Heat pump popularity soars, but cost and evolving technology remain barriers

Valeria Silva (left) and Edwin Caro of GreenSavers work on the installation of a heat pump system at a house in NW Portland on May 24, 2023. Heat pump installations are on the rise in the Northwest due to their energy efficiency and climate benefits. Dave Killen / The Oregonian

When Jack Schniepp’s furnace began to fail this winter in his two-story Bend home, he and his wife decided they’d tear it out and replace it with a heat pump.

“We wanted to do it for climate-related reasons, to move away from using natural gas,” Schniepp said. “I think it’s the right thing to do.”

They also had a gas smell at their house, and while the gas company assured them it wasn’t a leak, they didn’t want to take any chances with two children at home.

Though the price tag wasn’t cheap – $18,500 for a ducted cold climate heat pump and an electrical panel upgrade after a $1,500 state rebate – it was just a few more thousand than a new high-end gas furnace and also replaced the home’s aging air conditioner.

Heat pumps are suddenly on everyone’s lips. Proponents tout their energy efficiency and ability to reduce utility bills. The federal government and the state of Oregon are banking on their rapid adoption to reduce greenhouse gas emissions and lessen the impact of heat waves. And local and federal incentives are rolling out to make heat pump adoption more affordable.

Despite the fanfare, the transition to heat pumps will be far from easy.

The Oregonian/OregonLive interviewed electrification enthusiasts, HVAC installers, energy experts and more than a dozen families around the state who have recently installed heat pumps. The vast majority of the families removed their gas furnaces and disconnected their gas lines, though a few kept a gas furnace or fireplace as a backup source of heat.

Read: Oregonians’ experiences with heat pump installations

While praising the myriad benefits of heat pumps, many stressed that their high price tag of $10,000 to $20,000, the delay in the availability of federal rebates and the industry’s lack of know-how and labor shortages could pose obstacles to rapid widespread adoption.

Schniepp hopes his heat pump’s high efficiency will make up for its higher cost over time. But the family’s biggest concern: Will it work well enough when it gets cold?

“We’ve definitely been in the teens overnight and it’s been fine for that,” he said. Because the heat pump was installed in March, they’ll have to wait for next winter to really find out.

HOW IN DEMAND ARE THEY?

Heat pumps aren’t new. They’re ubiquitous in Asia and just enjoyed a record year in Europe. They’ve been installed for decades in the American South because they’re more energy efficient than air conditioners and provide heating through mild winters.

They’re now gaining a foothold across the U.S. Last year, Americans for the first time bought more heat pumps than gas furnaces. And in the Northwest, installations of heat pumps are now on par with installations of gas furnaces.

Heat pumps are still nowhere near replacing air conditioners, though that may change in the coming years, experts say.

Local HVAC installers say interest in heat pumps first began in 2019 when Berkeley, California, became the first town on the West Coast to prohibit natural gas in new construction. Other cities followed – including Eugene earlier this year, though now a citywide vote is planned there.

And last August, Congress passed the Inflation Reduction Act, a bill that offers massive incentives to accelerate the transition to clean energy, including through heat pumps.

Read: Buying a heat pump? Here’s some financial help.

Oregon – unlike neighboring Washington – has no mandate to require heat pump adoption in either new or existing buildings, though buildings are the second largest source of climate pollution in Oregon behind transportation. State officials hope that developers and homeowners will adopt heat pumps voluntarily, prompted by federal and state tax cuts and rebates – and, it appears, some are going that route.

“Previously, I had to introduce the topic of heat pumps to people. This year … right off the bat, they want to know about heat pumps,” said Zachary Turner, an estimator for Climate Control, a Portland-based heating and air conditioning company.

Brad Twiss, a Portland real estate agent, noticed a similar trend among homebuyers. Previously, most either didn’t care about heating systems or specifically shopped for a house with a natural gas furnace and gas range, he said.

“I’m now standing in houses that have beautiful, expensive gas ranges and the clients are like, ‘How hard would it be to put an induction stove in here?’ And people are asking, ‘Can I install a heat pump here?’” Twiss said.

Edwin Caro of GreenSavers works on the installation of a heat pump system at a house in NW Portland on Wednesday, May 24, 2023. Dave Killen / The Oregonian

HOW DO HEAT PUMPS WORK?

The name ‘heat pump’ is a misnomer because the machine uses electricity and a refrigerant to provide both heating and cooling.

Air source heat pumps – the most popular and the focus of this story – provide heat by extracting it from outdoor air and transferring it inside the home. To cool, they do the reverse, moving heat from the inside of a house to the outdoors.

Because heat pumps use heat that already exists and simply move – or “pump” it – instead of generating it, heat pumps are more energy efficient than furnaces. And while they’re based on the same technology as air conditioners, heat pumps have higher efficiency standards and hence are more energy efficient than most AC units. They can also provide heat, which air conditioners cannot do.

Under ideal conditions, an efficient heat pump can transfer 300% more energy than it consumes in electricity, compared to a new 95% efficient gas furnace.

Less energy used equals lower bills and less strain on the region’s electric grid.

WHAT KIND SHOULD I GET?

One size does not fit all and the technology is fast evolving.

Designs vary significantly from home to home, as does the price tag. Homeowners can choose from a multitude of types, brands, models and configurations.

Heat pumps are typically ducted or ductless – and the two systems can also be used together in one home. Portable heat pumps are available if you’re a renter or want to reduce your natural gas use.

Read: Heat Pump Glossary

Perhaps most important is choosing the right compressor, which affects heating comfort, energy efficiency and utility bills.

Single-stage heat pumps, while cheap, can run only at full blast and use a lot of energy. Two-stage heat pumps, somewhat pricier, are more energy efficient.

Variable-capacity heat pumps, much like multi-speed bicycles, provide an infinite level of adjustment, which translates to higher efficiency, consistent temperatures and a quieter system – but they also have the highest upfront costs.

Heat pump size is also key: It needs to be large enough to provide adequate amounts of heat and cooling to the home. A contractor can help figure out the proper sizing based on the home’s square footage, insulation, draftiness as well as the climate and other factors.

Heat pumps are expensive – they often run $10,000 to $20,000, depending on the size of your home, usually several thousand dollars more than a highly efficient gas furnace. And many homeowners are surprised that instead of just replacing a piece of heating/cooling equipment, they’re faced with additional upgrades.

Older homes, which tend to be drafty, may need insulation or new windows for heat pumps to work effectively. In homes with poor insulation, drafts and cold spots may be more noticeable because heat pumps don’t blast out hot air like furnaces but rather heat more gently, steadily.

Older homes may also need an electrical panel upgrade and new wiring – all of which can add up to thousands of dollars. (An emerging technology called circuit sharing or load sharing may offer a workaround to costly panel upgrades.)

DO THEY REALLY HEAT?

Skepticism about the ability of heat pumps to heat continues to sow confusion – and for good reason.

The older generation still remembers that heat pumps didn’t work when temperatures dropped, said Twiss, the real estate agent.

While today’s heat pumps are more efficient, the standard ones flooding the market still struggle once outdoor temperatures dip below 30 or 40 degrees, said Craig Aaker, a general manager with GreenSavers, a home energy-efficiency company that operates in Bend and Portland.

As a result, some homeowners who have installed heat pumps report feeling cold during the winter.

It’s also why some HVAC companies say heat pumps don’t provide adequate heat and so promote dual fuel systems – in Oregon, that’s typically heat pumps coupled with natural gas furnaces. Other installers regularly add electric resistance heat strips in the heat pump’s air handler to act as emergency heating when the outdoor air gets cold – though they’re much less energy efficient.

Cold climate heat pumps – also called extended capacity or hyper heat pumps – are the gold standard, most efficient but also most expensive. They extract heat exceptionally well even when it’s minus-5 to minus-12 degrees, depending on the model, and have defrosting capabilities to operate in freezing weather – though they get less efficient as temperatures go down.

And while many standard heat pumps come equipped with heat strips, cold climate heat pumps generally don’t need those strips nor any other backup heat source – with a few exceptions.

“You’ll pay more upfront, but your heating bills will be even lower,” Electrify Now co-founder Brian Stewart said of cold climate heat pumps. “Because these things are just so outrageously efficient.” His volunteer-run organization promotes boosting electrification in Oregon.

A cold climate heat pump compressor is installed outside the home of Joe Hoffbeck in Bethany, an unincorporated community near Portland, Oregon. Cold climate heat pumps remain efficient even as temperatures dip below freezing. Sean Meagher/The Oregonian

Norway, Sweden, and Finland, European countries known for their long and cold winters, are leaders in heat pump installations. And Maine – a state where it can be brutally cold – now has one of the highest per capita heat-pump adoption rates in the U.S. A study conducted last year in Maine found that replacing heating systems with heat pumps can be cost-effective and comfortable and in most cases doesn’t require backup heat.

Most of the rebates offered for heat pumps in Maine go to ductless cold climate heat pumps without integrated heat strips, said Kate Rankin, a spokesperson with Efficiency Maine, a quasi-state agency that administers the rebates.

Experts say you can still get away with installing a standard heat pump in Portland – especially if it’s a more efficient model – but you might need a backup system unless you don’t mind feeling colder a few days per year.

But if you install a cold climate heat pump in Portland – which Aaker with GreenSavers recommends to all his clients – you don’t need a backup furnace or heat strips – even in a big house, he said.

Either way, it helps to have good insulation. Aaker’s company frequently installs additional insulation and air seals homes to make them more energy efficient and lower the heat loads.

In colder parts of the state, you definitely should go for a cold climate heat pump, Aaker said. And even then, you may need the backup heat strips if you have a large, sprawling house or lack good insulation, he said. In fact, city code requires backup heat in Bend (likely due to heat pumps’ past lackluster heating performance).

HOW TO FIND INSTALLERS?

Another challenge is that many HVAC installers in the Pacific Northwest, where heat pumps aren’t as common, may not be well-versed in or excited about heat pump technology, according to homeowners, HVAC professionals and electrification proponents.

Because installation expertise varies, it’s important to seek out several HVAC companies, get multiple quotes and find sales people who are knowledgeable about heat pumps, said Stewart with Electrify Now. The organization offers a network of installers and suggests questions to ask an installer.

If you’re a DIYer, you can also install a heat pump on your own.

Watch: DIYers, here’s how to install your own heat pump

Otherwise, you may have to wait in line for the right contractor. There’s already an HVAC worker shortage and the scarcity of competent heat pump installers to meet the growing demand is a major challenge, said Aaker, the general manager with GreenSavers.

“If you look at the targets for heat pump adoption in California, Oregon and Washington over the next six years, we as an industry are nowhere near the capacity that we need to be at to deliver the transformation that’s being asked of us,” Aaker said.

Edwin Caro of GreenSavers works on the installation of a heat pump system at a house in Northwest Portland on May 24, 2023. Heat pumps' popularity is growing, but there's a scarcity of competent installers to meet the growing demand. Dave Killen / The Oregonian

ARE THEY REALLY THAT EFFICIENT?

Stewart with Electrify Now said convincing more Oregonians to make the switch to heat pumps will require more positive messaging around their benefit to the planet and the pocketbook after the up-front investment.

But, he cautioned, over-selling heat pumps’ efficiency could backfire. They may be more energy efficient than other heating and cooling systems, but their real-world efficiency is lower than advertised and switching to a heat pump will lead to major energy and cost savings only for some households.

Those switching from an oil furnace, electric furnace or baseboard heaters or from a very old gas furnace will see significantly lower bills, as will those switching from a regular water heater to a heat pump water heater.

Families who rip out a newer gas furnace to replace it with a heat pump won’t see much of a difference in their bills, he said. In fact, their utility costs could go up if they didn’t previously have air conditioning. That’s because, even though a heat pump is more efficient than a gas furnace, the price of gas is still lower than that of electricity.

Still, the switch is worth it in the long run, Stewart said, because it’s likely gas prices will shoot up as electrification efforts expand and natural gas companies have fewer residential clients to cover their costs.

ENVIRONMENTAL DRAWBACKS?

Heat pumps – as many climate solutions go – aren’t perfect.

Just like air conditioners, heat pumps currently use a chemical refrigerant called hydrofluorocarbon (HFC) 410a, which is 4,260 times more potent as a greenhouse gas than carbon dioxide over 20 years.

That refrigerant slowly leaks into the atmosphere over a heat pump’s lifetime – though most of the emissions occur at the end of its lifetime if the remaining refrigerant isn’t properly disposed of. While strict regulations require HVAC professionals to collect and reclaim the refrigerant, the reality is that too often these rules aren’t followed, several installers told The Oregonian/OregonLive.

Still, environmental and electrification advocates point out that the emissions released by heat pumps pale in volume when compared to those generated by a natural gas-powered furnace over its lifetime.

And, newly approved safety standards will require appliance manufacturers to instead use hydrocarbon refrigerants such as propane and isobutane that have a much smaller climate impact – though it likely will be several years before the new standards go into effect.

Another drawback, at least for now: Oregon’s electric grid still isn’t clean. So until 2040 when the grid is to wean itself off fossil fuels, heat pumps will be powered, in small part, by electricity produced by natural gas and coal.

Widespread heat pump adoption – alongside other electrification efforts – might also put additional strain on that grid. To meet the rising demand, utilities must add massive – and expensive – amounts of renewable energy and storage capacity and build new power lines, a process that can take years.

But the strain might not be as great as some fear.

That’s because the transition to heat pumps marks a shift not just away from natural gas furnaces, but also from inefficient electric resistance heating.

A 2022 study by consulting firm Synapse Energy Economics, commissioned by the nonprofit Sierra Club, found that electricity consumption in Oregon’s residential sector could actually decrease as a result of widespread heat pump adoption, largely due to the shift from inefficient resistance heating to heat pumps.

– Gosia Wozniacka; [email protected]; @gosiawozniacka

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