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This article was originally published on Jan. 24, 2025 and updated on Feb. 20, 2025 with shipment data for all of last year.
Heat pumps just keep getting hotter. The über-efficient, emissions-free appliance outsold gas furnaces in 2024 — and by a bigger margin than ever.
According to shipment data from the industry trade group Air-Conditioning, Heating, and Refrigeration Institute, Americans bought 32% more air-source heat pumps than the next-most-popular heating appliance, gas furnaces, last year. That smashes 2023’s record-setting lead of 21%.
To be sure, the data comes with a notable caveat. Heat pumps outsold gas furnaces, but that doesn’t necessarily mean more households are choosing heat pumps over gas heating; homes often need multiple heat-pump units to replace a single fossil fuel–fired appliance.
Still, heat pumps have clear momentum. In fact, the market has been gravitating in this cleaner direction over the past two decades, said Russell Unger, who leads work on decarbonizing buildings at climate think tank RMI. “There’s just been this long-term, consistent trend.”
It’s not hard to see why. Electric heat pumps have massive comfort, climate, and health benefits. They’re essentially two-way air conditioners that can both heat and cool building interiors, are routinely three to four times as efficient as fossil-fuel systems, and are one of the most effective ways an individual can reduce their planet-warming pollution. In many cases, heat pumps can also save you money.
The building sector accounts for 35% of U.S. emissions. To decarbonize the economy by 2050 — the Paris Agreement goal the U.S. signed on to before President Donald Trump withdrew from the accord last month — heat pumps need to rapidly make up 100% of heating system sales, per modeling by electrification nonprofit Rewiring America.
Asked whether heat pump growth is strong enough to hit climate targets, Unger said, “We’d like it to be faster.”
Still, “I’ll go with a little slower and durable,” he said. “If we saw [the market] jump over a really short period, I would be biting my nails.” Unger has been reassured to see “steady, reliable increases” instead. “That feels on brand for the building industry.”
Unger pointed out that consumers don’t change home heating appliances as frequently as cars, a nod to the recent growth of electric vehicle sales. Contractors are also apt to move cautiously because they want to be sure that a technology will work for their business model before committing to it.
A medley of factors are causing heat pump sales to grow, according to experts Canary Media spoke to. Firstly, consumers and contractors are gaining more familiarity with the tech and having better experiences, Unger said.
Advances in heat pump technology have made it well-suited to some of the coldest climes in the U.S. Just look to Maine; heat pumps proved so popular there that the wintry state blew past its 2025 installation goal two years ahead of schedule. Certain heat pump models can work well below -22 degrees Fahrenheit. And the tech’s performance keeps getting better.
Plus, many states and local jurisdictions are pushing hard for heat pumps.
In 2023, 25 governors signed on to install 20 million of the clean heating machines by 2030. Last year, nine states — California, Colorado, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, and Rhode Island — raised the stakes by pledging that heat pumps will make up at least 65% of residential heating and cooling equipment sales by the end of the decade. California’s new energy code also encourages builders to install heat pumps instead of gas heating. And the San Francisco Bay Area will make heat pumps the de facto choice when it bars new gas furnaces starting in 2029.
Federal and local incentives are also helping people afford heat pumps. Installation costs for these systems are on average $17,000 to $30,000, depending on many factors including local climate and home insulation, per Rewiring America.
The Inflation Reduction Act, the most ambitious climate legislation in history, gave Americans state-distributed home energy rebates of up to $8,000 as well as a $2,000 federal tax credit to defray the costs of getting a heat pump. But how long these incentives might last under the Trump administration is an open question.
Thanks to steady growth in heat pump sales thus far, the U.S. is now among the top countries quickly transitioning from oil and gas heating to heat pumps, said Kevin Carbonnier, building technology market expert at the nonprofit Building Decarbonization Coalition.
What will it take to drive heat pump sales even higher in the U.S.? Stakeholders need to educate consumers and provide resources to make switching as easy and compelling as possible, said Wael Kanj, senior research associate at Rewiring America. Seeing the most recent data, “We know that we’re moving in the right direction.”
Canary Media’s Electrified Life column shares real-world tales, tips, and insights to demystify what individuals can do to shift their homes and lives to clean electric power.
Micah Parkin wanted to quash her home’s carbon pollution to help fight climate change. So she took a familiar step among climate-inclined homeowners: She got a heat pump — just not the typical variety.
Her heat pump pulls warmth from the ground, rather than the air, and the appliance “has been doing wonderfully well,” Parkin, the executive director of grassroots climate-action group 350 Colorado, told me from her home on a snowy January day. “It’s had no problem keeping up with these zero and negative temperatures.”
Heat pumps, whatever their heat source, are critical for decarbonizing space and water heating, which accounts for more than 60% of the energy homes consume in the U.S. Switching from gas, propane, and fuel-oil systems can save homeowners money and is guaranteed to have health benefits given the toxic pollutants fossil-fuel systems emit.
Ground-source, or geothermal, heat pumps have a superpower over the much more common air-based systems: efficiency. While air-source heat pumps can perform two to three times as efficiently as fossil-fuel systems in cold weather, ground-source heat pumps can perform about twice as efficiently again. To put it in dollar terms: That means cutting the heating bill from an air-source heat pump in half.
That efficiency is what won Parkin over. She has a 7-kilowatt solar panel system on her roof, and she and her husband wanted a heat pump that would minimize their reliance on comparatively dirty grid power by staying within the budget of what their solar produces. “It was really important to us that it be the most efficient system possible to use as little electricity as possible,” she said.
But for all their efficiency gains, geothermal heat pumps have one big thing holding them back: They cost roughly double to install compared with air-source systems.
Out of 123.5 million U.S. homes, just 1.3 million — or about 1% — rely on a geothermal heat pump, according to a January report by the Department of Energy. Air-source heat pumps provide primary heat for 13% of homes and are outselling fossil-gas furnaces by a wider margin than ever.
The DOE sees ample room for geothermal heat pumps to take off though. With the right policies and investments, annual adoption of the tech could double, with the equivalent of 7 million more American homes installing geothermal heat pumps by 2035.
“In the next five or 10 years, you’re really going to see these become much more of a household name as a way to heat and cool your home,” said Timothy Steeves, report co-author and geothermal fellow at the DOE.
The benefits could be enormous not only for the homeowners involved but for the power system overall. Geothermal heat pumps are way less of a burden on the grid due to their efficiency, the report found — enough to net roughly $4 billion in annual savings on grid system costs, which could be passed on to utility customers.
Could geothermal heat pumps, with their unrivaled efficiency and grid and climate advantages, be a good fit for you? Let’s dig into the details of this clean-heating tech.
Ground-source heat pumps, also called geo-exchange, earth-coupled, and earth-energy heat pumps, are so efficient because they tap heat where it’s steady and abundant: underground.
The appliances connect to flexible plastic pipes that delve into the earth. These ground loops, laid horizontally in trenches less than 10 feet deep or vertically in boreholes 100-plus feet deep, carry a nontoxic mix of water and glycol to absorb thermal energy from the ground. That energy is then delivered indoors and transferred to refrigerant in the heat pump unit. A compressor squeezes the refrigerant gas, raising the temperature further to provide heating that can flow through ducts, mini-splits, or radiators.
Drawing heat from underground is a winning strategy because the shallow earth stays at a fairly constant temperature of somewhere between 40 and 70 degrees Fahrenheit. In the winter, it’s easier to find heat in the ground than it is in the volatile — and often chilly — air. Conversely, in the summer, the ground is cooler, making it a better heat sink.
Some geothermal heat pumps draw energy from water bodies, rather than the ground, through a similar process.
Another selling point for ground-source heat pumps is their longevity. The heat pump unit itself has a slightly better average lifespan — around 20-plus years for ground-source heat pumps compared with 15 years for air-source heat pumps, according to the DOE. But the underground infrastructure can last 50 years, potentially more, said Kathy Hannun, founder and president of Dandelion Energy, a home-geothermal company and spinout from X, Google’s “moonshot factory.”
Ground-source heat pumps can also simplify some aspects of installation, Hannun said. Dandelion designed a ground-source heat pump that doesn’t need as much electrical capacity and can produce warmer air than typical heat pumps, making it more compatible with existing ductwork, she said.
The reason ground-source heat pumps tend to be much more expensive upfront is their drilling costs.
On average and before incentives, air-source heat-pump systems cost $12,000 to $20,000, according to Joe Parsons, senior marketing sustainability manager at the Climate Control Group, a geothermal-heat-pump manufacturer. A ground-source heat pump system costs between $25,000 and $40,000, he noted.
The typical payback period for home systems ranges from 3 to 10 years, depending on the location, the kind of ground loop required, and available incentives, according to experts.
A big factor affecting installation costs is the physical environment. “If you live in a very rural community, one type of geo[thermal system] that people can consider is horizontal loops,” Hannun said. They “take a lot of space, but you can install them using an excavator” instead of a drilling rig. Digging a horizontal loop field, which could cost around $5,000, is “much less expensive, lower-skilled work” compared with installing a vertical loop.
But if you’re in a dense residential neighborhood where labor costs are high, and you use a lot of heat in the winter, “it might cost more like $20,000 to put in your ground loop,” Hannun said.
The good news is that costs are coming down, Hannun pointed out. Dandelion has gotten better at taking geology into account; a home on bedrock, a great thermal conductor, doesn’t need as much ground loop as a similar home on clay. And the company has moved from water-well drilling rigs to more-compact ones that can be operated by fewer people, she said. Today, drilling costs are about two-thirds of what they were when the company started in 2017.
The beloved TV show This Old House showcases home-geothermal company Dandelion drilling boreholes in a tight space for a ground-source heat pump system in 2019.
Reducing a home’s heating demands by weatherizing it first can help you spend less on a heat pump and energy bills, whether you choose an air-source or ground-source system.
Homeowners can take advantage of thousands of dollars in tax credits and rebates from the federal government, states, and utilities to get ground-source heat pumps.
The biggest incentive is the federal Residential Clean Energy Credit, called 25D after its section of the tax code. Offering 30% of the cost of installing a geothermal heat pump off your federal tax bill, 25D is uncapped. By contrast, the tax credit for air-source heat pumps, 25C, is limited to $2,000.
The 25D tax credit first took effect in 2008 and was extended by the 2022 Inflation Reduction Act at full value through 2032, though the Trump administration has blustered about killing the IRA’s clean-energy tax credits.
Even if Congress does repeal the tax credit, homeowners should still be able to claim the credit next year as long as they have finished installing their ground-source heat pump systems while 25D is still on the books, according to Ryan Dougherty, president of the nonprofit trade association Geothermal Exchange Organization. “It would be unprecedented for Congress to retroactively revoke a tax credit for systems that were installed in good faith in accordance with existing law,” he added.
Generous, even enormous incentives can also be found elsewhere, especially in the Northeast with its cold winters and a legacy of expensive fuel-oil systems. New York offers a $5,000 state tax credit on top of utility Con Edison’s eye-popping rebate covering 50% of total project costs, with a cap of $25,000. For households in disadvantaged communities, the rebate maximum climbs to $35,000.
Check with reputable contractors about what financial help you can get, and search the Database of State Incentives for Renewables & Efficiency for incentives in your area.
If you’re considering geothermal heat pumps, look for experienced contractors who will calculate the heat load of your home to accurately size the system. Ask about the projected total lifetime cost; it could be lower for a geothermal heat pump than for an air-source system because of its low operating costs, especially after incentives. And as with any major home project, get multiple quotes.
Geothermal heat pumps are the most efficient home-heating systems available. But only you can decide whether they make sense for you, your goals, and your budget.
For her part, Parkin of 350 Colorado is thrilled that her ground-source heat pump keeps her home cozy while using little enough power that she can offset it with her solar panels. She put it simply: “I’m super pleased with it.”
Correction: This article initially identified Climate Control Group as a trade organization. It has been updated to reflect that it is a heat-pump manufacturer.
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