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Dive Brief:

  • Air-source heat pumps would lower energy bills for a majority of U.S. households, most significantly in colder climates, while cutting greenhouse gas emissions, according to researchers at the U.S. Department of Energy’s National Renewable Energy Laboratory.
  • However, heat pump efficiency is a key factor in whether households can save on energy bills, said a paper published Feb. 12 in the scientific journal Joule. While minimum-efficiency equipment could increase bills in 39% of households, that figure drops to 5% for higher-efficiency equipment, the paper says.
  • Despite energy bill savings, high installation costs may still make heat pumps financially infeasible for many of the households that could benefit, the researchers note. “We need work to bring down the cost of installing heat pumps,” Eric Wilson, a senior research engineer in NREL’s Buildings Technologies and Science Center and lead author of the paper, said in a Feb. 12 news release.

Dive Insight:

In 2023, heat pumps outsold gas furnaces for the second year in a row, according to data from the Air-Conditioning, Heating, and Refrigeration Institute. The technology’s growing popularity is bolstered by Inflation Reduction Act incentives and rebates, alongside state and local actions to encourage clean heating.

In their recent paper, the NREL researchers say the costs and benefits of air-source heat pumps vary across communities depending on the local climate, housing stock and fuel prices. 

Their findings, based on simulations of 550,000 statistically representative dwelling units, paint what the researchers describe as a comprehensive picture of how air-source heat pump adoption would affect greenhouse gas emissions and energy bills in the U.S., down to the county level and below.

Housing characteristics that had the largest bearing on energy bill savings were the current heating fuel type and the presence of existing air conditioning, according to the research. “For the 49 million homes that use electricity, fuel oil, or propane for heat and have air conditioning, 92% to 100% of homes would see energy bill savings, with median savings of $300 to $650 a year depending on heat pump efficiency,” NREL says.

Homes without air conditioning, however, are more likely to see energy bill increases caused by the new central AC provided by heat pumps, the paper says. But the researchers add that these households “receive an important comfort and resilience benefit that may be worth the higher cost.”

The researchers suggest several ways for local, state and federal policymakers to mitigate energy bill increases. For example, city councils, state utility regulators and electric cooperative boards could direct electric utilities to update electric rate structures to promote electrification and avoid bill increases. 

Policymakers can also financially quantify electrification’s societal benefits, such as the health impacts of reduced air pollution and improved extreme weather resilience from AC. Valuing these benefits in ratepayer and taxpayer-funded programs can help policymakers justify subsidizing heat pump installation costs, the paper says, similar to how some state regulatory commissions account for the social cost of carbon.