Heat Pump vs Air Conditioner: Which is Cheaper to Keep Your Home Cool?
Heat pump vs. air conditioner: which is a better option? As electricity costs surge amid what is expected to be one of the hottest summers on record, what can you do to cool off?


As electricity costs rise and temperatures start to heat up, saving on cooling costs this summer has become a top priority for many. Experts believe that from the Rockies to the East Coast, this summer could very likely be one of the hottest on record, and according to Accuweather, from June through August, temperatures are expected to reach 2 degrees above historical averages across more than half of the country.
As you search for the cheapest and most effective way to beat the heat, you may wonder which is better: a heat pump or air conditioner? Here’s what you need to know about the two.
Heat pump vs air conditioner: How do they work?
Simply put, air conditioners work by moving heat from the interior of your home to a warm outside environment.

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Air conditioners contain a liquid refrigerant that evaporates in an interior evaporator coil, “pulling heat out of indoor air and cooling your home," according to the DOE. After which, “the hot refrigerant gas is pumped outdoors into the condenser where it reverts back to a liquid, giving up its heat to the outside air flowing over the condenser's metal tubing and fins.”
Similarly, heat pumps cool your home by transferring warm air from inside your house to the outside. "From a cooling perspective, minus a few technical details, heat pumps and air conditioners are essentially the same when operating in cooling mode,” according to Carrier.
However, heat pumps can do something air conditioners cannot: warm your home by extracting heat and moving it inside your home. An air conditioner is typically paired with a furnace in order to heat your home when it’s cold outside. You can opt for either “ductless” mini-split heat pumps if your home doesn’t have ductwork, or purchase a heat pump to work with the existing ducting in your home.
Because they work similarly, heat pumps are just as efficient as air conditioners when used to cool your home during the summer months. However, when it comes to heating your home, heat pumps have the advantage. They're more energy efficient when compared to standard furnaces or boilers. Heat pumps use less energy to warm your home than conventional electric or gas systems, because they move heat rather than generate it, according to Energy Star.
Heat pump vs air conditioner: Which is cheaper?
How much a heat pump costs depends on a number of factors, including the type of unit you choose, its efficiency rating and where you live. But while heat pumps have steep up-front costs, they can save you money in the long run.
Heat pumps cost $4,200 to $7,600, on average, including installation fees, according to Architectural Digest. Ductwork installation will add $3,000 to $7,500 to your final cost. Air conditioners, on the other hand, cost between $3,800 and $7,500. However, you’ll need to also invest in a heating system: adding a furnace could cost $2,807 to $6,783, on average.
However, if you can justify the up-front expenses of installing a heat pump, you’ll save on expenses down the road. A majority of Americans (62% to 95% of households, depending upon heat pump efficiency) would see a drop in their energy bills by using a heat pump, according to the National Renewable Energy Lab (NREL). And depending on the size of your home, your local climate and which unit you choose, you can save $300 to $1,500 annually, according to the DOE.
There are also tax credits and incentives for installing a heat pump that can save you even more money. For example, thanks to the Inflation Reduction Act, homeowners may claim a credit for up to $2,000 or 30% of the project cost.
And if you're a Wisconsin resident, you can now save even more on home energy improvements, thanks to the state's recent launch of the Home Efficiency Rebate (HOMES) program. Depending on your household income, you could receive a rebate for up to 100% of the costs (on up to $5,000) to purchase and install a heat pump or other energy-efficient home improvements.
Not a Wisconsin resident? Similar programs may be heading to your state soon. You can use this map to check your state’s progress toward launching its rebates.
Also, learn more about heat pump savings by checking out our article Heat Pumps: Can You Save on Home Cooling and Heating?
Heat pump vs air conditioner: What are the sustainability differences?
Another added benefit of heat pumps is that they're better options for the environment. Because they use less energy, heat pumps help reduce carbon pollution. Heat pumps reduce emissions by up to 93% over their lifetime compared with gas furnaces, according to Rocky Mountain Institute (RMI).
"Heat pumps lower household annual energy emissions on average by 36% to 64% — or 2.5 to 4.4 metric tons of CO2 equivalent per year per housing unit," according to Canary Media.
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Erin pairs personal experience with research and is passionate about sharing personal finance advice with others. Previously, she was a freelancer focusing on the credit card side of finance, but has branched out since then to cover other aspects of personal finance. Erin is well-versed in traditional media with reporting, interviewing and research, as well as using graphic design and video and audio storytelling to share with her readers.
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