Ideal for warmer climates, a heat pump is an efficient choice when you want mostly cool air and heated air only on occasion. If you live where temperatures are typically above freezing and electric rates are low, you'll use a heat pump year 'round.

How do heat pumps work?

Heat pumps draw heat from outdoor air in winter and release it inside. In summer, the process is reversed. The cost of buying and installing a heat pump, divided by the total hours used each year, is less than that of buying and installing individual heating and cooling systems.

As long as the temperature stays above freezing, electricity is an efficient way to create heat. When temperatures dip lower, a heat pump with dual-fuel capability combines an electric heat pump with a gas furnace. The system alternates between electric and gas heat, depending on which is more economical, in turn helping to reduce monthly utility costs.