How a heat pump works, and why its efficiency changes

The refrigeration cycle

A heat pump uses the same cycle as a refrigerator or an air conditioner. Heat flows from warm to cold by itself. To push it the other way, from a cool place into a warm one, you need work, and the compressor supplies it as electricity. The US Department of Energy describes heat pumps as moving heat from a cool space to a warm space this way, rather than generating it.

Four parts and one fluid do the job:

• Refrigerant is the working fluid. It circulates in a sealed loop and keeps changing between liquid and gas.
• Evaporator. At low pressure the refrigerant boils at a low temperature, so it absorbs heat from the air or water around the coil even when that air is cool. ENERGY STAR explains the principle: controlling the refrigerant’s pressure controls whether it takes heat in or gives it up.
• Compressor. It squeezes the gas, which raises its pressure and temperature. It is the main electricity user in the cycle.
• Condenser. The hot, high-pressure gas is now warmer than the space being heated, so it hands over its heat and condenses back to a liquid.
• Expansion (metering) device. The liquid passes through a restriction that drops its pressure again, making it cold and ready to absorb heat once more.

The electricity does not become the heat you feel. It pays for moving a larger quantity of heat that was already there, which is why one unit of electricity can deliver more than one unit of heat.

Heating mode and cooling mode

Most heat pumps can run the cycle in both directions. A component called a reversing valve switches the flow of refrigerant. In summer the indoor coil is the evaporator, absorbing heat from your home, and the outdoor coil rejects it. In winter the roles swap: the outdoor coil absorbs heat from outside air, and the indoor coil releases it into your home. ENERGY STAR describes the winter case as the air-conditioning cycle run in reverse, and notes that even cold outdoor air still holds some heat for the refrigerant to collect.

Most US homes with heat pumps have an air-source split system: an outdoor unit with the compressor and a coil, and an indoor unit with the other coil, the metering device and a fan, joined by refrigerant lines. Ductless mini-splits put the indoor units on walls or ceilings instead of using ducts. The Building America Solution Center at Pacific Northwest National Laboratory describes these layouts.

COP, HSPF2 and “seasonal” efficiency

COP (coefficient of performance) is heat delivered divided by electricity used, at one set of operating conditions. It has no unit. A COP of 3 means three units of heat for each unit of electricity. Electric resistance heating is the benchmark at a COP of 1.

A single COP is a snapshot. It changes with outdoor temperature, indoor temperature and how hard the unit is working. A seasonal figure averages over a whole heating season. In the US the label figure is HSPF2: heat delivered over the season, in Btu, divided by electricity used, in watt-hours. Cooling has a matching SEER2. Both are defined in federal test procedures, and the heating figure is based on a standard reference climate region, not on your town.

You can compare HSPF2 to a COP-style number by dividing by 3.412, the Btu in one kilowatt-hour. A rating of 8.5 works out to about 2.5. Treat that as a rough translation, because the rating comes from a standard test climate and a standard house. It is not a prediction for your home.

ENERGY STAR sets minimum levels for certified equipment. As read on 2026-10-15, split systems need at least 7.8 HSPF2. Its Cold Climate designation asks for more: at least 8.5 HSPF2 for ductless split systems and at least 8.1 for ducted ones, plus a COP of at least 1.75 at 5°F and a heating capacity at 5°F of at least 70% of the capacity at 47°F. Check the current criteria before relying on these numbers, since specifications get revised.

Two cautions. First, a manufacturer’s rated figure describes lab conditions. Second, comparing a heat pump with a furnace is not as simple as comparing two ratings: the Building America Solution Center notes there is no reliable way to equate a furnace’s AFUE with a heat pump’s HSPF, and recommends a full load calculation and a comparison of annual operating costs.

Why efficiency changes with outdoor temperature

The colder the outside air, the larger the temperature gap the compressor has to bridge, so each unit of heat costs more electricity. The Building America Solution Center notes that the heating efficiency of standard central air-source heat pumps drops once outdoor temperatures fall below roughly 35°F, which is why many installations include backup heat, either electric resistance strips or a second fuel such as a gas furnace.

Cold-climate models are built to hold up better. They commonly use staged or inverter-driven compressors, one of the advanced technologies the Department of Energy lists, and the Department describes cold-climate models as designed for temperatures as low as 5°F. It suggests looking for the ENERGY STAR Cold Climate label if winters regularly dip below freezing.

Real installations vary more than the ratings suggest. In a Department of Energy Building America study, researchers monitored seven inverter-driven heat pumps across Connecticut, Massachusetts and Vermont through the 2013–14 winter. Monthly COPs ranged from 1.1 to 3.1. Measured maximum heating capacity was generally in line with manufacturers’ claims down to −10°F, and all the units delivered useful heat below 0°F. But efficiency differed a lot from site to site, even for the same model. The researchers pointed to low indoor airflow, outdoor-unit placement, high return-air temperatures, thermostat setbacks, integration with an existing heating system and occupants turning the fan down. Most of the systems still heated for less than oil, propane or electric resistance.

Keep the limits of that study in view: seven homes in one region, tested more than a decade ago, so it shows how much installation quality matters rather than what a current system will do in yours. A newer 2023 NREL field validation of cold-climate heat pumps exists, but automated access to the full report was blocked, so none of its figures appear here.

What moves your running cost

Running cost is heat demand, divided by the efficiency of the system, times the price of the energy. Everything below works through one of those three terms. The US heat pump calculator uses exactly this structure.

Insulation and air sealing reduce the heat you need

A better envelope lowers the heat demand, so any heating system costs less to run and a smaller heat pump can do the job. The Department of Energy advises existing homeowners replacing a gas system to weatherize first, especially in older homes. The Building America Solution Center adds that sizing matters most after air sealing and insulation have cut the load, because an old estimate no longer applies.

Sizing and installation decide whether the rated efficiency is achieved

The recommended method is a room-by-room load calculation (ACCA Manual J) followed by equipment selection (ACCA Manual S), using the manufacturer’s performance data at your design temperatures rather than the figures on the certificate. A unit that is too small leans on backup heat in cold snaps, and the Solution Center notes that some researchers suggest a slightly larger central unit to avoid that. Refrigerant charge and airflow matter too: the Solution Center warns that too much or too little refrigerant reduces efficiency and shortens component life, and says charging must be done by an EPA-certified technician. Any size the calculator suggests automatically is a rough placeholder, not a load calculation.

Ducts and air temperature

A heat pump delivers air at roughly 80–115°F, against 130–140°F from a typical furnace, according to the Solution Center, so it moves more air to deliver the same warmth. Ducts sized for a furnace can be a poor fit. The Building America field study measured airflow at only 50–80% of listed rates and found that setting the fan to low appeared to cut capacity and efficiency sharply.

Electricity price against fuel price

This is the term homeowners most often miss. A heat pump costs less to run than your current system when

electricity price ÷ COP < fuel price ÷ system efficiency

With a seasonal COP of 3 and a 90%-efficient gas furnace, electricity can cost at most about 3.3 times as much per kWh as gas before the heat pump loses its running-cost advantage. Cheap gas and expensive electricity can erase it; expensive oil, propane or resistance heat widens it. The calculator’s own results turn on this ratio more than on anything else. Test it by changing the electricity price.

The system you are replacing

Against electric resistance heating the saving is large, because resistance converts each unit of electricity to one unit of heat. The Department of Energy says a modern heat pump can cut electricity use for heating by up to 75% compared with resistance heat. The Solution Center gives a more cautious 30% or more. The gap shows how much depends on equipment and conditions. Against a gas furnace the result depends on the price ratio above.

Common types

• Ducted air-source: the most common US type. It can reuse existing ductwork.
• Ductless mini-split: outdoor unit plus one or more wall or ceiling units. Often used where there are no ducts.
• Dual-fuel (hybrid): a heat pump paired with a gas furnace that takes over in the coldest weather.
• Ground-source (geothermal): exchanges heat with the ground. The Department of Energy says it can cost several times as much to install as an air-source system of the same capacity.

Limits, and when to call a professional

• This article explains principles. It does not size a system, check your ducts or electrical service, or promise savings.
• Ask installers for a written load calculation and the manufacturer’s performance data at your design temperature, and for the assumptions behind any savings claim.
• Refrigerant charging, commissioning and electrical work need qualified, licensed people.
• Very cold sites, unusual homes, multi-zone layouts and homes with failing existing systems need a site visit.
• Cost and incentive figures change. Verify them with your utility, your state and written quotes.

When you are ready to put numbers on it, use the heat pump cost calculator. If you are also considering generating your own electricity, the solar panel cost calculator works through that side. The methodology page documents every formula.

Sources

Each source below was opened and read for this article on 2026-10-15. Claims are paraphrased; figures are as the source stated them at that date.

• US Department of Energy, Energy Saver. Heat Pump Systems. Used for: heat transfer rather than generation, air-source and ground-source types, cold-climate designation, advice to weatherize, resistance-heat comparison, dual-fuel systems.
• ENERGY STAR (US EPA). How Does a Heat Pump Work? (A. Daken, 2 Feb 2024). Used for: the pressure-based explanation of the cycle and the winter reverse operation.
• ENERGY STAR. Heat Pump Equipment Key Product Criteria. Used for: definitions of COP, HSPF2 and SEER2, and the certification and Cold Climate thresholds quoted above.
• Building America Solution Center (PNNL, for the US Department of Energy). Traditional Split Heat Pumps. The page shows a last-updated date of 2017-08-01, so some of its context may be older than the current rules. Used for: system layout, reversing valve, efficiency drop below about 35°F, backup heat, load calculation and sizing method, duct and airflow notes, refrigerant charging, the AFUE–HSPF caveat.
• US Department of Energy Building America, Field Performance of Inverter-Driven Heat Pumps in Cold Climates case study (DOE/GO-102015-4643, September 2015; research by the Consortium for Advanced Residential Buildings). Used for: the 2013–14 monitoring results quoted above.

The 3.412 Btu per kWh conversion and the break-even price inequality are our own arithmetic, shown so you can check them.