How much money do heat pumps save?

How to estimate your savings

For most American homeowners, one of the best ways to save money and energy is to switch to an electric heat pump for space heating and cooling.

Because of the very clever way heat pumps work, these heating and cooling machines are anywhere between 2-4x more efficient than traditional furnaces and boilers. But like the cost of a heat pump, the actual amount of savings varies significantly between homes.

In this article we’ll help you estimate how much you can save by switching to a whole-home heat pump or mini-split system.

What determines how much you can save?

The average household in the United States can save $370 per year by switching to a heat pump. Homeowners switching from inefficient systems that run on fuel oil, propane, or traditional electric resistance (like baseboard heat or electric furnaces) can save closer to $1,000 per year.

As with other energy upgrades like improving your home insulation, your annual savings will vary. Here are the factors that impact savings the most:

1. The size of your home

More square footage means a bigger energy bill. And the more you currently spend the more you will save by switching to a heat pump. Though, as covered in our heat pump sizing article (link needed), you’ll also need a larger system, which costs more upfront.

2. Your local climate

Heat pumps work in both warm and cold climates. But people living on the East Coast (and especially the Southeast) will save the most due to the large number of homes that use inefficient electric, fuel oil, and propane heating systems.

One common myth you’ll hear is that heat pumps waste money when the temperature drops. In the past this was true, but today’s best cold climate heat pumps work efficiently down to very low temperatures. And many homeowners living in cold climates currently use fuel oil and propane to heat their home, two very inefficient fuels.

That’s why, somewhat surprisingly, people living in cold states like Maine, Ohio, Pennsylvania, New York, and Massachusetts can save a lot of money every year by making the switch.

3. How energy efficient your home is

If your home is poorly insulated then you probably spend a lot of money to heat and/or cool your home. And that means more opportunity for the heat pump to work its magic.

4. How you currently heat your home

Rewiring America has crunched the numbers using data from the National Renewable Energy Laboratory (NREL) to help homeowners better understand how much they can save by switching to a heat pump.

While there’s a lot of variation based on the different factors above, we calculated the national average savings for households, depending on their current heating fuel:

Estimated savings

As you can see, the biggest savings will come if you switch from fuel oil, propane, or electricity as your main source of heat.That’s because a heat pump uses so much less electricity than electric furnaces and baseboard heat, and fuel oil and propane are expensive ways to heat a home (and subject to huge price swings).

Because of current prices, switching to a heat pump from natural gas doesn’t save much on average. But natural gas is both unhealthy and bad for the environment so homeowners who are able to make the switch should still consider it, especially since we believe gas rates will continue to rise.

Estimated emissions reductions 

We are climate and sustainability nerds so naturally we wanted to know how impactful it is to switch to a heat pump. Here’s what we found in our analysis:

Other benefits of upgrading to heat pumps 

Heat pumps are healthier and easier to maintain 

Compared to gas, propane, and fuel oil systems, heating your home with electricity doesn’t carry a risk of gas or carbon monoxide leaks. Recent studies have found a link between rates of asthma and gas usage. 

Heat pumps also require less maintenance than combustion heating systems, which means lower repair and maintenance costs.

With new incentives and savings programs coming online across the country, it’s never been more affordable to ditch gas for your health, your comfort, and your wallet! 

Visit Rewiring America’s IRA savings calculator to see how much you can save!