More heat pumps would actually be good for the grid, researchers find

Heat pumps, superefficient sources of electric heating and cooling, are winners for the climate, air quality, and typically a household’s energy bills. But a common claim cautioning against their widespread adoption in the U.S. is that the electrical grid is too strained to handle all the extra demand they would bring. 

Now, a new study from clean energy think tank RMI tackles that myth. In most of the country, use of the grid maxes out in summer — during the hottest afternoons when people turn on their power-hungry air conditioners at the same time. But in winter, roughly half of states have plenty of spare capacity for heat pumps to keep homes toasty, the study found. Plus, these heat pumps wouldn’t drive up peak energy use in summer, because they would largely be displacing less efficient air conditioners.

This means that a lot of new heat pumps could be added without triggering expensive grid buildouts. But that’s not all. The study also shows that in the 24 states, plus Washington, D.C., that RMI analyzed — the places with the most spare grid capacity — heat pump adoption by some could actually help keep electricity costs more affordable for all customers. 

Here’s how: Electricity rates encompass the cost of the power itself and the larger, fixed costs for the stuff that makes up the grid — the poles, wires, power plants, transformers, and other equipment — as well as regulated profits for the utility. Because it’s built to handle occasional peaks in demand, the grid is often an underutilized resource. 

It’s like a toll bridge with too few cars driving on it, said Ryan Shea, study co-author and manager on the carbon-free buildings team at RMI. Because the toll is spread among far fewer customers than the bridge can handle, the cost per ride remains high. However, if more people were to use the bridge, each customer would bear less of its price tag. 

Across much of the U.S., the grid is like that toll bridge. It’s built to handle the summer surge in electricity demand. But in the winter, when demand is typically less, adding consumption from heat pumps would spread out the fixed grid costs over many more kilowatt-hours. 

Maximizing deployment of heat pumps over the coming years without having to build out the grid could reduce residential electricity rates by 13% on average from what they would otherwise be due to inflation, per the study. For context, that’s equivalent to a $200 discount on a customer’s annual bills.

Some states have a lot more spare grid capacity in winter than others. For example, Michigan could install 3.6 million home heat pumps and thereby lower overall residential rates by as much as 27%. Policymakers could incentivize heat pump adoption as a tool for driving down electricity costs.

However, these numbers are directional estimates, not forecasts. The study shows where rates could fall most, Shea said. RMI didn’t have access to utility-specific data that would refine the results. 

Despite that limitation, Parth Vaishnav, assistant professor of sustainable systems at the University of Michigan, called the work sensible and well done. He noted, though, that lower electricity rates (the price per kilowatt-hour) do not necessarily mean lower bills (the total cost for all kilowatt-hours used) for people who get heat pumps. That can especially be a concern in the coldest climes in the U.S. where electricity is substantially more expensive than fossil gas. A 2024 Michigan study Vaishnav co-authored found that switching from fossil gas to a heat pump could drive bills up for some households by more than $1,000 annually under then-current fuel costs. 

RMI’s team didn’t estimate bill changes for households switching to heat pumps. Whether they save money overall depends on a host of factors, including what they’re switching from, how well insulated their home is, how efficient their heat pump is, and the relative price of their heating fuel to electricity.

But ​“the larger the reduction in electricity rates, the higher likelihood that someone’s energy bill will decrease with a heat pump,” Shea said.

Another major finding of the study is that states could deploy more heat pumps within the grid’s existing headroom if a percentage of households keep their current fossil-fueled furnace or boiler to use during the coldest hours of the year.

In Illinois, for example, the team found that the grid could accommodate only 30% of households getting a heat pump as their sole heating appliance. Although some heat pumps can work at temperatures below minus 20 degrees Fahrenheit, certain units may be installed with less efficient electric-resistance strips that turn on when the heat pump can’t keep up, which gobbles up more grid capacity. The study posits that the optimal mix for utilizing headroom and driving down rates would be 79% of households having a hybrid setup — a heat pump with an existing fossil-fueled heater for backup — with only 21% using only all-electric heat pump systems. 

Installing more of the climate-friendly appliances, even if they’re supplemented with gas furnaces, makes deeper emissions cuts than fewer heat pumps, according to the study.

“We could think of hybrid heat pumps as a bridge solution in what makes sense in today’s grid,” Shea said.

Vaishnav agrees. People often think ​“of a contest between using furnaces to heat versus using heat pumps to heat. But in fact, the two can work in tandem,” he said. ​“And their [cumulative] reductions in greenhouse gas emissions, their reductions in bills, the amount of headroom [utilized], all those things are better if you have a hybrid solution.”

Vaishnav suggests a couple of regulatory approaches to make that a reality: Policymakers could require that central air conditioners be replaced with heat pumps, leaving installed fossil-fired systems in place. Or they could get manufacturers to stop producing one-way air conditioners in favor of two-way heat pumps.

Of course, for the country to decarbonize, U.S. homes will eventually need to relinquish fossil fuels entirely.

“Our hope is that over the coming years, the economic case to go for an all-electric heat pump starts to be more affordable over time,” Shea said.

To that end, regulators could rebalance winter electricity rates so that they’re lower for heat-pump households, which often currently overpay for fixed grid costs. Last winter, that approach saved Massachusetts heat-pump customers at least $37 million. 

Those without heat pumps still benefit from winter heat-pump rates, according to the RMI study. They incentivize people to switch to the electric tech — and the more heat pumps utilizing the winter grid, the more rates can go down for all.