Heat pumps are having their moment. Are they right for you?

For decades, Scott Nelson’s Oceanside Service has been installing traditional residential cooling systems and gas-powered furnaces in Jersey Shore communities such as Long Beach Island.

Within the past few years, however, the Allenhurst-based contractor has seen a big change: More homeowners are opting for heat pumps, once thought to be ill-suited to cold Northeast winters. The switch is fostered by warming winters, more efficient heat pump units, and federal and state incentives.

“We give everybody the option,” Nelson said, referring to a traditional system versus a heat pump. “And 8 out of 10″ have been buying heat pumps.

Heat pumps are having their moment, boosted in recent years by federal tax credits and other incentives that align their cost more closely with traditional fossil-fuel powered units, while also being highly efficient.

The momentum could grow with the Environmental Protection Agency’s announcement last week of $4.3 billion in grants for projects in 30 states aimed at reducing climate change and air pollution, fostering environmental justice, and accelerating a transition to renewable energy. Pennsylvania received nearly $400 million, and New Jersey and a coalition of other states received nearly $250 million, all funded by the Inflation Reduction Act (IRA) as part of the Biden administration’s agenda.

The grants will be used to fund various programs, including those that encourage a switch to heat pumps such as Pennsylvania’s Priority Climate Action Plan.

Heat pumps are energy-efficient alternatives to furnaces and air conditioners, according to the U.S. Department of Energy.

During winter, heat pumps use refrigerant to move heat from the cool outdoors into a house and warm it. During summer, heat pumps move heat from a house to the outdoors.

In a traditional system, furnaces burn oil or gas to generate heat.

In the past, heat pumps produced less heat than those systems in very cold weather and worked best in warmer climates. That’s no longer the case with newer “cold climate” heat pumps that work even in very low temperatures.

The three main types of heat pumps collect heat from air, water, or ground (geothermal) outside a home and concentrate it for use inside. Because heat pumps transfer heat rather than generate it like traditional systems, they are more efficient. And they can be powered by renewable energy from a distant generator or home solar.

Most heat pump systems being installed in the region’s existing homes are hybrids, meaning they tap already-installed gas powered furnaces as a backup during severe cold. Heat pumps can be ductless, or use existing ducts. Heat pumps that use surrounding air are by far the most common.

Many Philadelphia homes still have boilers that use radiators and baseboard heat. Those likely would need ductless, mini-split heat pumps. Ductless heat pumps use multiple “head units” mounted on interior walls or ceilings. Refrigerant from the heat pump carries heat or cool air directly to the head units to be dispersed.

Heat pump installations can quality for federal tax credits valued at up to 30% of the cost paid for the unit, or up to $2,000 per year, for air-source heat pumps. There’s a rebate up to $8,000 for an ENERGY STAR-certified electric heat pump for space heating and cooling.

Pennsylvania anticipates using money from the Infrastructure Act to offer rebates starting in 2025 for heat pumps installed in low- to moderate-income households.

Local utility providers also often offer rebates. Peco offers rebates up to $300 for heat pumps. And PSE&G, which services parts of South Jersey, offers rebates up to $600 for the highest efficiency model.

Nelson, the heating and cooling contractor, has a rooftop solar system. He said incentives have put the cost of heat pumps in range for many homeowners. He plans to replace his current traditional system with a hybrid dual-fuel heat pump that will be powered by solar. The gas furnace will kick only when temperatures get really low.

A bonus: “Heat pumps are the quietest pieces of equipment on the market,” he said.

However, he assesses a home before recommending any system.

The nonprofit Energy Coordinating Agency (ECA) in West Kensington provides energy efficiency upgrades for homeowners in low-income neighborhoods and trains local youth to work in clean energy. The ECA will install new heating systems for free for those who qualify by income.

ECA’s executive director Steve Luxton started a heat pump training program last year.

“I realized that a lot of heating contractors, particularly those who work in Philly, aren’t really skilled up to work on heat pumps and are certainly not certified in heat pump technology,” he said.

Luxton said Philadelphians are starting to install heat pumps, but the up-front costs are still too expensive for the ECA to install through its program. A heat pump can cost $15,000 or more. Luxton said it costs the ECA about $8,000 to install a traditional gas-fired furnace.

Luxton said the ECA would need more grant money to begin installing heat pumps. Adding to the cost: 440,000 rowhouses in Philadelphia, with an average age of 80 years. Many would need electrical panels upgraded from 100 to 200 amp service to accommodate heat pumps.

“That’s why it’s not a slam dunk,” Luxton said. “We just can’t go in and convert somebody’s heat pump up just like that.”

However, Luxton said the move to electrification will be a main driver of conversions.

“That wave of mass heat pump installations is coming,” Luxton said. “There’s no question about it.”

Flora Cardoni, an advocate with the nonprofit PennEnvironment, said most people are not aware of government incentives for heat pumps and so fail to consider them.

“People talk about the credits available for buying an electric vehicle,” Cardoni said. “But there are so many tax credits and incentives available for things people may not realize. And heat pumps are one of them.”

But she notes natural gas is still relatively cheap, a lure to keep a traditional furnace.

“Electricity can be expensive,” she said. “Why would I want to make that switch other than the climate?”

The answer, she said, is that because heat pumps are more efficient, they can cost less to run depending on the home, and can tap renewable electricity.

Rashee Blair, 21, of North Philly, could be part of the energy future. He graduated in the spring from ECA’s heat pump training program and moved into the nonprofit’s program that teaches energy efficient construction, including heating and cooling.

“This program helped me realize that I like to do these types of things, and like helping people save money, fixing up their homes and making their lives better,” Blair said. “And everything is slowly switching to electric.”