freezing temperature, such as the Northeast U.S.

If your old furnace has an AC attached, replacing both the heating and cooling system with the all-in-one solution of a heat pump might produce significant cost savings. If you are currently cooling with window units, or have an older central AC, moving to an air-source heat pump could reduce your summer energy bills.

Heat pumps not only reduce energy costs, they can also eliminate the risk of carbon monoxide poisoning and problems that can occur with on-site storage of propane or heating oil.

Selecting and installing Heat pumps must work harder to extract heat as the outside temperature drops. At some point "regular" air-source heat pumps switch to resistance mode, which operates the same way a toaster or an electric baseboard heater works. If your area has very cold winters, as Iowa does, homeowners needed to consider a dual fuel system, which utilizes a heat pump along with a gas or propane furnace.

However, there is a newer, better option available to those of us who live in cold climates: a cold climate air-source heat pump (ccASHP). This new generation of ASHPs offers increased efficiency and operating capacity at lower outside temperatures than the “original” air-source heat pumps. The Northeast Energy Efficiency Partnerships (NEEP) is an authority on ccASHPs and has consumer guides and case studies on their website. Also find the Air Source Heat Pump Buying Guide on the website.

It’s recommended that in cold climates, consumers should look for air-source heat pump units that have a high capacity maintenance percentage (meaning that the heat output capability is not reduced as much at low temperatures (5℉) compared to warmer temperatures [47℉ and 17℉]). Also recommended: seek a higher HSPF rating, which measures heating efficiency.

On the other hand, those who live in a warm climate and use more air conditioning than heating, will likely want to focus their heat pump search more on the SEER rating, which measures cooling efficiency. The minimum standard heat pump is SEER 14 and HSPF 8.2. An easy way to compare options is to look for the ENERGY STAR® label. This indicates the unit is at least 15 SEER and 8.5 HSPF.

How much can a heat pump reduce your energy costs? This depends upon the size and efficiency of your home, local energy prices and local climate. You can find calculators online that can help you predict energy savings. One entry with sample data found that the cost of heating in South Carolina, using a new heat pump and national average fuel costs, was less than half the cost of heating with a typical propane furnace or an electric resistance system.

According to a study conducted in Dane County, Wisconsin, single family homes with propane heat and existing air conditioning saved 22% on their heating/cooling utility bill. Single family homes with electric heat and existing air conditioning saved 50%. Dane County and the northern half of Iowa are in the same (“cold, moist” Zone 6) climate zone. In the article describing the findings, find the pertinent details in Table 5, page 16.

Find assistance to make the switch Professional energy auditors can predict energy savings with greater precision than a sales person, and they can offer advice on choosing a specific brand and size of the unit. More importantly, energy auditors can suggest other ways to improve comfort or reduce energy use such as duct sealing or insulating the building envelope.

Your local HVAC dealers, if they have heat pump experience, can be very helpful. Many heat pumps are not installed correctly, so be sure to ask how they will ensure a quality installation.

And of course, be sure to contact us to find out more about reputable dealers, rebates and rates for electric heat.

For more information:

  • Energy Saver air-source heat pumps general details

  • Energy Star key product criteria for air-source heat pumps

  • Energy Star heat pump savings calculator


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