Heat pumps are an energy upgrade for homeowners that’s becoming a climate and financial winner
Heat pumps are becoming more popular for residential housing with energy prices increasing and the need to reduce use of fossil fuel heating systems.
Andrew Aitchison | In Pictures | Getty Images
Thinking about a home heat pump? New and expanded government incentives, coupled with sharply rising utility costs, make it more compelling.
Especially when used in connection with clean electricity sources like rooftop or community solar, a heat pump — a single electric appliance that can replace a homeowner’s traditional air conditioner and furnace system — can warm and cool a home with less planetary harm.
These investments are becoming more appealing to consumers, too, given inflation’s heavy hand. A whopping 87% of U.S. homeowners surveyed said they experienced higher prices in at least one household service or utility category over the summer, according to SaveOnEnergy.com. There’s another possible bonus: Incentives being offered through the recently passed Inflation Reduction Act of 2022.
“These incentives are not only saving you money now and in the long run on your utility bills, but they are putting our economy on track to reduce consumption of fossil fuels that contribute to climate change,” said Miranda Leppla, director of the Environmental Law Clinic at Case Western Reserve University School of Law. “It’s a win-win.”
The use of heat pumps will become more common as governments legislate their adoption. Washington State recently mandated that new homes and apartments be constructed with heat pumps. In July, California Governor Gavin Newsom announced a goal of 3 million climate-ready and climate-friendly homes by 2030 and 7 million by 2035, supplemented by 6 million heat pumps by 2030.
Here are four important things to know about upgrading your home to a heat pump system.
Heat pump cost, savings and efficiency considerations
Heat pumps are appropriate for all climates and are three to five times more energy efficient than traditional heating systems, according to Rewiring America, a nonprofit focused on electrifying homes, businesses and communities.
Rather than generating heat, these devices transfer heat from the cool outdoors into the warm indoors and vice versa during warm weather. Heat pumps rely on electricity instead of natural gas or propane, both of which have a higher carbon emission than renewable electricity such as wind or solar, said Jay S. Golden, director of the Dynamic Sustainability Lab at Syracuse University.
With installation, heat pumps can range from around $8,000 to $35,000, depending on factors such as the size of the home and heat pump type, according to Rewiring America, but it estimates the savings could amount to hundreds of dollars per year for an average household. What’s more, it’s a long-term play, since heat pumps that most people will consider installing have an average lifespan of 10 to 15 years, according to Rewiring America.
Electricity costs also tend to be more stable, insulating consumers against gas price volatility, said Joshua Skov, a business and government consultant on sustainability strategy who also serves as an industry mentor and instructor at the University of Oregon.
“While there’s an upfront cost, millions of homeowners would save money with a heat pump over the life of the device,” he said. “You’ll save even more with the federal government covering a chunk of the upfront cost.”
Inflation Reduction Act incentives
The Inflation Reduction Act — an expansive climate-protection effort by the federal government — includes multiple incentives to lower the cost of energy-saving property improvements. These incentives significantly exceed what’s available to homeowners today, said Jono Anzalone, a lecturer at the University of Southern Maine and the executive director of The Climate Initiative, which empowers students to tackle climate change.
For low-income households, the Inflation Reduction Act covers 100% of the cost of a heat pump, up to $8,000. For moderate-income households, it covers 50% of your heat pump costs, up to the same dollar limit. Homeowners can use a calculator — such as the one available from Rewiring America — to determine their eligibility.
If you’re considering multiple green home improvements, keep in mind that the law’s overall threshold for “qualified electrification projects” is up to $14,000 per household.
Federal tax credits for homeowners
For those who exceed the income threshold for a rebate, there’s the option, starting Jan. 1, to take advantage of the nonbusiness energy property credit, commonly referred to as 25C, said Peter Downing, a principal with Marcum LLP who leads the accounting firm’s tax credits and incentives group.
Homeowners can receive a 30% tax credit for home energy efficiency projects such as heat pumps. In a given year, they can get a credit of up to $2,000 for installing certain equipment such as a heat pump. This credit will expire after 2032, according to the Congressional Research Service.
There can be another tax credit to homeowners who purchase a geothermal heat pump, which is a more expensive, but longer-lasting option on average. Homeowners can receive an uncapped 30% tax credit for a geothermal heating installation, according to Rewiring America, which estimates an average geothermal installation costs about $24,000 and lasts twenty to fifty years. That means the average tax credit for this type of pump will be around $7,200, Rewiring America said.
The ventilation system of a geothermal heat pump located in front of a residential building.
Picture Alliance | Picture Alliance | Getty Images
Rulemaking is still underway for the Inflation Reduction Act. But it is possible eligible consumers will be allowed to receive both a rebate and a credit, Downing said. But the math is not likely to be as straightforward, based on previous IRS guidance on energy rebates backed by the federal government. Say a consumer is entitled to a 50% rebate for a heat pump that costs $6,000. For purposes of the tax credit, the remaining $3,000 could be eligible for a 30% tax credit, resulting in a possible credit of $900, he said.
State and local financial support
States, municipalities and local utility companies may provide rebates for certain efficient appliances, including heat pumps. “Check with all of them because there are so many different levels of programs, you really need to hunt around,” said Jon Huntley, a senior economist at the Penn Wharton Budget Model who co-authored an analysis of the Inflation Reduction Act’s potential impact on the economy.
Also be sure to check back frequently to see what new state, local and utility-based incentives may be available because programs are often updated, Golden said. Reputable local contractors should also know about locally available rebates, he said.
Many installers have aggressive financing packages to make heat pump installation more feasible, Anzalone said.
Kia’s electric SUVs are taking over. The EV3 is the best-selling retail EV in the UK this year, giving Kia its strongest sales start since it arrived 34 years ago. And it’s not just in the UK. Kia just had its best first quarter globally since it started selling cars in 1962.
Kia EV3 is the best-selling EV in the UK through March
In March, Kia sold a record nearly 20,000 vehicles in the UK, making it the fourth best-selling brand. It was also the second top-seller of electrified vehicles (EVs, PHEVs, and HEVs), accounting for over 55% of sales.
The EV3 remained the best-selling retail EV in the UK last month. Including the EV6, three-row EV9, and Niro EV, electric vehicles represented 21% of Kia’s UK sales in March.
Kia said the EV3 “started with a bang” in January, darting out as the UK’s most popular EV in retail sales. Through March, Kia’s electric SUV has held on to the crown. With the EV3 rolling out, Kia sold over 7,000 electric cars through March, nearly 50% more than in Q1 2024.
The EV3 was the best-selling retail EV in the UK in the first quarter and the fourth best-selling EV overall, including commercial vehicles.
Starting at £33,005 ($42,500), Kia said it’s the “brand’s most affordable EV yet.” It’s available with two battery packs, 58.3 kWh or 81.48 kWh, good for 430 km (270 miles) and 599 km (375 miles) of WLTP range, respectively.
With new EVs on the way, this could be just the start. Kia is launching several new EVs in the UK this year, including the EV4 sedan (and hatchback) and EV5 SUV. It also confirmed that the first PV5 electric vans will be delivered to customers by the end of the year.
Electrek’s Take
Globally, Kia sold a record 772,351 vehicles in the first quarter, its best since it started selling cars in 1962. With the new EV4, the brand’s first electric sedan and hatchback, launching this year, Kia looks to build on its momentum in 2025.
Kia has also made it very clear that it wants to be a global leader in the electric van market with its new Platform Beyond Vehicle (PBV) business, starting with the PV5 later this year.
Earlier today, we learned Kia’s midsize electric SUV, the EV5, is the fourth best-selling EV in Australia through March, outselling every BYD vehicle (at least for now). The EV5 is rolling out to new markets this year, including Canada, the UK, South Korea, and Mexico. However, it will not arrive in the US.
For those in the US, there are still a few Kia EVs to look forward to. Kia is launching the EV4 globally, including in the US, later this year. Although no date has been set, Kia confirmed the EV3 is also coming. It’s expected to arrive in mid-2026.
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Environment
Podcast: Tesla’s disastrous deliveries, more Trump tariffs, EV delivery numbers, and more
In the Electrek Podcast, we discuss the most popular news in the world of sustainable transport and energy. In this week’s episode, we discuss Tesla’s disastrous deliveries, more Trump tariffs, EV delivery numbers, and more.
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Charging your EV in freezing weather could soon become dramatically faster, thanks to a big breakthrough from the University of Michigan engineers.
Neil Dasgupta, U-M associate professor of mechanical engineering and materials science and engineering and corresponding author of a study published in Joule, and his team have developed an innovative battery structure and coating that can boost lithium-ion EV battery charging speeds by a whopping 500%, even at frigid temperatures as low as 14F (-10C). “Charging an EV battery takes 30 to 40 minutes even for aggressive fast charging, and that time increases to over an hour in the winter,” Dasgupta explained. “This is the pain point we want to address.”
Freezing weather has traditionally been harsh on EV batteries because it slows down the movement of lithium ions, resulting in slower charging speeds and reduced battery life. Automakers have tried thickening battery electrodes to extend driving range, but this makes some of the lithium hard to access, making charging even slower.
Previously, Dasgupta’s group sped up battery charging using lasers to carve pathways around 40 microns in size into the graphite anode. This allowed lithium ions to reach deeper into the battery more quickly. However, cold-weather performance still lagged because a chemical layer formed on the electrodes, blocking the ions. Dasgupta compares this barrier to “trying to cut cold butter,” making charging inefficient.
To solve this, the team coated the battery with a thin, glassy material made of lithium borate-carbonate—only 20 nanometers thick—which prevented the problematic chemical layer from forming. Combined with the microscopic channels, the results were groundbreaking: the modified batteries retained 97% of their capacity even after 100 fast-charging cycles in freezing temperatures.
“We envision this approach as something that EV battery manufacturers could adopt without major changes to existing factories,” Dasgupta noted. “For the first time, we’ve shown a pathway to simultaneously achieve extreme fast charging at low temperatures, without sacrificing the energy density of the lithium-ion battery.”
This innovation could tackle one of the biggest concerns holding potential EV buyers back.
The new battery tech is moving closer to commercialization, supported by the Michigan Economic Development Corporation’s Michigan Translational Research and Commercialization (MTRAC) Advanced Transportation Innovation Hub. The research devices were built at U-M’s Battery Lab and studied with help from the Michigan Center for Materials Characterization.
U-M Innovation Partnerships assisted the team in applying for patents, and Arbor Battery Innovations has licensed the technology for market deployment. Dasgupta and the University of Michigan hold financial stakes in Arbor Battery Innovations.
Read more: California now has nearly 50% more EV chargers than gas nozzles
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