A heat pump is a heating and cooling system that moves heat from one place to another instead of generating it by burning fuel. In winter, it pulls heat from outdoor air or the ground and transfers it inside your home. In summer, it reverses direction and works like an air conditioner, pulling heat out of your home and releasing it outside. This ability to do both jobs with a single system is what makes heat pumps distinct from traditional setups that pair a furnace with a separate AC unit.
How a Heat Pump Works
The core principle is simple: heat naturally flows from warm areas to cool ones, and a heat pump uses a small amount of electricity to move heat against that natural flow. It does this by circulating refrigerant, a fluid that absorbs and releases heat as it cycles between liquid and gas states, through a loop of coils and a compressor.
In heating mode, the outdoor unit absorbs heat from the air or ground (even cold air contains usable thermal energy) and the refrigerant carries that heat indoors, where it’s released into your living space. In cooling mode, a component called a reversing valve flips the direction of refrigerant flow. Now the indoor coil absorbs heat from your home’s air, and the outdoor unit dumps it outside. The thermostat controls which direction the system runs, so switching between heating and cooling is automatic.
Because a heat pump moves existing heat rather than creating it from scratch, it can deliver roughly three units of heating energy for every one unit of electricity it consumes. That 300% efficiency figure is why heat pumps dramatically outperform even the best gas furnaces, which top out around 95% efficiency.
Air Source vs. Ground Source
The two main types are air source and ground source heat pumps, and the difference comes down to where they collect heat from.
Air source heat pumps are far more common because they’re simpler and cheaper to install. They use an outdoor unit (similar in appearance to a central AC condenser) that extracts heat from ambient air. A typical air source system costs around $13,500 installed in the U.S. They work well in cold weather, though efficiency drops as temperatures fall because there’s less heat energy available in very cold air.
Ground source heat pumps (also called geothermal) tap into the soil, where temperatures stay relatively stable year-round, generally above 5°C (41°F) even in winter. That stability means ground source systems maintain more consistent efficiency across seasons. The tradeoff is cost and disruption: installation requires digging trenches or drilling boreholes in your yard, which pushes the price significantly higher. In the UK, for example, air source systems average around £11,000 while ground source systems run about £29,000. The efficiency gains do translate to lower operating costs over time, but the upfront investment is substantial, and you need adequate outdoor space for the underground piping.
Cost Compared to Traditional Systems
A common concern is that heat pumps cost more than conventional heating and cooling. The reality is more nuanced. An air source heat pump installation averages around $13,500, while a gas furnace paired with central AC averages around $16,000 when you factor in both units and installation labor. If your home needs new ductwork, either option gets more expensive.
Operating costs are where heat pumps pull ahead. Because they’re moving heat instead of burning fuel, your monthly energy bills are typically lower, especially if you’re replacing an older or less efficient system. The savings vary depending on your local electricity and gas prices, your climate, and how well-insulated your home is.
There’s also a federal tax incentive worth knowing about. Through 2025, the IRS offers a tax credit covering 30% of heat pump installation costs, with a separate annual credit limit of $2,000 for heat pumps specifically. That credit applies each year with no lifetime cap, so if you install a heat pump water heater one year and a space heating heat pump the next, you can claim the credit both times.
Environmental Impact
Heat pumps reduce household greenhouse gas emissions by at least 20% compared to a gas boiler, even when your electricity comes from a carbon-heavy grid. In regions with cleaner electricity (more solar, wind, hydro, or nuclear), that reduction can reach 80%, according to the International Energy Agency. As electrical grids continue to shift toward renewables, the emissions advantage of heat pumps grows automatically without any changes to your equipment.
The refrigerants inside heat pumps have also been improving. Starting in January 2025, new residential systems no longer use R-410A refrigerant, which has a high global warming potential. Manufacturers have transitioned to R-32 or R-454B, both of which carry a significantly lower environmental footprint. If you already own a system using R-410A, it will continue to work and be serviceable for years, much like the earlier R-22 phaseout that took over a decade to complete.
Performance in Cold Climates
Older heat pump models struggled in very cold weather, and that reputation lingers. Modern air source heat pumps perform effectively even in sub-zero temperatures. Air temperatures fluctuate between roughly -5°C and 25°C (23°F to 77°F) for at least 95% of the year in most temperate climates, and current models handle that range without trouble. Even at extreme lows, they continue to operate, though efficiency decreases and a backup heating source (electric resistance strips built into the unit, or an existing furnace) may kick in during the coldest stretches.
Ground source systems sidestep this issue almost entirely because soil temperatures don’t swing with the weather. If you live in a region with harsh winters and have the budget and yard space, ground source is the more consistently efficient option. For most homeowners, though, a modern air source system handles cold weather well enough that the extra cost of going geothermal isn’t justified.
Efficiency Ratings to Know
Heat pump efficiency is measured with two main ratings. SEER2 measures cooling efficiency, and HSPF2 measures heating efficiency. Higher numbers mean better performance. To earn an ENERGY STAR label, a split-system heat pump needs at least a 15.2 SEER2 for cooling and a 7.8 HSPF2 for heating. These are useful benchmarks when comparing models: anything at or above those thresholds is considered high-efficiency equipment.
Maintenance and Lifespan
Heat pumps require less maintenance than combustion-based systems (no gas lines, no exhaust venting, no carbon monoxide risk), but they do need regular attention. The Department of Energy recommends professional servicing at least once a year. A technician will check refrigerant levels, inspect and clean the coils and blower, test airflow, look for duct leaks, tighten electrical connections, and verify the thermostat is triggering the correct mode.
Between professional visits, the most important thing you can do is keep filters clean. Dirty filters restrict airflow, force the compressor to work harder, and reduce efficiency. Depending on your system, that means cleaning or replacing filters every one to three months. You should also keep the outdoor unit clear of leaves, snow, and debris so air can flow freely around it.
With consistent maintenance, most air source heat pumps last 15 to 20 years. Ground source systems often last longer because the underground piping has no moving parts and isn’t exposed to weather. The indoor components may need replacement on a similar timeline, but the ground loop itself can last 50 years or more.