For climates with moderate heating and cooling needs, heat pumps offer an energy-efficient alternative to furnaces and air conditioners. Like your refrigerator, heat pumps use electricity to move heat from a cool space to a warm space, making the cool space cooler and the warm space warmer. During the heating season, heat pumps move heat from the cool outdoors into your warm house and during the cooling season, heat pumps move heat from your cool house into the warm outdoors. Because they move heat rather than generate heat, heat pumps can provide equivalent space conditioning at as little as one quarter of the cost of operating conventional heating or cooling appliances.

There are three types of heat pumps: air-to-air, water source, and geothermal. They collect heat from the air, water, or ground outside your home and concentrate it for use inside.

The most common type of heat pump is the air-source heat pump, which transfers heat between your house and the outside air. Today's heat pump can reduce your electricity use for heating by approximately 50% compared to electric resistance heating such as furnaces and baseboard heaters. High-efficiency heat pumps also dehumidify better than standard central air conditioners, resulting in less energy usage and more cooling comfort in summer months. Air-source heat pumps have been used for many years in nearly all parts of the United States, but until recently they have not been used in areas that experienced extended periods of subfreezing temperatures. However, in recent years, air-source heat pump technology has advanced so that it now offers a legitimate space heating alternative in colder regions.

For homes without ducts, air-source heat pumps are also available in a ductless version called a mini-split heat pump. In addition, a special type of air-source heat pump called a "reverse cycle chiller" generates hot and cold water rather than air, allowing it to be used with radiant floor heating systems in heating mode.

Geothermal (ground-source or water-source) heat pumps achieve higher efficiencies by transferring heat between your house and the ground or a nearby water source. Although they cost more to install, geothermal heat pumps have low operating costs because they take advantage of relatively constant ground or water temperatures. Geothermal (or ground source) heat pumps have some major advantages. They can reduce energy use by 30%-60%, control humidity, are sturdy and reliable, and fit in a wide variety of homes. Whether a geothermal heat pump is appropriate for you will depend on the size of your lot, the subsoil, and the landscape. Ground-source or water-source heat pumps can be used in more extreme climates than air-source heat pumps, and customer satisfaction with the systems is very high.

A new type of heat pump for residential systems is the absorption heat pump, also called a gas-fired heat pump. Absorption heat pumps use heat as their energy source, and can be driven with a wide variety of heat sources.

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