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How Much Does A Heat Pump Installation Cost? 2022 Prices & Guide

How Much Does A Heat Pump Installation Cost? 2022 Prices & Guide

Heat Pump Installation Cost: Key Price Factors

If you’re considering an upgrade to a more comfortable heating and cooling system, you’ve probably asked yourself an obvious question: How much does a heat pump installation cost? 

Unfortunately, there’s no simple answer. Air source heat pump pricing depends on the size of your home, the type of heat pump system, available financial incentives and other variables. However, by understanding the true costs of installation, property owners can develop a better understanding of the potential costs—and benefits—of this all-electric, all-in-one heating and cooling system. Below, we’ll explain the basics.

Need an estimate for a state-of-the-art heat pump system? BlocPower can help. Answer a few quick questions about your property to get started.

How much does a heat pump installation cost?

First, A Brief Introduction to Heat Pumps

Air source heat pumps—commonly referred to as mini splits—are the most popular and affordable heat pump technology (followed by geothermal heat pumps), because they are an effective heating and cooling solution for almost any home or building. 

Instead of generating heat through electrical resistance or fuel combustion, air source heat pumps use outdoor air as either a heat source (in winter) or a heat sink (in summer). They’re able to provide both heating and cooling while often reducing overall utility bills by 20-40%. 

For a more detailed explanation of how air source heat pumps work, read: What Is An Air Source Heat Pump? Your Go-To Guide

4 Key Factors impact heat pump installation cost

In 2022, the average cost of ductless air source heat pump equipment for a 2,000-square-foot home is about $8,000 to $10,000. However, the cost of the equipment makes up about one third of the overall price of a typical retrofit project. Key factors that can influence heat pump install costs include:

1. Heat Pump Features and Sizing

While all air source heat pumps use the same basic process to provide heating and cooling, some models have features that make them a better choice for certain types of properties. For example, some heat pump systems can be outfitted with higher rated filters for enhanced air filtration, and many newer models have variable-speed motors that improve efficiency. 

The size of the heat pump system you need is also an important determinant of cost. Factors that impact heat pump sizing include your local climate, the square footage of the space to be heated and cooled, the effectiveness of your insulation or weatherization as well as comfort preferences. A 8,000 square foot building in a cold climate like Chicago will need a much larger heat pump than a 2,000 square foot home in a milder climate like Atlanta.  Sizing a heat pump system properly is a critical step and requires the help of an HVAC expert. 

Aesthetic differences may also make certain models more desirable for specific applications. Take the below two Mitsubishi air handlers. While both perform the same task, the flush mounted ceiling cassette—for those that prefer a lower-profile design—will likely come at a higher cost than the wall mounted placement. 

This heat pump system installation from Mitsubishi Electric Trane uses a flush mounted ceiling cassette for air handling.
This system uses the more commonly used, typically lower heat pump installation cost wall mounted air handlers.

2. Type of Heat Pump System (Ductless Vs. Ducted)

If a home has existing ductwork, a heat pump system can use that ductwork to distribute hot or cold air. This can significantly reduce the overall cost of installation—with a couple important drawbacks.

First, every type of HVAC system loses some energy efficiency when moving air through ductwork. While a ducted heat pump is still much more efficient than a gas furnace, ductless systems offer the best performance. 

Additionally, ductless heat pump systems can maintain different temperatures for each heating and cooling zone. In other words, if you prefer your bedroom cooler than your living room, a ductless heat pump system provides a way to keep both rooms comfortable—and reduces your utility bills, since you won’t pay for heating that you don’t need. Ducted air source heat pumps don’t offer this level of precision.

Despite those drawbacks, ducted heat pumps are a more appropriate option for certain types of properties. They’re efficient, eco-friendly, and relatively inexpensive, but you’ll need a professional assessment of your property to determine which type of system will provide the best long-term return on investment.

3. Electrical Upgrades to Support the Heat Pump Installation

While air source heat pumps are efficient, they require electricity to operate. Depending on the configuration of the new system, the existing breaker box (or load center) might not be sufficient, and installers may need to run new wiring to the indoor and outdoor units.

Factors that affect the cost of electrical upgrades include:

  • The distance and linear length of the wiring
  • Fees for obtaining permits or performing inspections
  • Aesthetic considerations (such as replacing drywall)

When a property’s existing electrical infrastructure can support heat pump units, the total cost of installation will be much lower. In our experience, about 90% of retrofit projects require some type of electrical upgrade.

4. Labor and Installation Costs for Heat Pumps

Labor costs vary depending on the complexity of the installation. BlocPower’s team considers dozens of parameters when evaluating each project, including the installation location of the outdoor and indoor units, the length of the runs between the units, and whether installers will need to take special precautions to preserve the building’s appearance.

During the first stages of the BlocPower process, we’ll provide a preliminary Statement of Work (SOW) with an estimate for the full cost of installation. Our team will also perform a cost analysis and an energy utility analysis to provide you with an accurate projection of your potential savings.

After performing a site visit, we provide a final SOW with the total cost. If the cost of the project exceeds your budget, you’re under no obligation to proceed.

What will your heat pump installation cost?

Including the cost of equipment, electrical upgrades, and all the other costs of installation, retrofitting a 2,000-square-foot home with a ductless air source heat pump could require an investment of $25,000-$30,000. That’s a substantial amount of money.

Here’s the good news: While air source heat pump systems are more expensive upfront than a standalone furnace or central air conditioner, they can pay for themselves over time in energy bill savings and offer a range of other benefits including offering heating and cooling, providing cleaner indoor air, lowering maintenance costs, increasing property value and significantly reducing greenhouse gas emissions. 

Even then, there are two key strategies BlocPower helps its customers employ to reduce cost and keep their heating and cooling system upgrade within the budget.

Financial incentives and rebates reduce the heat pump installation cost.

Energy incentive rebates and other incentives are often available for heat pump retrofits that meet certain criteria. At the federal level, the Inflation Reduction Act will help buyers switching to a heat pump system lower costs through tax credits and rebates—including for heat pump water heaters, electric panel enhancements and improved weatherization (insulation and air sealing). Check out this calculator to get a sense for your potential savings.

Additional incentive programs exist at the state and local level. While these programs vary by location (and depending on your utility provider), they can reduce the cost of a new system by tens of thousands of dollars. In New York State, financial incentives can subsidize about 15-40% of the overall cost of heat pump installation on average—including the cost of the equipment. 

To maximize incentives, it is helpful to work with an experienced provider who knows how to properly submit paperwork for often complicated programs. BlocPower’s finance team works to ensure that every customer has access to affordable heating and cooling. For one New York low-rise apartment building, our team took advantage of $38,800 in incentives, reducing the cost of the project by 53%. 

Review our other Example Projects to see how we’ve managed budget-friendly retrofits for houses of worship, commercial buildings, and single- and multi-family homes.

Heat pumps are eligible for $0/down financing with Energy Service Agreements. 

Energy Service Agreements (ESAs) help building owners finance and perform energy-efficient upgrades without paying as much money upfront. In many cases, BlocPower has installed heat pumps through ESAs with customers paying no money down. 

Under an ESA, the service provider covers some or all of the upfront costs of the equipment and labor, plus often performs necessary maintenance throughout the heat pump system’s lifespan. Building owners spread out the cost of the upgraded heating and cooling system, paying a fixed amount each month, often offset by much lower utility bills. Since the equipment acts as collateral, ESAs do not require a lien on your building, and most building owners can qualify.

For more information, read: Energy Service Agreements: Advantages for Building Owners.

Heat pumps provide an excellent return on investment.

By transferring heat instead of generating heat, air source heat pumps save a tremendous amount of money over time while keeping your home or building’s space comfortable. 

If you’re replacing a gas furnace with a new heat pump system, you’ll generally see a return on investment within about 10 years. If you’re replacing a boiler, especially one using more expensive fuels like oil or propane, the payback period can be much shorter. According to one analysis from the Northeast Energy Efficiency Partnership (NEEP), single-family homes in the Northeast and Mid-Atlantic regions saved an average of $459 per year by switching from oil heating to air source heat pumps.

And while lower utility bills are an excellent selling point, modern heat pumps have a number of other advantages: most importantly, the precise temperature control and dependability even in frigid weather means improved comfort year round.

In short, retrofitting your building with a modern heat pump heating and cooling system makes sense—and BlocPower can help you take the first steps. We’ve helped more than 1,200 property owners retrofit their buildings while staying within their budgets. To get started, find out if your home or building is a good fit to upgrade.