Earlier this month, The Washington Post published an article in their Climate Lab section titled, “Which home energy upgrades will save you money? We did the math.” 

The Post deserves credit for looking closely at a question millions of Americans face each year: Whether a heat pump will save you money. The Post gets a lot right, since the answer to that question depends on your current heating fuel, utility rates, climate, and home efficiency. For many people who heat with natural (methane) gas, like the fictional Marylanders in the article, replacing a gas furnace with a heat pump can be a tough sell financially. The value proposition often lies in the comfort, control, and health benefits these efficient systems offer — even if the upfront costs are slightly higher.

However, that’s only half the story.

The first thing to note is that there are more efficient and advanced heat pumps on the market than the one The Post used in its analysis.¹ 

Heat pumps aren’t one-size-fits-all, and the newest models perform measurably better than the older ones. For example, the newest heat pump models can effectively heat homes even when it’s minus 15 degrees. That improved efficiency can make a significant difference on bills. The savings grow even more when combined with insulation and weatherization upgrades.

Second, roughly two-thirds of American households — or more than 60 million homes — could lower their energy bills by switching to a heat pump. That includes homes using expensive delivered fuels or inefficient electric resistance — as well as those in regions where it’s cheaper to run high-efficiency heat pumps on electricity than using methane gas for furnaces or boilers. The savings grow even more when combined with insulation and weatherization upgrades. That could be you.

So, for example, when The Post writes “In some states, like Maine, homeowners could save money switching from fuel oil, which is relatively expensive, but not from gas,” what’s missing from their analysis is the fact that 49 percent of homes in Maine are heated with fuel oil, and only 17 percent of the state’s homes are heated with methane gas.²

In addition, Maine designed and implemented one of the best state-level programs for upgrading low-, moderate-, and middle-income households to efficient heat pump heat. As a result, Mainers who switch to heat pumps are saving a ton of money. Based on our analysis, single-family households would save more than $1,000 each year on average. So would households around the country. Our analysis shows that the average single-family household in 26 states would save more than $500 each year with a heat pump. 

Another limitation of The Post’s analysis is that it evaluates the cost/benefit of installing heat pumps, solar, and heat pump water heaters separately — which misses the bigger picture. The power of home electrification lies in combining upgrades for greater savings. Our modeling shows that a fully electrified home — powered by rooftop solar and efficient electric appliances — can save households between $600 and $3,500 per year, even in homes like the Post’s Maryland model.³ The vision of a fully electrified home — with good insulation, windows, and doors — is all about stacking up the benefits. 

How do we bring down the upfront costs of these upgrades? The Inflation Reduction Act was a good start. The IRA introduced more generous tax credits of up to $2,000 for heat pumps and heat pump water heaters, among other benefits. Many states and localities have built on the incentives available at the federal level and utilities also often offer generous rebates and discounts. Take Colorado, for example, where Rewiring America helped to secure $430 million in utility rebates for home electrification and energy efficiency measures, over three times the state's allocation under the federal efficiency and electrification rebate program. 

For the homeowner out there looking to make an upgrade: You’re not on your own. We’ve got tools and resources — including the Savings Calculator, Personal Electrification Planner, and Why Electrify Course — to help you navigate these same questions, and do the math that makes sense for you, your family, and your home.  

How we calculated savings

Rewiring America modeled emissions savings and energy estimates using ResStock, the National Renewable Energy Laboratory’s (“NREL”) publicly available model. ResStock uses a sample of about 550,000 residential building models that statistically represent every residential housing unit in the contiguous United States, along with their baseline energy consumption by fuel and residential end-use. We include only building models representing single-family homes in this analysis. 

The full electrification scenario includes the bill savings associated with installation of an air-source heat pump, heat pump water heater, rooftop solar, and electric vehicle. 

The simulated baseline efficiency air-source heat pump has performance characteristics similar to a centrally-ducted heat pump with Seasonal Energy Efficiency Ratio (“SEER”) 18, 10 Heating Seasonal Performance Factor (“HSPF”), or a ductless mini split heat pump with SEER 18, 10.5 HSPF, depending on whether the building has existing ductwork. The modeled air-source heat pump uses electric resistance backup, is sized using the Home Energy Rating System (“HERS”) methodology, and does not have a setpoint setback.

The heat pump water heater upgrade represents replacing a household’s existing water heater with a heat pump water heater with Uniform Energy Factor (UEF) 3.35-3.45.

The savings and energy estimates for the rooftop solar upgrade are based on modeled datasets from NREL. We first estimate the potential electricity demand using electricity consumption data after a household’s appliances have been upgraded to efficient electric alternatives. We use NREL’s PVWatts, a tool that provides data on sunlight hours and solar system electricity generation throughout the U.S., to estimate the solar system size needed to meet the yearly electricity demand after electrification. We also estimate how large a system each roof might be able to support based on the square footage of the home. Using these two potential system sizes, we estimate how much electricity rooftop solar would generate on the home. 

We converted the modeled changes in energy usage for each building model into changes in consumer household utility bill changes by multiplying energy usage changes by the consumer costs of electricity and natural gas in the county. These volumetric rates were derived using data from the Energy Information Administration, NREL’s Utility Rate Database, American Gas Association, and the Homeland Infrastructure Foundation-Level (HIFLD) Database. We calculated utility-average rates for gas, then applied those to building models which were located within counties served by each utility.

1. The heat pump used in the analysis is a single-speed, SEER 15, 9 HSPF model. In our analysis, we model a heat pump more likely to be eligible for the current federal tax credits — a variable speed heat pump with SEER 18, 10 HSPF.  

2. https://www.eia.gov/consumption/residential/index.php

3. Modeling results based on combining the individual savings from installation of a heat pump, heat pump water heater, and rooftop solar. See methodology below for more details.