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Commercial HVAC, Residential HVAC

What is a heat pump and how does it work?

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Last Updated on January 28, 2019


what is a heat pump

If you’re building, renovating or replacing HVAC equipment, there are more options than ever for heating and cooling your space. You’re already familiar with the old standby options: boilers, gas furnaces, electric baseboard heat and split system air conditioners. But if someone has suggested a heat pump, this technology may be new to you.

What exactly is a heat pump? And is it the right choice for your space?

In this article, we’ll explain everything you need to know in simple terms.

What is a heat pump?

Simply stated, a heat pump is a type of HVAC equipment that can provide both heat and cooling. A heat pump uses mechanical energy to remove heat from the air and move it either inside or outside, depending on whether your space needs heat or air conditioning.

Heat pumps are energy efficient and environmentally friendly, because don’t need to burn any fossil fuels to produce heat.

Heat pumps have been used for quite a long time in areas that don’t get very cold. Here in the New York City area, people are not so familiar with heat pumps. That’s because, until recently, heat pumps could not provide sufficient heat in a climate where temperatures frequently drop below 20 degrees.

Today that’s changing, because heat pump technology has improved to the point where they can be efficient and effective even here in the northeast.

How does a heat pump work?

A heat pump is basically an air conditioner that can also work in reverse to provide heat.

  • In warm weather, the heat pump absorbs heat from the air inside and moves it outside, thereby providing air conditioning.
  • In cooler weather, the heat pump provides heat by removing heat from the air outside and moving it inside.

This idea may seem to defy logic… removing heat from outside in cold weather? The fact is, even in cold weather, there is always heat energy in the air. There’s just less of it than there is in the hot weather. That’s why heat pumps are most efficient in milder climates. The colder it is outside, the harder the heat pump has to work to absorb heat energy and transfer it inside the space.

However, as we mentioned earlier, heat pump technology has improved so much that they can even provide heat here in New York City.

Types of heat pump systems

The heat pumps we’re describing here are called air source heat pumps, because they absorb heat from the air. There are also water source or geothermal heat pumps that use water pipes and heat from underground. These can be very efficient, but not typically a practical choice here in New York City. We don’t often have the ability to dig under city buildings to install water pipes!

Among air source heat pumps, there are several different types of heat pump systems to choose from.

Split system heat pump

A split system heat pump has two parts: an inside unit and an outside unit, just like a traditional residential central air unit.

The difference is, a split system heat pump has coils that absorb heat (evaporator coils) and that release heat (condenser coils) in both the inside and outside units.

That means (unlike a split system air conditioner) a split system heat pump can absorb heat from inside or outside, and release heat inside or outside. It can remove heat to cool your space, or add heat to warm it.

Learn more about: heat pumps vs air conditioners

Packaged heat pump (also known as a rooftop unit)

A packaged heat pump works the same way, but all the coils are located in a single “packaged” unit that often sits on the roof of the building. (That’s why it’s also called a rooftop unit.)

Heated or cooled air is delivered inside the building via ductwork that passes through the roof and/or walls.

Wondering why you’d choose a heat pump split system vs a packaged unit? The answer depends on your space. If you have easy access to the roof, a packaged unit can be less expensive to install and maintain. However, they are not as efficient in buildings more than 10 stories tall.

Learn more about rooftop packaged heat pumps.

Ducted or ductless heat pumps

Most heat pumps deliver heated or cooled air through ductwork. However, sometimes using ducts is impractical, especially when renovating an older building. Or adding heating and cooling to a supplemental space, like a garage or new addition.

In that case, a ductless mini split heat pump can be a great solution. Instead of ducts, these systems transfer heat through refrigerant lines to a fan/coil unit installed in the wall or ceiling. The downside of these units is that you need the fan/coil unit in every room that needs climate control. Also, they do not remove humidity as effectively as a ducted system.

Learn more about ductless mini split systems.

Variable refrigerant flow (VRF) heat pumps

VRF is newer type of heat pump technology that has some amazing benefits compared to traditional heating and cooling systems. VRF systems are more energy efficient, quieter, and can precisely control comfort conditions in multiple zones with different heating and/or cooling needs. In fact, they can provide both heat and cooling to different areas at the same time!

Learn more about VRF heat pump systems.

Heat pump advantages

So why choose a heat pump over having separate heating and air conditioning systems?

Lower energy expenses. According to, a heat pump can deliver as much as 3 times more heat energy to a space than the electrical energy it uses. That translates to greatly reduced energy bills for you. An average home might save as much as $1,000 per year.

Lower repair and maintenance costs. If you’re using a heat pump as your sole source of heating and cooling, there’s only one system to maintain, and one system to diagnose and repair if anything goes wrong. That also lowers your total cost to operate.

Check out this related article about heat pump troubleshooting.

More environmentally friendly. Heat pumps do use electricity, but they don’t consume fossil fuels to produce heat. When you don’t have to rely on an oil or gas burning furnace, you’re doing your part to reduce the use of fossil fuels.

Heat pump limitations

As we mentioned earlier, the big drawback to heat pumps is that they lose efficiency in climates with extended periods where the temperature drops below freezing.

That can mean you’ll need a supplemental heat source for the coldest days of the year. In an existing space, you might already have an old boiler in place that can be used only when needed. In a new space, you could install radiant floor heat.

Depending on where you are and your specific heating and cooling needs, it may still be possible to save money on HVAC operating costs with newer heat pump technology. An expert HVAC contractor can help you compare options and make the right choice.

Learn more about: split system heat pumps in cold climates

Heat pump cost

Now comes the part you’ve probably been waiting for… what about the cost of a heat pump compared to other HVAC systems.

Again, it depends on your situation.

A split system heat pump might cost several thousand dollars more than a traditional split system air conditioner. However, if you compare that to the cost of both an air conditioner and a heating system, you may find that the heat pump is less expensive (assuming you don’t need to purchase a supplemental heating system in a cold climate area).

Heat pump tax credit

However, there is good news that you might not be aware of! There’s a commercial HVAC tax credit for this year that can offset a big portion of the cost.

Let me briefly explain how that works:

Under the previous tax rules, businesses can depreciate the cost of capital equipment like HVAC systems over the life of the equipment (typically many years for systems like heat pumps). So that’s nice, but it doesn’t put a big dent in the expense.

Now there’s a new tax rule that lets you deduct the entire cost of the HVAC equipment, plus installation, on your tax return. Now that makes a big difference in your cost!

This is especially helpful for those who are replacing old R22 HVAC systems that are being phased out. Get this helpful guide that explains more.


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