Ask Alexis

Heat pumps have received a lot of press as new and existing incentives draw attention to their role in improving home energy efficiency and reducing energy costs for Minnesotans.

Most Minnesota electric utilities offer rebates on air source heat pumps. The federal government now offers a tax credit for up to 30% of project costs, up to $2,000.

Later in 2023 or early 2024, heat pump projects will be eligible for additional rebates through the Inflation Reduction Act. Visit our Guide to the Inflation Reduction Act to learn about emerging incentives for clean energy projects as we learn more about them. 

But is a heat pump right for your home? Alexis tackles some common heating and cooling situations in this feature and you can submit your question to Alexis for a future segment. 

PROPANE HEAT + DUAL FUEL ELECTRIC RATES

Q: We heat our northern Minnesota home with a forced-air, propane furnace. It has gotten really expensive to fill the propane tank the last few winters. Would an air source heat pump save us money?

—Propane purchaser pondering heat pumps

A: Yes. Propane costs have been above $2 per gallon for the past two winters. A cold-climate air source heat pump that uses your existing ductwork and serves as your primary heating system will result in savings of 25-40% from what you’ve been paying for propane. Exact savings depends on your electric rate. You can see estimates of these savings for yourself with the MN ASHP Collaborative’s Cost of Heat Comparison resources. An added benefit is avoiding a pricey mid-winter propane tank refill.

With a cold-climate air source heat pump, you’ll be maximizing its performance (and savings) for the entire winter. So, in the Annual Energy Costs bar chart, take a look at the two bars at the left — the first bar for the propane furnace you have now (the bar that says “baseline” below it) and the second bar for the cold climate air source heat pump (the bar that says “15^o F switchover” below it). Just be sure that you’ve selected your electric utility (or one similar to it), “propane” fuel type, and “standard” electric rate in the drop-down menus. 

A switchover temperature is the outdoor temperature at which a hybrid heating set-up — in your case it will be a propane furnace and cold-climate air source heat pump — switches from the primary heating system to the secondary or back-up heating system. Above the switchover temperature, the heat pump will operate. Below the switchover temperature, the furnace will operate. As a reminder, a cold-climate air source heat pump is one that heats efficiently down to 5^o F and even lower in many cases. So, the Annual Energy Costs bar chart showing a 15^o F switchover temperature as the lowest option means you may see even more savings.

Also, you could save an additional 15% if your electric utility offers a dual fuel rate program, which is commonly available in northern Minnesota. Meaning, a dual fuel rate may result in savings of 40-55% from what you’ve been paying for propane when you use a cold-climate air source heat pump as your primary heating system. Dual fuel electric rates are typically close to half the price of standard electric rates. For example, in places where the standard rate is $0.10 per kilowatt-hour, the dual fuel rate may be just $0.06 per kilowatt-hour. The dual fuel rate would apply only to the heat pump’s electricity use. In exchange for the very low price, the electric utility has the ability to control (turn off) the heat pump; when that happens, your existing propane furnace would kick in as the secondary or back-up heating system.

Photo: Propane tank in northern Minnesota.

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MINI-SPLIT UPGRADE

Q: Our mid-1970s home has electric baseboards as its primary heat source and a propane furnace as the back-up heat as part of the electric co-op’s dual fuel program. In 2004, we installed mini-splits for air conditioning since there is limited ductwork in our home. What would you recommend for our home? We’ve never had a home energy assessment.

—Dual Fuel Diva

A: It is great that you are already taking advantage of your utility’s dual fuel program! (For readers unfamiliar with dual fuel electric rate programs, see the post above.) I suggest you upgrade your mini-split system to one rated for cold-climate performance so that a heat pump becomes your primary heat source in your dual fuel program with the electric co-op. Your propane furnace can remain as the secondary or back-up heat source, and the electric baseboards could become an emergency or supplemental heat source. If the propane furnace fails during a time when it is colder outside than your upgraded mini-split heat pump is rated, the baseboard heat is a great back-up to your back-up. 

With the limited ductwork in your home, I would stick with what is working for your home — the mini-split system. I’d advise against a centrally-ducted heat pump, unless a contractor confirms with calculations that your ductwork can support it. A cold-climate mini-split heat pump is at least two times more efficient for heating than electric baseboards over a year, so, you will definitely save on your electric bill with this upgrade. 

With the life of an air source heat pump being 15-20 years, your current mini-split is due for an upgrade, and oh, what a nice upgrade it will be! It might be that you got a “cooling only” mini-split around 2004. Even if your existing heat pump is capable of heating, when it was installed, inverter-driven heat pumps were not widely used. An inverter compressor is one of the key components of a cold-climate air source heat pump. An inverter compressor runs in a more consistent and controlled way, which means it uses significantly less energy and has much less wear and tear than standard compressors. On another note, you may need additional indoor units to achieve the heating needs for your home and possibly to supply heat to more spaces than were cooled with your 2004 mini-splits. Depending on the number of indoor units, you may need larger or additional outdoor equipment.

Anytime you consider changing a heating and/or cooling system, work on tightening up and insulating your home. (See December’s home energy assessment post for more information.) Weatherizing not only makes your home more comfortable and lowers energy costs over the long run, but it can reduce the size (or capacity) of the equipment that you will need to heat and cool your home — sometimes by 0.5 to 1 ton smaller. Smaller equipment size means lower upfront project costs. 

Photo: Mini-split outdoor compressor unit in winter at a CERTs staff member's home.

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HEAT PUMP WATER HEATERS

Q: My wife and I are in our late 70s. Our home will be a tear-down when we leave, between 10 and 15 years from now. Our central A/C is about 8 years old and we rarely use it. Would a heat pump still be a good investment? How about a heat pump water heater? We need to replace our water heater in the next year or two. Lastly, when will the IRA funds be available? I’m hoping my water heater makes it until I can use those funds. I don’t want to end up with a less efficient unit because it’s all I can afford.

—Savvy Senior Couple

A: The life of an air source heat pump is 15-20 years, which is longer than you plan to be in your house. Because you anticipate your home being a tear-down when you leave, and because your A/C isn’t that old and you don’t use it much, maybe investing in a heat pump for heating and cooling isn’t the highest priority in your case. I think focusing on the heat pump water heater is a great idea, especially since you know you need to replace your current water heater soon. 

Heat pump water heaters take heat from the surrounding air and convert it into usable heat for water in a storage tank. Heat pump water heaters have a lifespan of about 10-15 years, and you would reap all the benefits of switching to this technology.

One consideration to keep in mind is that heat pump water heaters need to be located where there is enough air space from which to draw heat, ideally 750-1,000 cubic feet of air space (the upper end of this range is a room that is about 10 feet by 12 feet). Utility rooms in semi-conditioned basements and mechanical rooms adjacent to conditioned spaces are good locations to place a heat pump water heater in Minnesota homes. It is not ideal to place a heat pump water heater into a closet that is only slightly bigger than the water heater, but it may work if vents are added to allow air transfer. 

The economics of switching look a little different depending on whether your current water heater is a conventional electric or natural gas water heater. Compared to conventional electric water heaters, heat pump water heaters typically cost $400-$1,500 more upfront, but cost roughly $200 less to operate each year, based on a 2015 study in Minnesota.  

Compared to a natural gas tank water heater, the upfront cost of a heat pump water heater would typically be $900-1,500 more, and the operating costs may be roughly the same (based on current Twin Cities area gas and electric rates). Utility rebates are not yet available when making a switch from a natural gas water heater to a heat pump water heater. (Note, however, that utilities may soon be able to provide incentives for this kind of fuel-switching because of the Energy Conservation and Optimization (ECO) Act.)  

There are ways to offset the higher price of heat pump water heaters. For example, if you pay taxes, ENERGY STAR heat pump water heaters are now eligible for a 30% tax credit, up to $2,000. In addition, some electric utilities offer rebates for heat pump water heaters (when replacing an electric water heater). The Inflation Reduction Act rebates will be available in late 2023 or early 2024 and could take as much as $1,750 off of the purchase price of a heat pump water heater.

Most water heater replacements happen when people are in a bind: the water heater fails unexpectedly and people look to replace it as quickly as they can. This limits their options and can result in putting in a less efficient option. It sounds like you’re already creating a plan to proactively replace the heater before it fails on its own - that’s very savvy of you! 

Photo: Former Metro Steering Committee member John Suzukida’s heat pump water heater, installed as part of beneficially electrifying his home. Learn more about his journey. 

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NATURAL GAS FIREPLACES

Q: Our home was built in the mid-90s. Since it’s new-ish, we haven’t had a home energy assessment, but we did add attic insulation this year. We currently heat with a natural gas forced air furnace. The central A/C is 15 years old. Just installed this year, we are enjoying a new high quality gas fireplace. Is it possible to use the natural gas fireplace as a supplemental source of heat with a heat pump?

—Cozy-by-the-fire and heat pump curious

A: It is great that you’ve added attic insulation! I would still encourage you to get a home energy assessment, if one is readily available in your area. (See December’s home energy assessment post for more information.) The age of a home alone doesn’t always predict its energy needs. Even newer homes can have potential for energy improvements, whether due to their original construction methods or due to leaks resulting from minor home settling. 

You could replace your central A/C with a ducted air source heat pump. (See November’s State Fair enthusiast post for more details ). It’s not urgent; your central A/C probably has about 5 more years of useful life. If your furnace is about the same age as your central A/C, it would be best to replace your furnace at the same time you replace your A/C with a heat pump, so you can be sure they will be compatible with one another. It would be most cost-effective to continue using the natural gas furnace as your primary heating system throughout winter. You could use the heat pump seasonally in Spring and Fall when outside temperatures are 35 degrees or warmer.

While it is possible to use the natural gas fireplace to supplement the heat pump, the fireplace is the least energy efficient option of the three (fireplace, natural gas furnace, heat pump). I’d suggest only running the natural gas fireplace when people are using the room in which it is located.

If your fireplace is able to operate without electricity, it may be a viable heating option during power outages. There is some hesitancy around air source heat pumps as a primary heating system due to power outages, but nearly all heating systems (except wood stoves) rely on electricity to operate, even natural gas forced air furnaces!

The Inflation Reduction Act has made 30% tax credits - up to $2,000 - available for heat pumps now. Later in 2023 or early in 2024, there will be new point-of-sale rebates for air source heat pumps for low- to moderate-income households. In addition, there are utilities rebates for air source heat pumps. 

Photo: Natural gas fireplace in a CERTs staff member's home.

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HOME ENERGY ASSESSMENTS + WEATHERIZATION

Q: I noticed something among the more than a dozen folks asking about heat pumps for their homes: About half have not had a home energy assessment to understand whether their home could use more insulation or sealing leaks to improve air tightness. You might have wondered whether a home energy assessment and weatherization are necessary before getting air source heat pumps for your home. As is the case many times, it depends.

A: The time is right: Before upgrading or making significant changes to a home’s heating and cooling equipment is a great time to improve home insulation levels and make the home more air-tight. By doing so, it may save on the initial cost of heating and cooling equipment by being able to go with a smaller sized system than you might have without any weatherization.

There are many benefits to home energy assessments and weatherization: A home energy assessment uncovers energy waste you may not have known was happening in your home and gives you clear steps you can take to make improvements. Weatherization will not only improve your home’s comfort, reduce drafts and cold spots, and have lasting benefits in both heating and cooling seasons, but it can prevent structural damage from ice dams, too.

There are definite money-savings for homes heated with electric and/or propane: If your home is currently heated with electricity, with a cold climate air source heat pump, you could see 55% bill savings. For propane, it’s 30% bill savings or more. So, while a home energy assessment and weatherization is what I would typically recommend ahead of an air source heat pump for heating purposes, you will see operating cost-saving benefits if your home is heated with electric and/or propane, even if assessing and weatherizing are skipped.

Home energy assessments and weatherization are strongly encouraged for homes heated with natural gas: For Xcel Energy and/or CenterPoint Energy customers, home energy assessments are available through Home Energy Squad. For all others, check with your gas or electric utility to see what home energy assessment programs they have available. As we turn to heating more homes with electricity in Minnesota, we want to be sure we are doing so in a way that is beneficial to your own energy bills and also to the energy system as a whole. That’s why the Inflation Reduction Act (IRA) includes home energy audits and weatherization. Since the IRA incentives will be in place for 10 years, you can take the time needed to get your home looked at and improved before adding air source heat pumps for heating.

Do-It-Yourself is great, too! If you don’t have access to a home energy assessment where you live, you may want to do a self-assessment. Or, simply see what you can do to improve your home’s air tightness by taking steps yourself [PDF] like adding weather stripping around doors, re-sealing windows, spraying foam around openings into the house with gaps, and insulating dryer vents.

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RADIATORS + WINDOW AIR CONDITIONING UNITS

Q: My 1912 home has a natural gas-fueled boiler for radiators. In the summer, I use window air conditioning units. From a home energy visit, I learned that my home’s insulation levels and air tightness needed to be improved and I’ve since made changes. What are my options for air-to-water heat pumps that could utilize my existing radiators?

—Turn-of-the-(last)-century homeowner

A: I have a “now and later” response for you.

For now, the proven system that works in Minnesota for your home type is a ductless or mini-split air source heat pump. This would be a good time to assess with a contractor where to place the indoor heads of a mini-split system. You likely will want an indoor head in the main living area and in occupied bedrooms. Mini-splits will either save you a lot of effort each spring and fall installing and removing window A/Cs, or if you leave the window A/Cs installed all year, you will not have those heat losses adding up all winter. Mini-splits also are much quieter and offer better dehumidification than window A/Cs.

When it is 35 degrees or warmer outside, you could cost-effectively operate the mini-splits as your primary heating system (depending on the efficiency of each heating system and the costs of natural gas and electricity). So, this would be best in the fall or spring, offering you the ability to run your boiler heating system a few weeks less each year. (If operating in fall and spring only, you wouldn’t necessarily need a cold-climate air source heat pump.)

Based on current energy prices, your boiler will be the more cost-effective primary heating system once it drops below 35 degrees outside. The boiler can be made the primary heating system by setting it up to 4 degrees cooler than the temperature setpoint of the mini-splits (for example, set the boiler at 67 degrees and the mini-splits at 70 degrees). If you plan to operate the mini-splits in this way and through the winter, you’ll want a cold-climate air source heat pump. Operating the two systems in this way also makes “zoned heating” possible–keeping areas that are seldom used a little cooler. Since the mini-splits and boiler will have separate thermostats, you can also ask your contractor the best strategy to cost-effectively operate both systems to keep your home comfortable.

For later, there may be air-to-water heat pump equipment that would be compatible with your radiator. A study is currently underway to assess how air-to-water heat pumps may work in Minnesota with radiators and the results are expected in 2023. The most comprehensive list of air-to-water heat pump product specifications is from the Efficiency Vermont rebate program [PDF] and Otter Tail Power is currently offering rebates on this type of system in Minnesota (thanks to the MN ASHP Collaborative for sharing this information).

Also for later, you may be able to replace window A/Cs with window heat pumps, which is currently being tried in New York City’s public housing. This hasn’t yet been studied or tried in Minnesota, but it is something to keep eyes on.

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ELECTRIC BASEBOARD + WOOD-BURNING STOVE

Q: I heat my home with electric baseboard heat. It can get expensive and so I also heat with a wood-burning stove. Is an air source heat pump right for my home?

—Minnesota Northwoods resident

A: Yes! By converting your home’s primary heating system to an air source heat pump, you could save 55% on the portion of your electric bill that goes to heating your home. Since your home doesn’t have ductwork, the type of air source heat pump you would have installed is called a mini-split or ductless system. 

Depending on the size of your home, there would be one or two outdoor compressor units. Multiple indoor units (sometimes referred to as “heads”) will be connected to the outdoor unit(s). A connection between the indoor units and outdoor unit(s), called a line set, runs on the outside of your home and looks like gutter downspouts. The indoor units can be mounted on the upper part of a wall, or there is another style that sits closer to the floor and is about the size of a radiator. Indoor units would be installed in spaces like the living room, bedrooms, and any other rooms that may not be very well connected to these spaces. 

Ideally, you’ll want to get 2-3 bids from skilled contractors. These contractors will be able to identify a set-up that will strike a balance between performing well for your home and keeping the total project costs reasonable. You would keep your electric baseboards in good working order for use on the coldest days of the year and you would get to use the wood stove only when you wanted to and not feel as much like you need to use it. As an added bonus, the mini-splits will be able to cool and/or dehumidify your home in the summer months. 

Visit the Air Source Heat Pump Collaborative Preferred Contractor Network for help finding an experienced HVAC contractor in Minnesota. 

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AIR SOURCE HEAT PUMP VS CONVENTIONAL AIR CONDITIONER

Q: My home has a 25 year old air conditioner and a 5-10 year old forced air, natural gas furnace. I mostly want more efficient cooling, since my air conditioner is not going to last much longer. Should I be buying an air source heat pump instead of a conventional air conditioner?

—Minnesota State Fair EcoExperience Enthusiast

A: Yes! Since your home has ductwork that is already being used for your forced air heating system, you most likely will want to replace your very old central air conditioner with an air source heat pump. 

The heat pump will provide cooling in the warm months of the year. You will be getting a new piece of equipment that looks like the current outdoor compressor, but it will be a lot more efficient. Bonus: The heat pump can also provide efficient heating in the spring and fall! Heat pumps cost roughly the same as a natural gas furnace when outdoor temperatures are between 25°F and 45°F.

Since your furnace hasn’t yet reached the end of its life, ask heating and cooling contractors whether there are any outdoor compressor units that would be compatible with your furnace’s air handling system.

If not, this may mean replacing equipment in addition to the outdoor compressor, in order for the entire system to work together. I recommend that you get 2-3 bids from skilled contractors.) Once all compatible equipment is installed, two heating systems (forced air furnace and central heat pump) will be controlled through a single thermostat for your heating and cooling needs throughout the year.

Visit the Air Source Heat Pump Collaborative Preferred Contractor Network for help finding an experienced HVAC contractor in Minnesota.

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