In climates with moderate heating and cooling needs, a heat pump—also known as a "two-way air conditioner"—can offer an energy-efficient alternative to an electric or gas furnace—and make a huge dent in utility bills by decreasing the cost of heating a home. Heat pumps can also serve as an energy-efficient air conditioner alternative. According to the U.S. Department of Energy, a heat pump can cut a heating system’s electricity in half compared with electric-resistance heating such as baseboard heaters. Heat pumps also dehumidify better than standard central air conditioners, resulting in less energy usage and a more comfortable indoor environment in summer months. The energy efficiency of heat pumps makes them very attractive—especially if a home also has solar panels installed to provide residential electricity. The combination of both, says Kevin Granados, owner of East Bay Heating and Air in Livermore, California, can virtually eliminate the electricity bill. He has installed heat pumps for homeowners who live in areas where natural gas is not available.
Here are three main types of heat pumps:
Air-to-air. Absorbs heat from outside air and pumps it indoors
Water. Works in a similar way to an air-to-air pump but extracts and dissipates heat using water instead of air—best when there is easy access to a natural body of water or a well
Geothermal or ground source. Uses the natural heat storage ability of the earth or the earth’s groundwater
The average cost to install an air- or water-source heat pump, including the unit and necessary materials, ranges from $5,000 to $8,000 for a 3-ton unit, depending on the manufacturer. Since geothermal heat pumps require underground installation, they can cost anywhere from $1,500–$3,000 more to install, but these heat pumps are much more efficient because underground temperatures are more consistent throughout the year. Geothermal heat pumps are popular with homeowners who plan to remain in the same house for a long time, or for people who are making an effort to live more sustainably.
A fourth type of heat pump, called a "mini-split heat pump," provides an option to add a ductless system if the home doesn’t have central heating and cooling. A heat pump can also be added to an existing ductless system such as such as hydronic (hot water) heat or radiant panels. Granados of East Bay Heating and Air says that adding a heat pump to a ductless system typically requires access to electricity to run the heat pump. If there is no power to the installation site, it could cost $1,000–$1,500 to have an electrician put in the necessary wiring.
The cost of the heat pump itself varies by manufacturer and quality of the unit, ranging from as low as $550 up to $3,000.
An air-source electric heat pump's efficiency is indicated by the heating season performance factor (HSPF), which is the total space heating required during the heating season, expressed in British thermal units (BTUs), divided by the total electrical energy consumed by the heat pump system during the same season, given in watt hours. Cooling efficiency is indicated by the seasonal energy efficiency ratio (SEER), which is the total heat removed from the conditioned space during the annual cooling season, expressed in BTUs, divided by the total electrical energy consumed by the heat pump during the same season, given in watt hours. Units with better HSPF and SEER ratings typically cost more.
Air-source heat pumps also come in single- and two-stage (also called variable-speed) models, which provide the benefit of operating at variable speeds to lower electricity usage. Two-stage heat pumps cost about $250 more than single-stage units.
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