Due to the recently passed Inflation Reduction Act, there are some generous tax credits being offered for energy-efficient home updates. One of the upgrades I’m looking at making in my own home is swapping out our aging air conditioners—which, as of last service, I was told have a maximum of three years left—to an energy-efficient heat pump.

 According to ‘experts’ they are the cheapest and most efficient way to handle both heating and cooling, no matter where you live. In other words, they’re a win-win and with an up-to-$2,000 tax credit to help offset the cost, it makes sense to explore the upgrade. Here’s what to know about heat pumps and whether your home (and wallet) might benefit.

What is a Heat Pump?

They’re not well known in the United States as of yet, but countries like Japan and Norway have been promoting them for years.  Despite the misnomer of a name, heat pumps don’t actually generate heat. Instead, they move hot and cold air around. When it’s cold outside, an exterior unit extracts warm air (found in the thermal energy of the air and ground) and sends it to the indoor unit. Along the way, the air is compressed, heating it up even more, before it’s pushed into the home. The scenario is reversed when it’s hot – warm air inside is sucked up and pumped outside.

What Makes Them More Energy Efficient?

There are a few things that make it a more energy-efficient pick than fossil-fuel-guzzling furnaces and air conditioners. First, heat pumps run on electricity. And because they don’t generate any heat, they use less energy than electric-powered heating and cooling systems. The same equipment does the heating and cooling, which means fewer parts.

The air-to-air heat pump is the most popular, and they work to warm and cool homes via air ducts. If your home already has air ducts, this is probably the version you’d want. Another version includes mini-splits, which don’t require ducts – they’re like the A/C units people plug into windows to cool a specific room. This is a good idea if you like the idea of separate climate control in various parts of your home.

Should You Get a Heat Pump?

Exploring your options now, before your furnace or air conditioner dies and you’re just looking for the fastest replacement possible, means you can really dig into the logistics. Installing a heat pump can significantly reduce your monthly energy costs, especially in the summer months, but the upfront installation costs can be more than traditional options. In addition, you need to make sure you find a service provider that specializes in servicing and installing them.  

For the record, heat pumps seem to work best in moderation environments. They use more energy and work less efficiently in temperatures below 20 degrees Fahrenheit. Then again, 60% of the buildings in Norway use heat pumps. In the 1970s, the country subsidized heat pump adoption in response to the oil crises. These days, new technology means they’re really efficient even in low temperatures.

Want more information on the tax credits, which some states are coupling with state credits? Head over to Clean Energy for All. I’ll be exploring my own options throughout the year to maximize the credits offered and spreading them out over a few years. Stay tuned, and I’ll make sure to let you know what I find, which vendors are best and in the end, if it was worth it!