Brutal cold gripped Minneapolis, Minnesota, in the days before Christmas 2022, with wind chills as low as -40 degrees Fahrenheit and many residents cranking up their natural gas heating systems. But Alex Tsatsoulis’ family kept warm using a highly efficient electric system called a heat pump, which can both heat and cool homes.

“I don’t think it got above zero in outdoor temperature for a while,” Tsatsoulis said. “I’ll be honest, I was amazed that in that frigid temperature, it was finding heat to put into the house.”

Heat pumps pull warmth from the outside air with a compressor and pump it inside. Adoption of the technology in cold places like Minnesota is still relatively new, but it is growing rapidly as cold-climate heat pump technology improves, financial incentives ramp up, and homeowners choose to fight climate change in their own lives. Meanwhile, federal tax credits and pending rebates are making it cheaper than ever to get a heat pump.

How a heat pump heats your home
When it’s cold, heat pumps pull heat from the outdoor air and transfer it indoors.

1. Air is pulled across a coil that begins to heat up the liquid refrigerant in the heat pump’s pipes.

2. A compressor heats up the refrigerant even more.

3. The reversing valve controls the direction that the heat travels. A heat pump can both heat and cool a home.

4. The indoor unit pushes heat into the home.

Tsatsoulis made the switch to a heat pump when his family moved into a home with a natural-gas-burning furnace and an air conditioner that were approaching the end of their life spans. Initially, contractors pushed back on the family’s desire to move away from natural gas. But Tsatsoulis — with help from the Center for Energy and the Environment, a Minneapolis-based nonprofit — fought to make it happen.

“The reality is I have two young kids,” he said, “and locking ourselves in for another 20 years of burning natural gas didn’t seem like the right thing to do in the face of climate change.”

Residential energy use accounts for about 20% of climate-heating pollution emitted in the U.S., according to an analysis by researchers at the University of California-Davis. A major source is the oil, natural gas, and wood burned to heat millions of homes across the country, so many policymakers and activists want homes to switch from fossil fuels to heat pumps.

Electricity in the U.S. is not fossil-fuel-free yet, but sources like wind and solar are rapidly gearing up — Tsatsoulis’ electricity comes from wind power. Major investments from the Inflation Reduction Act, landmark clean energy legislation passed by Congress in 2022, could hasten an era of rapid electrification. In fact, it was designed to transform how Americans power every aspect of their lives — from power plants to the furnace in their basements.

Here are five things to know about using a heat pump to cool and heat your home if you live in a cold climate.

1. Heat pumps work in cold climates

Homeowners as far north as Alaska are using heat pumps to keep their homes comfortable in the winter. In Juneau, an organization called Alaska Heat Smart is helping homeowners make the switch.

“We believe that almost any home will benefit from a heat pump, barring those places that are about to fall over,” said Andy Romanoff, Alaska Heat Smart’s executive director. “If a home has no insulation or has single-pane windows, and you can look under the door and watch mice come in, those kinds of places may not quite be ready for a heat pump.”

Romanoff’s organization has helped over 350 people in Juneau install a heat pump so far, and heat pumps are even used north of the Arctic Circle in Alaska.

Mark Houston runs an Anchorage-based business called the Comforts of Home, which helps people make their homes more energy efficient.

Houston has consulted with villages in Northern Alaska to get them heat pumps, including one system used to grow produce in a hydroponic garden system in the village of Kotzebue.

“I was there one night when it turned on at 35 [F] below, and it made heat,” Houston said, “enough to keep that space warm.”

Most cold-climate heat pumps can run at total capacity until the outdoor temperature gets to about 5 F or below. It will still heat your home at those lower temperatures, but not necessarily keep it as warm as you may typically like. That’s where backup heat sources come in.

2. Supplementary heat is important for heat pumps in cold climates

When Natalie Yahr wanted to replace the aging furnace in her Madison, Wisconsin, home with a heat pump, she called around to local contractors. They all told her the same thing: “We will not install a heat pump without a furnace,” she said.

Rabi Vandergon, a program manager at the Center for Energy and the Environment in Minneapolis, said most homes in cold climates do need supplementary heat along with their heat pump.

A major reason is cost. Homeowners looking to heat solely off a heat pump in a cold climate would often need a very large and expensive heat pump. In Minnesota, Vandergon recommends that people consider heat pumps as an air conditioning replacement first and keep their existing furnace as a supplementary heat source on frigid days.

If you need a new heating system altogether, you might consider going fully electric by choosing a heat pump with an electric heat strip, which helps keep homes comfortable on very cold days. For his home in Denver, Dan Esposito uses a heat pump with an electric heat strip. “It’s not like a plug-in electric space heater or radiator anything. It’s installed within the heat pump unit itself,” he said.

3. Start planning for a heat pump now

Tsatsoulis first tried to get a heat pump when the furnace broke in his previous home, but he couldn’t find a contractor with a heat pump available right away. “The reality is for most folks, it’s an emergency that makes you do these things, and if you’re not prepared, you’re not going to get the most efficient option,” he said.

Planning can also save you money. Making energy-efficient updates like installing new insulation and windows can reduce the size, and thus cost, of a heat pump needed to heat a home. Some homeowners may need a new electric panel or breaker box to support a heat pump. Federal incentives from the Inflation Reduction Act can help you save money as you make these updates.

Additionally, tax credits can offset the cost of heat pumps themselves. At the beginning of 2023, Erin Bloodgood got a heat pump installed in her Milwaukee, Wisconsin, home. “It’s fantastic, it’s quiet, it’s electricity,” she said, “And we’re going to be getting a whole bunch of money back on our taxes at the end of the year.”

In Denver, local financing helped Dan Esposito save money on the cost of his new heat pump. He qualified for a $7,200 rebate from the city and $800 from his utility.

Nonprofit organizations can help connect people to savings. Romaoff’s organization offers rebates and low-interest financing for Juneau residents, and the Center for Energy and Environment helps Minnesotans identify financing options.

You can also try searching the DSIRE database for incentives available in your area.

4. Savings will vary depending on local factors

Whether heat pumps are a cost-saving choice for a home can depend on a number of factors. If a home is currently heated with propane or electric resistance heat, a heat pump could save that family a lot of money.

For Romanoff’s home in Juneau, heating with electricity is extremely cost-effective because of the city’s cheap hydropower. “It’s just incredibly inexpensive to run a heat pump,” he said. “I paid $550 last year to heat my house — three floors.”

Josh Quinnell, a senior research scientist at the Center for Energy and Environment, said field studies have shown that heat pumps are a cost-effective solution for rural Minnesotans who rely on propane to heat their homes.

Natural gas, on the other hand, is a relatively inexpensive fuel. So if you use natural gas as a heat source, you may not see savings immediately. That could change if electricity becomes cheaper in the future or if natural gas prices spike.

During winter 2022-23 in Denver, Esposito said that he saw savings from his heat pump. “I kind of crunched some numbers and tried to create a counterfactual if I still had a gas furnace, and it looks like I saved $100 last month over gas,” he said. “That’s because gas prices have risen something like 60% in Colorado since last year, whereas electricity prices haven’t really changed.”

Most homeowners will see immediate savings from a heat pump in the summer months. Heat pumps are much more efficient at cooling homes than traditional air conditioners.

Tsatsoulis in Minnesota said energy costs this winter have been pretty comparable to what he would have expected to see if his family was running a furnace. “I think what we’re going to see is probably a spike in winter use and then a major decline in summer, which is pretty cool,” he said.

How a heat pump cools your home
When it’s hot, heat pumps pull heat from the indoor air and transfer it outdoors.

1. The indoor unit blows cool air into the home and pulls heat from indoors to warm the refrigerant in the pipes.

2. A compressor heats up the refrigerant even more.

3. The reversing valve controls the direction that the heat travels. A heat pump can both cool and heat a home.

4. A fan blows the heat into the outdoor air, just like a traditional air conditioner.

5. An expansion valve cools the refrigerant.

5. Finding a contractor can be dicey. Nonprofits can help.

Every heat pump owner interviewed for this story said one of the trickiest parts of getting a heat pump was finding a contractor. One place to start is often with a local nonprofit that works on electrification and can make recommendations for contractors to contact. Try typing your location and some of these keywords into a search engine: heat pump, electrification, clean energy, decarbonization, or nonprofit.

The Center for Energy and Environment created a preferred contractor network, which is how Tsatsoulis found a company to put in his heat pump.

“One of the big barriers was a lot of homeowners, they want this equipment, and they’ll call the contractor, but sometimes the contractor may talk them out of getting a heat pump for various reasons,” Vandergon said.

Contractors may be wary of heat pumps due to decades-old experiences with technology that didn’t work well in cold climates. They may also have concerns about the affordability of electricity versus natural gas.

Esposito in Denver said the first few companies he called all tried to steer him back to a gas furnace.

“A lot of them are family businesses, and their reputation is everything. So I’m definitely not calling anybody uninformed,” he said. But he said he would like to see more training to help contractors see the value in the new technology.

Contractors usually have a limited selection of heat pumps available. If you know that you want a specific make and model, you may need to do some digging to find out who in your area supplies it.

Demand due to federal incentives from the Inflation Reduction Act is already helping to popularize heat pumps and bring contractors on board. In Juneau, Romanoff said there’s so much demand that contractors and electricians are struggling to keep up.

“There’s just a lot of change right now. This IRA is going to be a big deal. It’s going to fundamentally change the heat pump market,” Quinell said. “It’s very exciting. I’ve been waiting my entire career for this.”

Samantha Harrington, director of audience experience for Yale Climate Connections, is a journalist and graphic designer with a background in digital media and entrepreneurship. Sam is especially interested...