Oct '23 Question: Are Heat Pumps Worth It in Denver?

We answer:
I’ve heard a bunch of talk about heat pumps… Are they worth it?
Recent tech advancements, financial incentives, and the green movement have put a spotlight on heat pumps. For some households, heat pumps are a smart upgrade, however their overall benefit will be limited for most.

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Transcription:

Hi everybody, it’s David & Bryan with Greenwood Estates Realty bringing you October’s top burning real estate question.

I’ve heard a bunch of talk about heat pumps… Are they worth it?
Heat pump popularity is soaring right now due to 3 things… The first is due to recent technological advancements over the past 5 years for heat pumps – which has historically only been used in mild to warm climates like the Southern part of the US – but now heat pumps are efficient enough to be operated in cooler climates, like Denver. The second reason is due to government incentives, which includes up to $2K in rebates from the federal government and an additional $2K from Xcel Energy – for those served by this utility provider. At a maximum rebate of $4K, approximately 25% of the overall cost of the system is paid for! Finally, the third reason is the broader green-friendly movement where a growing number of consumers are showing a preference for sustainable products and services and many are willing to pay a premium for it. These 3 market forces combined have created an explosion of heat pump demand in Denver recently.

But first, what are heat pumps? Heat pumps are units that can both heat and cool homes. Most work by taking the warmth or coolness from outside and bringing it inside the home. Heat pumps work similar to air conditioning units, however they not only cool a home, but they can also warm it. You can think of heat pumps as a two-in-one technology.

How do electric-powered heat pumps compare with traditional fuel-powered furnace and AC units? First off, heat pumps are powered by electricity making them cleaner for the environment, however heat pumps usually cost more to operate in homes and there is a higher risk of power outage – which could be really difficult to experience on a cold winter night. Now you could add a backup furnace to your heat pump, but that might defeat the point and be financially costly. Speaking of cost, according to a few HVAC contractors I’ve spoken with, including Steel Brothers and Cooper Heating & Air, heat pumps cost around $15K-$30K before rebates, and vary in cost depending on size, efficiency, and product quality. After factoring in rebates, heat pumps typically cost just slightly more than traditional furnace and AC units. Finally, the operation of heat pumps is good during warm and cool days, but performance begins to suffer considerably once you start getting into below freezing temperatures. According to Cooper Heating, the efficiency of a heat pump is cut in half once you reach below 32 degrees. When you go below 0, heat pump performance declines even more rapidly.

Now let’s look at special considerations. We already established heat pumps are cleaner than traditional furnaces and AC’s, however heat pumps cost slightly more upfront, cost more to operate, and can become a bit of a concern when temperatures dive below freezing. In most cases, consumers who place a premium on function and economics will probably not want to switch to a heat pump. However, consumers who place a priority on sustainability may opt-in for heat pumps, especially when they don’t have an existing air conditioner because, remember, heat pumps can both heat and cool homes! Finally, households that don’t have access to natural gas or propane are ideal candidates for upgrading to heat pumps because heat pumps are usually considerably more efficient than standard electric baseboard heat systems.

There are a ton of great resources out there concerning heat pumps and we tried our best to put the summary points in our video today. We want to thank the Denver Post and Cooper Heating & Air who offer fantastic online resources for those interested in learning more. If you need a referral to an experienced HVAC contractor or have a question we didn’t answer today, please reach out. We’re your real estate advisors.

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