Want To Cut Your Bills And Fight Climate Change? Dump Your AC And Buy A Heat Pump

The humble heat pump — you may have never heard of it. But this simple household appliance is one of the biggest revolutionaries when it comes to curbing the climate crisis.

Heat pumps are up to five times more efficient than traditional heating and cooling systems, meaning they can provide five times more cooling or heating power than the electricity they consume.

That high efficiency is a big reason why heat pumps are increasingly playing a role in combating the climate crisis — and seen as a way to help people cut down on their bills. While they're popular in Europe, they're not as widespread in the U.S.

As the world heats up, we’re using more air conditioning. The International Energy Agency estimates air conditioning use will at least triple by 2050. It’s a conundrum because as the world warms and we rely more on things such as air conditioning, we burn more fossil fuels that are creating the problem in the first place. Already, the majority of household energy use — and thus emissions — goes towards heating and cooling the air and water in our homes.

Experts say, as we transition to a cleaner power grid, we need to do two primary things at home: better insulate our homes so we need to use less energy, and swap out old appliances for highly energy-efficient electric systems, such as heat pumps.

In fact, California’s climate plan includes a goal to deploy 6 million heat pumps by 2030. And the federal Inflation Reduction Act offers a tax credit to cover 30% of the cost, to incentivize more people to replace their old sputtering A/Cs or gas water heaters with heat pumps instead.

Making the switch to a heat pump

Stephen Pallrand owns L.A.-based CarbonShack, a design-build firm that helps people make their homes more environmentally friendly, while cutting long-term costs.

“A heat pump is one of the ways to get to an all-electric house,” Pallrand said. Electrifying our homes is one of the biggest hurdles to unhooking from fossil fuels and relying more on cleaner energy sources such as wind and solar. But the good news is, all of us have at least some control over that.

“You're not only not using fossil fuels, but you're saving huge amounts on cooling your house,” Pallrand said.

That’s because heat pumps are so much more energy-efficient than traditional options, so you get more bang for your electricity usage buck. According to non-profit electrification thinktank Rewiring America, the average homeowner will save $370 per year by upgrading to a heat pump and homeowners switching from fossil fuel systems will save closer to $1,000 per year.

Heat pumps also quickly lower a home’s fossil fuel pollution: a 2022 study from UC Davis found that replacing a gas furnace with a heat pump can reduce residential greenhouse gas emissions by more than 50%.

And Pallrand said a heat pump furnace and water heater are similar to traditional gas options in size and look, so there won’t be a big change to your home’s setup.

“Especially in Southern California, since we're cooling more than heating, it just makes sense to have a heat pump,” Pallrand said.

If you can pair that electric heat pump with rooftop solar — and even battery storage — then you’re in a good spot for coping with our new climate reality and saving a ton on your bills, Pallrand said. (Here’s more on how to electrify your life, including accessing solar, with state and federal incentives.)

Some things to consider first

If you live in an older home, like many of us do here in the Southland, you’ll likely have to upgrade your home’s electrical panel, or breaker box, before installing a heat pump, Pallrand said.

“You're probably going to have to upgrade your service panel to 200 amps at least,” he said.

He also said that if you’re just starting on the electrification journey, it can make the most sense to start with simply insulating your home.

“The greatest green thing we can do is insulate the house,” Pallbrand said. “If you can insulate your house, which is very cheap and very accessible, then you're going to reduce the demand on your heat pump.”

Using financial incentives to your advantage

Like pretty much all greener technologies, heat pumps are still more expensive up front than traditional fossil fuel options.

While a window-unit heat pump costs a couple hundred bucks more than traditional A/C window units, a central heat pump system for your home costs on average about $5,500, but can be higher depending on the type of heat pump system you choose and what other electric upgrades may be needed to support it. But there’s a lot of money rolling in from the state and federal governments to help offset those costs.

“You have to think about the investment and the return on investment,” Pallbrand said. “And the return on investment is just so massive.”

The Inflation Reduction Act offers tax credits for pretty much every step of a household’s electrification journey:

• 30% tax credit back for an energy audit and on upgrades for insulation, doors, and windows
• 30% of the cost of heat pumps for air and water, capped at $2,000 each year, but resets annually so that credit can be used for projects over the next ten years
• 30% of a home’s electrical panel upgrade, up to $600 each year (uncapped if paired with rooftop solar installation)
• Up to 30% of the cost of installing rooftop solar
• Up to 30% of the cost of battery storage 

There are also state incentives for many of these upgrades. View our full guide on how to electrify your life here.