Our nation’s buildings, homes, offices, schools, hospitals, military bases, and other critical facilities are responsible for more than 40% of all U.S. energy consumption. Buildings and their equipment operate for decades—installing energy efficient technologies can lower energy costs for families, reduce risks to our power grid, and tackle the climate crisis.

Electric heat pumps are an exciting example of highly efficient building technology. Electric heat pumps can both heat and cool a space by transferring heat either in or out—rather than generating it—efficiently providing comfortable temperatures. This combination of efficiency and versatility—keeping buildings warm in winter and cool in the summer—is why deploying more heat pumps is essential to reducing our nation’s carbon footprint and meeting our critical goals for combating climate change. It’s also why heat pump sales have been growing steadily in recent years.

As energy costs climb this winter, heat pumps are keeping consumer bills low

Heat pumps are an advancing heating technology, representing only a small fraction of home heating in the United States. In fact, most homes that heat with electricity in the U.S. today use older, less-efficient electric resistance technology, which requires at least twice as much energy as a heat pump to keep a house warm. These inefficient heaters are one of the drivers of the most recent U.S. Energy Information Administration (EIA) Winter Fuels Outlook, which predicts higher-than-average costs for whole-home electricity use this winter compared to last (including lighting and other electric appliances).

But homes with electric heat pumps will be less impacted by higher heating costs this winter than those using conventional heating technology like oil furnaces. One study estimates that homes using Energy Star electric heat pumps—on average—will spend less than $600 on heating this entire winter, significantly less than the average home spends. As costs of all energy sources go up, the annual benefits of owning a heat pump can go up as well—especially when considering the efficient air conditioning provided in the summer months.

Meet Susan from Wisconsin. She's saving money because she switched to clean energy. "It just feels great. I think people should do whatever they can to take advantage of the Inflation Reduction Act."
US Department of Energy

In 2022, Boulder, Colorado resident Chaz Teplin replaced his gas-powered air conditioner, furnace, and water heater with heat pumps. When temperatures fell to -10 degrees Fahrenheit, he found that his appliances were operating twice as efficiently as his neighbors’, telling Business Insider, "my advice is don't wait, especially if you have an old gas furnace or air conditioner.” He’s not the only one seeing the benefits. Watch Secretary Jennifer Granholm’s walkthrough of a California home upgraded with energy-efficient appliances like heat pumps.

For most households, one barrier to getting a heat pump is the higher upfront cost. Thanks to the Inflation Reduction Act (IRA), that’s changing. As of January 1, 2023, households buying an electric heat pump can claim a 30% federal tax credit, up to $2,000 in value. (See here for details on other home energy products like solar panels, insulation, and much more for which people are now eligible for a tax credit too).

“Pumping up” heat pump technology

Other programs in addition to federal tax credits are on the way that will do even more to make heat pumps more affordable and accessible to consumers:

  • Through IRA, the Department of Energy (DOE) will work with states to implement rebate programs that make it easier for households to cover the upfront costs of efficient improvements such as heat pumps, saving them money on their utility bills. These state rebates will be available for low- and moderate-income residents. Stay tuned for more details in the coming months as these programs are designed and launched, lasting through 2032.
  • The Inflation Reduction Act provides $250 million to support U.S. manufacturing of electric heat pumps. DOE has issued a Notice of Intent for electric heat pump manufacturers regarding the application process, examples of eligible projects, criteria for qualification and selection, and potential funding requirements.
  • DOE’s Cold Climate Heat Pump (CCHP) Challenge is driving innovation for performance of electric heat pumps at extremely cold temperatures, which will allow even more American families to benefit from the lower costs and improved comfort of heat pumps for heating and cooling.

DOE invests in heat pumps and beyond

DOE is implementing many other programs and actions to further reduce household energy costs for Americans—no matter the kind of energy they use to heat their homes:

  • The DOE Weatherization Assistance Program (WAP) reduces energy costs for low-income households by increasing the energy efficiency of their homes, providing weatherization services to approximately 35,000 households every year.
  • DOE’s Building Energy Codes program supports the development and implementation of building energy codes by engaging with government and industry stakeholders and providing technical assistance for code development, adoption, and compliance.
  • The actions on appliance and equipment standards taken by the Biden Administration in 2022, will contribute to final standards that will save the average household at least $100 annually.

Learn more about how the Biden Administration and the U.S. Department of Energy are investing in high-efficiency home equipment like heat pumps, and how American households can save money on efficient home upgrades with recently announced tax credits and rebates.