Create Your Home Electrification Plan [Part 3: Staying Warm]
Ditching gas for heat pumps can help you heat your space and water for less, while cutting emissions
This is Part 3 of our series on creating your personalized home electrification plan (if you missed the first two parts on Plugging In and Getting Around, I’d highly recommend checking them out).
There’s a reason why heat pumps are all the rage these days. They are arguably the clearest cut example of a home electrification win-win — it’s good for you, and good for the planet. Modern heat pumps do a better job keeping your home comfy, and your water hot at a fraction of the cost (yes, even in cold climates). At the same time, heat pumps offer a clear path to eliminating hundreds of millions of tons of annual CO2 emissions in the U.S.
Today we’ll dive into our third category of home electrification projects: Staying Warm. Recalling our home electrification sequencing pyramid, this is the third of six layers:
In particular, we will explore how high-efficiency heat pumps can replace legacy systems for both:
Space heating (& cooling!): How you keep the air in your home warm in the winter and cool in the summer.
Water heating: How you heat water for bathing, cooking and cleaning.
The combination of a fossil-fuel burning space heater and water heater combines for 25% of the average U.S. family’s carbon emissions (15% and 10% respectively). That’s why the collective way we heat our air and our water is so important to our ability to decarbonize. It’s estimated that we need to double the number of homes that electrify their heating systems by 2030 in order to reach our country’s climate goals.
As mentioned above, electrifying how you stay warm is far from an act of charity. In most cases, modern heat pump technology are simply the superior choice for you and your family.
In this post, we’ll cover heat pumps for both space and water heating — what they are, their benefits to you, and how to think about incorporating them into your home electrification plan.
If you are interested in creating your personalized home electrification plan throughout the series using our free template, you can copy and paste this section to the bottom of your sheet before moving on. This will extend your plan to include the Staying Warm category. Here is Jeff’s plan to demonstrate what yours could look like.
Space Heating & Cooling
An overwhelming majority of U.S. homes today either use a fossil-fuel based or inefficient electric heating system. Odds are, you are part of this cohort — as only 12% or 8.9 million homes in the U.S. use heat pumps today.
Modern electric heat pumps offer you material benefits to homeowners over legacy heating systems: they offer better efficiency, lower cost, and improved comfort. This creates the win-win effect of avoiding emissions of burning fossil fuels for heat, without asking you to sacrifice. In order to understand why, it’s helpful to quickly cover what a heat pump actually is.
What is a heat pump?
In its simplest terms, a heat pump is a two-way air conditioning unit that can both heat and cool a home1. Whereas furnaces and boilers rely on burning fuel, heat pumps do so using electricity — extracting heat from the air and moving it to create a comfortable environment in a home.
In the summer months, warmer air is pulled out from inside a space and is replaced with cool air delivered back into the home to cool things down (this is how any A/C unit works). In winter, the process is reversed. Heat energy is extracted from outside and delivered into your house to increase the temperature.
But wait… can a heat pump really pull hot air from outside when it’s really cold in winter? Yes, it can! Heat pumps use refrigerant which absorb any ambient heat it encounters — even a teeny amount on a very cold day. In addition, heat pumps compress that refrigerant to further increase its temperature to deliver toasty air into your home, even on the coldest days. And as mentioned above, the whole process can run in reverse to deliver cool air on hot summer days. See the below diagram to visualize this process:
Why are heat pumps so magical?
With a basic understanding of how heat pumps work, it’s much easier to grasp the efficiency, cost, and comfort benefits they provide to you in addition to the emissions savings.
Efficiency
Heat pumps are the most energy efficient way to keep your home warm in the winter and cool in the summer. In short, for every unit of inputted energy, a heat pump delivers 4 units of heat. That means you will use significantly less energy for the same amount of heat produced.
Let’s stop and think about that for a moment. Heat pumps are effectively a force multiplier of electricity that can magically create 4x more heat than inputted energy. That is crazy good compared to the alternatives:
Gas powered furnaces: 80% efficiency
Electric resistance heat: 100% efficiency
Heat pumps: 400% efficiency 🤯🤯 (5x gas furnaces, 4x electric resistance)
The below diagram visualizes this well:
This hyper-efficiency is explained by the fact that as described above, heat pumps move heat rather than generate heat. By extracting available heat from the ambient air rather than burning stuff (gas or watts), heat pumps can do much more with much less. As they say — work smart not hard 😝.
Cost
Efficiency and cost are interrelated. Because of their efficiency, modern heat pumps are less expensive to operate that legacy heating systems and can save you money on your heating and cooling bills. But — spoiler alert — this isn’t quite as straightforward as it sounds when factoring in up-front purchasing and installation costs of a heat pump.
According to the U.S. Department of Energy, heat pumps can save residents nearly $1,000 a year compared with oil, or about $500 compared with electric resistance heating.
However, it is important to note that potential operational cost savings of heat pumps are highly tied to what fuel source your home is currently using, and today’s price for that type of fuel. The below chart illustrates the heating cost for various fuel sources as of April 2023 in the Northeast to generate a normalized unit of generated heat:
What this chart essentially says is if you heat your home with propane, fuel oil, or electric resistance heat, annual cost savings can be significant. But, if you use natural gas to heat your home, your heating cost may only drop slightly (an estimated $117 per year). Keep in mind that the cost per unit of heat generated as shown above is just one factor contributing to the overall operating cost of a system — efficiency and energy consumption matter, too. This is why you can still have moderate annual cost savings even when switching from natural gas to a heat pump, because of a heat pumps relative efficiency and lower overall energy usage.
So what does this all really add up to? You’re likely to save on annual heating & cooling costs with a heat pump, but the payback period on your up-front purchase does depend on what fuel you currently use. At a minimum, that payback period is 10 years or more. That’s why it doesn’t usually make sense to “rip and replace” a working heating system, but rather switch to a heat pump when your current heating or A/C solution reaches its end of life. Below is a useful chart that shows the average annual savings per home and payback period broken out by current heating fuel:
However, there are a few important call out around “Upfront cost” that could make the decision to immediately switch to a heat pump more desirable:
Low/no interest loans: Multiple government-sponsored programs and private company offerings exist to offer low or no interest financing on climate upgrades. Using programs like this could actually make the payback period immediate by netting the difference between the monthly savings and the loan payment.
One example local to me is the MassSave Heat Loan which offers 0% interest financing on heat pump upgrades to MA residents. California offers a similar program
Some examples of private offerings from companies to this effect are Sealed and Mosaic to finance up-front costs of heat pumps
Rebates and incentives: There are available rebates and incentives that can materially reduce the up-front cost of purchasing a heat pump.
Federal: 30% tax credit up to $2000 on an air source heat pump install. Further federal rebates are planned to be rolled out to low-income residents by 2024.
State & Local: Additional rebates may be offered by your state and/or town. Do your research on this! My hometown of Concord MA offers a $10,000 (!) rebate of the up-front cost of a heat pump
Overall, the efficiency of heat pumps will save you in energy bills over time, but it’s important to explore the average up-front costs, available financing options, and rebates in your area to determine when it makes the most financial sense to switch.
Comfort
An often overlooked benefit of heat pumps is improved heating and cooling comfort!
Now, I know what you might be thinking — don’t heat pumps not work well in the cold? That’s what I heard. I will say with 100% certainty, that this is now patently false for most homeowners. A 2017 study showed modern heat pumps perform perfectly well down to -13 degrees Fahrenheit. So unless you live in a truly frigid place with regular double digit sub-zero temperature days in winter, a heat pump will keep your home nice and toasty and continue to do so efficiently on the coldest days of winter.
Every heat pump is given a Heating Seasonal Performance Factor (HSPF) score that measures its heating efficiency and in turn how well it will perform in lower temps. Older, less efficient heat pumps from the mid-2000s have HSPF ratings between 6-7 meaning they generally will start to lose efficacy below 30-40 degrees F — this is where the outdated assumptions about performance in the cold originate.
However, modern heat pumps built after 2015 have scores as high as 13 — meaning they perform well into sub-zero temperatures. Some states (like Maine) actually require a minimum HSPF rating to qualify for heat pump rebates to ensure performance in cold climates, as does the federal heat pump tax credit (HSPF of 9 or higher).
What’s more, the way by which modern heat pumps deliver warm and cool air is actually more pleasant than conventional fossil fuel systems. Furnaces blast hot air for a short period of time (just fully on and off) and you’re never exactly at your thermostats set temperature — instead always fluctuating above and below. In contrast, heat pumps can provide a steady flow of air that is fine-tuned to the precise temperature you set. The below diagram illustrates this well:
This results in more even heating, reaching set temperatures faster, as well as having a sealing effect on your walls from the consistent temperatures that better keeps cold air out in winter.
Ok, I’m sold on heat pumps. Where do I start?
A good place to start is figuring out what heating fuel source you currently use. If you don’t already have modern heat pumps, you’re a candidate to upgrade to one!
If you don’t already know your heating fuel source from your utility bills (do you pay a gas or oil bill?), look up your property on Zillow which may list your heating source.
Another option is to use an app called Centriq which allows you to take a picture of your heating system for automatic identification
Next, get a home energy assessment through your local utility if offered. This can help give you more personalized recommendations for switching to a heat pump, including how much you can expect to save, and other efficiency upgrades that would be good to do in parallel — like weatherization
As an example, we received one through our local utility that claimed we would save ~$1800 or ~50% on our annual energy costs each year by switching to new high efficiency heat pumps
Do some research to figure out your payback period for realizing heat pump savings based on:
Average installation costs in your area. Some good state-level and home size specific data in this report.
Available rebates and incentives at the federal, state, AND local level to offset up-front costs
Financing options to cover the up-front cost to potentially make the economics of switching more beneficial in the short term
ADDING THIS TO YOUR PLAN
Add the following information in your electrification plan about your heating system in the Staying Warm section under Home Heating System:
Current Primary Fuel Source: Natural Gas, Residential Propane, Heating Oil, Electric (resistance), or Electric (heat pump)
[if already using heat pumps] HSPF rating: Research your heat pump model and enter its HSPF rating for evaluating heating efficiency.
Current System’s Est. Remaining Life: <1yr, 1-3yrs, 3-5yrs, 5+yrs
Weatherization Upgrade Needed? Whether your home needs upgrades like improved insulation and sealing windows to support a heat pump (based on the results of your home energy assessment)
Is it a candidate for electrification?
If you do not currently use high efficiency heat pumps built after 2015, mark Yes in Column F. If you already use high efficiency heat pumps, mark No.
If a candidate for electrification, consider the following factors when choosing a Priority level:
🟢 Higher:
You will have large savings on annual heating/cooling bills if you switch to heat pumps (i.e. electric resistance, heating oil or propane)
Your fossil-fuel heating system needs to be replaced very soon
You have access to material rebates and low-interest financing to help cover the up-front cost of a heat pump and shorten payback periods
You prioritize the emissions savings of electric heat pumps
🟡/ 🔴 Lower:
You use a fuel like natural gas where annual heating/cooling bills won’t significantly change with switching to heat pumps
Your current system has a longer expected remaining life
Weatherization upgrades in your home are needed before installing a heat pump to maximize its efficiency
Jeff’s plan as an example:
Water Heating
Heat pumps aren’t just for keeping your space at the right temperature, they’re also for heating your water at home. Water heaters provide the hot water for your showers and faucets throughout your home.
I call heat pump water heaters the “sleeper of electrification .” What I mean by this is it’s often overshadowed by HVAC and solar, but can provide one of the highest short-term ROIs of any electrification project at a much lower up-front cost.
Heat pump water heaters (also referred to as hybrid water heaters) offer the same efficiency, cost, and comfort benefits of heat pump HVAC systems in addition to their significant emissions reductions.
What is a heat pump water heater?
Heat pump water heaters share the same fundamental way of functioning as HVAC heat pumps. Namely, heat pump water heaters extract heat from the surrounding ambient air in the room where it is placed (e.g. a basement, utility room) to heat water. Once the warmed refrigerant is compressed to further increase the temperature, the heat is intermixed with water to raise its temperature:
Heat pump water heaters also contain a backup electric resistance heater in case the surrounding air is not warm enough to sufficiently heat water (hence the name hybrid water heater).
Efficiency & Cost
Heat pump water heaters (HPWH) are up to 3 times more efficient than a traditional electric water heater and 50% more efficient than a natural gas water heater.
This translates to an average resident saving between $200-$600 per year on water heating costs when switching to a heat pump. Next to your HVAC system and insulation, it’s the best investment in saving on energy and cutting emissions in your home. This is because 20% of your home’s energy usage and 10% of total emissions goes to water heating.
Relatedly, given the up-front of a heat pump water heater ($3,000-$5,500 including labor) is a fraction of replacing an HVAC system, the payback period is much shorter. In fact, you can begin realizing the savings of replacing your water heater with a heat pump in just 2-3 years when switching from fossil-fuels or electric resistance models. This makes it an attractive electrification project to prioritize even before your current water heater reaches its end of life.
And long term, as more utilities switch to “time of use” rates that charge more for electricity at peak usage hours, HPWHs can save additional energy cost by acting effectively as water battery — storing hot water in the tank during lower cost off-peak times that avoids the need to call for electricity when it’s more expensive.
It is important to note that the average sticker price of a heat pump water heater is higher than a traditional water heater. However, just like for HVAC, incentives and rebates exist for heat pump water heaters to help reduce this “green premium” of the up-front cost:
Federal: 30% up to $2000 tax credit for the installation of a heat pump water heater
State/Local: Additional rebates may be offered in your area. Check out this database of rebates. My hometown of Concord MA offers a $750 rebate when replacing a fossil-fuel water heater with a heat pump.
Comfort
HPWH do the job of heating water in your home: better than the alternatives:
Compared to tankless water heaters, heat pump water heaters offer more consistent hot water supply especially during periods of high demand. This means that if multiple people in your home are showering simultaneously, heat pumps ensure everyone gets hot water whereas a tankless heater may run out.
HPWHs operate more quietly than gas water heaters, which can contribute to a quieter and more comfortable living environment especially if your water heater is close to your living space
Ok, I’m sold on a heat pump water heater. Where do I start?
Just like for HVAC, you should find out what fuel source you currently use for water heating which impacts operational savings and comfort considerations when switching.
Find out if you’re using oil, propane, natural gas, or an electric resistance water heater
Also determine if your current water heater is tanked or tankless
Do some research to calculate your payback period for realizing heat pump savings based on the below:
Projected annual savings: Based on which fuel source you currently use, and whether you have a tanked or tankless system
Average installation costs in your area. Get a few quotes from local contractors
Available rebates and incentives at the federal, state, AND local level to offset up-front costs
ADDING THIS TO YOUR PLAN
Add the following information in your electrification plan about your heating system in the Staying Warm section under Water Heating:
Current Primary Fuel Source: Natural Gas, Residential Propane, Heating Oil, Electric (resistance), or Electric (heat pump)
Current System’s Est. Remaining Life: <1yr, 1-3yrs, 3-5yrs, 5+yrs
Tanked or Tankless? Whether your current WH is a tanked or tankless system
Is it a candidate for electrification?
If you do not currently use a heat pump water heater, mark Yes in Column F. If you already use a heat pump water heater, mark No.
If a candidate for electrification, consider the following factors when choosing a Priority level:
🟢 Higher:
You will have large savings on annual water heating bills if you switch to heat pumps (i.e. electric resistance)
Your water heater needs to be replaced very soon
You value the comfort upgrades associated with a heat pump water heater
You have access to material rebates to help cover the up-front cost of a heat pump and shorten payback periods
🟡/ 🔴 Lower:
You currently have an efficient tankless system where cost savings would be minimal
Your current system has a long expected remaining life
Jeff’s plan as an example:
What’s next?
Look at you, heat pump expert! Hope this was a helpful primer to help you transition to a comfortable, low-carbon way to stay warm at home.
Our next post will more deeply examine my hometown of Concord, MA’s residential electrification program as a blueprint for the rest of the country to help accelerate the transition to electrify everything.
For the sake of simplicity, we’ll focus here on air-source heat pumps and ignore geothermal heat pumps. Most readers here would likely opt for air-source rather than geothermal due to lower cost and installation complexity