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Heat Pump Technology Briefing

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Heat pumps are space conditioning appliances that can provide both heating and cooling to indoor areas. They draw heat from a variety of sources, including air, ground, and seawater, and use a refrigeration cycle to “step up” the heat to a usable temperature. Heat pumps take advantage of the phase change properties of a refrigerant to transport heat between spaces. When used for cooling, heat pumps extract heat from the indoors and pump it outside. In heating mode, heat pumps extract heat from the outdoors and pump it inside. Heat pumps do not use resistance electric heaters, but rather use electricity to power fans, pumps, and compressors, which run the refrigeration cycle to transfer heat. The ratio of the amount of electrical energy needed to power the process to the amount of usable heat is known as the coefficient of performance (COP). Even in Alaska’s cold climate, the COP can be well over 3, indicating that for every 1 unit of electrical energy input, 3 units of heat energy are transported. The performance of heat pumps continues to improve in cold climates, and recent studies have shed light on how these systems work in Alaska. However, there are limits to the use of heat pumps. For example, air source heat pumps only work down to about 0°F, and ground source heat pumps may become less efficient over time as heat is extracted from the ground. Additionally, the economics depend on the local price of electricity and the price of competing fuel.

Current Installations in Alaska

While several hundred heat pumps are operating around the state in both residential and commercial settings, this briefing covers 17 projects that could provide data. Heat pumps generally produce lower-temperature heat (130°F) than conventional fuel oil boilers (180°F). Consequently, cost information in this analysis often includes HVAC modifications in many of the systems, although it should be noted that heat pumps have been installed without replacing a building’s entire HVAC system when weatherization and energy efficiency have first been optimized.

Key Performance Metrics

Data show that ground source systems range in cost from less than $2,000/kW to more than $12,000/kW. The same range is found for air source heat pumps, which tend to be used for smaller projects. The range was smaller for seawater source heat pumps because these systems are typically installed where a reliable intake of seawater is already in place, which helps reduce costs. All systems over 200 kW were either seawater heat pumps or ground source heat pumps. The mean cost per kW of the systems studied was $4,248 with a standard deviation of $4,202. The life expectancy of newer heat pumps is still not entirely known, but can be estimated at 20 to 25 years. For smaller mini-split style air source heat pumps, life expectancy is likely closer to 15 years. The compressor typically needs to be replaced at some point during the lifetime of the heat pump.

Technology Trends

Heat pump technology is improving as companies develop more efficient models that function better in colder climates. In addition, advances with alternate natural refrigerants such as carbon dioxide and ammonia are being made, which enable water to be heated to higher temperatures.

Technology Gaps & Barriers

Technological advances are still needed for heat pumps to take off in colder climates. There is also a challenge in Alaska with regard to the Power Cost Equalization (PCE) program subsidies and unused heat pump capacities, especially in colder months. If a utility could sell more electricity for heating purposes, a community might save diesel, but utilities in PCE communities are hesitant to sell electricity at different costs because of the potential dilution of the PCE subsidy.


As with other renewable energy technologies for heating purposes, the PCE formula may need to be addressed.

Left: Ground source heat pumps pull energy from the ground using a vertical or horizontal groundloop. Center: Heat pumps draw heat from the ground, air, or water and use a refrigeration cycle to “step up” the heat to a higher temperature. Photo Courtesy Cold Climate Housing Research Center. Right: Air source heat pumps are popular in milder regions such as Southeast Alaska. The system above heats the City Hall in Wrangell. Photo Courtesy Cold Climate Housing Research Center.