Personal Finance

How Much Energy Do You Save with a Heat Pump?

Quartz published an article today titled “Want to cool your home, save money, and curb climate change? Try a heat pump“, which has some helpful tips about what a heat pump is and why it may be worth considering for your home. About a year after we bought our Central Indiana home, we converted our HVAC system from an all-electric furnace and central air system to a heat pump. Now that I have a few months worth of data, I thought today would be a great day to see what a difference it made.

The previous owner of our home was using it as an “investment property,” which is his fancy way of representing the reality that he was a slum-lord. Minimal care was given to preserve the home so it could continue to produce cash flow. No consideration was given to stewardship. That meant that when it was time to deal with the HVAC system, the decision that made the best impact on his ability to collect rent was chosen: base model furnace and central air systems. These kept the tenants’ electric bills unnecessarily high, while allowing him to collect his rent with the lowest possible capital expense.

Our home inspectors and our HVAC contractors all scratched their heads about why it was set up in such a wasteful way until I explained this to them. The consensus of everyone I talked to about this was that for our situation–a home in a Midwestern neighborhood with no gas lines–a traditional electric furnace and central air would be a huge waste of energy. A heat pump would decrease our monthly electric bill significantly, although no one could tell me exactly how much.

Breaking Down the Numbers

Upgrading to a heat pump system would cost us over $10,000. We wanted a high quality system with an electric air purifier, so we spent even more. The contractor hooked us up with 5 years financing at 0% APR. It sounded too good to be true, but I read the fine print, and it all checked out.*

That was a few months ago, so I finally have enough data to do a rough comparison of how much we are saving. This is not enough data to say exactly what one could expect to save. There are factors like how the weather compares from one year to another, how other electrical usage habits in the house might compare from one year to another. For example, 2020 had a mild winter with a surprising number of sunny days in the 40s and 50s, while 2021 had a colder winter including a major storm that forced us to stay home for a full week in February. 2020 had the COVID-19 shutdown that meant that we were spending more time at home in March through June than we did in 2021. So, looking at the following year-over-year (YoY) data for those months, we could probably assume that the savings for February-March might have been greater–all other factors being equal–and the savings for April-June might have been less.

From 2020 (pre-heat pump) to 2021 (with heat pump), our household energy usage decreased about 28% for Feb-March, 52% for March-April, 47% for April-May, and 24% for May-June. YoY for these 4 months, our energy usage is down over 37% after replacing our traditional electric HVAC system with a heat pump.

How does that save us per electric bill? So far, we are saving about $42 per month. Compared to the cost of the new system, that is a lot less than the monthly financing cost. So we will not be breaking even any time soon, but in the very long term we should eventually get there. We knew when we converted that it might take more than 10 years to break even, but we were okay with that. We plan to live in the home that long. And in the meantime, we have reduced our household’s carbon footprint. We have a lower impact on our local community’s energy spikes during a heat wave and pollution emissions on Knowzone Action Days, when folks are asked to cut back to help with air quality.

Additional Considerations

Our savings of 37% only amounted to $42/month, but that is for a small 868 square foot house. If you have a larger home, the impact on your bill may be a lot closer to the cost of financing the upgrade, allowing you to break even sooner.

The effects of climate change appear to be accelerating, and we are all going to start noticing them more in our daily lives. Consider the recent electrical grid issues in Texas (both in the winter and now the summer), the heat wave hitting the Northwest, and the tragic condominium collapse in Miami. These are all problems exacerbated by climate change: warming global temperatures, rising sea levels, weather volatility, etc. In the event that your region is hit with a heat wave, electrical grid stress, and other climate-related issues, a lower energy HVAC solution may be more valuable then than it is right now.

Another consideration is the value of the home. If you were to sell the house in a few years, having a more efficient and more recently installed system should make the home significantly more valuable. You may break even on the investment in the selling price alone.


Switching from an electric furnace with central AC to a heat pump makes a substantial impact on energy usage. If you need to make an expensive replacement anyway, it is definitely worth switching. If your current system is working fine, it could be more than a decade to brake even compared to if you did nothing, but the environmental impact of that decision would still be a huge benefit worth considering. A more efficient system may become more valuable during climate events, such as a heat wave or energy grid crisis. And the effects of a newer, more efficient system on the home’s value may be worth the investment enough by itself.

*While I would love to help you out with the exact numbers of our total cost and monthly payments, those details could potentially be used to hack one of the credit ratings agencies’ verification processes and unfreeze my credit. The vague hints I gave here are probably more than I should have said as it is. Be careful how much information you share online about the total balance and monthly payments on an account, and especially do not announce which banks or companies you borrow from!

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