The IRA: What’s a Heat Pump?

stock image of heat pump outside a home

This post is part of our ongoing series about the Inflation Reduction Act (IRA). For more information, see other IRA posts: Funding Our Energy Transition and Get Ready Today; and Weatherization

The Inflation Reduction Act (IRA) is the largest piece of climate legislation in US history, and it has the potential to have enormous impacts on energy costs, pollution, and climate change across the country. Through this huge investment, the federal government will be providing funding to energy efficiency projects and programs. There will also be energy efficiency funding available from the Minnesota state government in coming years. The funding that will be provided is mainly aimed at reducing the costs of home energy efficiency upgrades.

Making a home energy efficient is a multi-step process. This post is about heating and cooling using heat pumps.

Energy journey graphics in a timeline: Audit, air sealing, insulation, new appliances, heating/cooling, windows/doors, and solar. Audit and heating/cooling are highlighted yellow.
The home energy journey is a complex, multi-step process. It is recommended to go left to right.

A heat pump is a super efficient heating and cooling system for your home. Heat pumps are a safer and more environmentally friendly alternative to traditional heating and cooling systems (gas, oil, electric resistance). There are two main types of heat pumps out there — air source heat pumps (ASHPs), which draw energy from the air, and ground source heat pumps (sometimes called geothermal), which draw energy from the ground. In this post we’re going to focus on ASHPs. 

The interesting thing about heat pumps, and what makes them so much more efficient than other heating sources, is that they don’t actually generate any heat. Instead, they simply move heat from one place to another. Because of this, heat pumps can act as both heaters and air conditioners. For example, if you have a gas furnace in your home, your system produces energy by burning methane and uses that to heat the air in your home. Heat pumps draw the heat energy from the outside air and then amplify that heat with a compressor. Heat pumps use refrigerants, which allow them to draw energy from the air even when it’s cold outside.

A common misconception about heat pumps is that they do not function well in harsh winters like ours. The truth is that recent technological advances have produced what we call cold climate air source heat pumps (CCASHPs) specifically designed for cold winters. Early heat pump models worked efficiently down to about 15°F, then became less efficient below that. Recent models allow reliable functionality down to -15°F with 100% efficiency down to -5°F. And for those bitter January nights below that, there are established backup options. It is often possible to retain your existing heating system as a backup and program your system to switch from the heat pump to your other heating system when the efficiency begins to drop. 

While a heat pump can be beneficial for everyone, some of the best candidates for them are buildings that currently use the most inefficient and costly heating systems. For example, those with propane, fuel oil, or electric resistance heating would easily see cost and energy savings with a heat pump. For those on natural gas, the cost benefit may not be as easily seen at this moment, but gas prices are in flux and expected to rise higher over time compared to the cost of electricity. And now, with financial incentives on the horizon from the state of Minnesota and the federal government, installing a heat pump system will be more affordable than ever. These upfront reductions mean a faster return on investment. 

Installing a heat pump also comes with safety and personal health benefits. Heat pumps use electricity instead of fossil fuels. Gas, propane, and fuel oil create harmful emissions when burned, which means heating your home this way reduces your indoor air quality. In addition, all of these fuels produce carbon monoxide when burned. Using a fully electric heating system makes the air in your home healthier to breathe, and greatly reduces the risk of carbon monoxide poisoning. 

The big takeaway about heat pumps is that they work, and they work great. They are very effective at making homes and buildings more comfortable in all seasons, and they are incredibly efficient. In a city with long, cold winters like Duluth, getting a warmer home at a lower price is very compelling. Because of this, the health benefits, and the environmental impacts, the IRA and state incentives are focused on getting heat pumps into as many homes as possible. 

So where do you start? With an energy audit! The home energy audit allows you to make informed decisions about the energy needs of your home and the type of system that might work best. Your energy auditor will direct you in the best steps to take to prepare your home for a heat pump. Most homes need a significant amount of weatherizing and air sealing work before a new HVAC system is installed. Although heat pumps are super efficient, your home will be most comfortable and efficient once leaks have been properly sealed, insulation has been sufficiently upgraded, and the ventilation system is working properly. A heat pump can bring in warm air, but it won’t prevent that heat from leaking right back out! Plan for time to make these updates before exploring heat pump installation. You may even find that after making these improvements, your home can be effectively heated with a smaller heat pump than you previously thought. 

Another thing to consider is if your current electrical system is sufficient for a heat pump. Adding more electrical load to the home requires sufficient wiring and a panel with enough capacity. Your energy auditor should be able to provide some basic information on this, but it is advised to find out more from an electrician. Luckily, audits and electrical upgrades will also be supported by tax credits and rebates from the IRA. 

While incentives easily target homeowners, landlords and other property owners also have a great opportunity to make the most of this state and federal funding. Upgrades that might have been too expensive to be practical in the past are now going to be hugely offset by rebates or tax credits. Property owners can improve the quality of life for their tenants, upgrade the property, and invest in a durable, highly efficient HVAC system, with less financial risk. If you own a property that currently runs on fuel oil, converting to a heat pump will save money and be more attractive to renters. Renters will feel the benefits of upgrades by enjoying more comfortable homes, lower utility bills, and, in some cases, improved indoor air quality. If you currently rent, consider discussing heat pump installation with your landlord. Feel free to contact us if you’re not sure how to have this conversation. 

It is a very exciting time to think about making home energy improvements and heat pumps have really been the star of the show lately. Keep an eye on future posts from us for more information on the coming state and federal incentives. 


Here are some things you can do in the meantime:

Get an energy audit. Sign up here!

Check out our other posts about the IRA and how to prepare for this funding

Check out the new City of Duluth IRA webpage.

Explore the IRA calculator from Rewiring America to estimate what you’ll qualify for.

Read up on some other heat pump resources from the EPA and CERTS.