Heat Pumps Could Save US Homes $20 Billion Every Year

If your electric bill has been climbing, your heating system might be stuck in the past and costing you a fortune.

About 25 million American homes still use electric resistance heaters, which work essentially like a giant toaster to warm your house. Another 57 million homes rely on the same outdated technology for hot water. These systems are surprisingly inefficient, and families are paying the price.

A new analysis from energy nonprofit RMI reveals just how much money is being lost. The average single-family home could save $1,530 every year by switching to a heat pump. Over the lifetime of the equipment, that adds up to $23,000 back in your pocket.

Heat pumps work by moving heat rather than generating it, making them about three times more efficient than old electric heaters. They can both heat and cool your home, and newer models are even 20% more efficient than older air conditioners.

The savings vary by location, but the benefits show up everywhere. In colder parts of the Northeast with high electric bills, the payback period can be just a few years. In Texas alone, where electric resistance heating is especially common, homeowners could collectively save nearly $2 billion annually if everyone made the switch.

The Ripple Effect

The impact goes far beyond individual savings. If every home currently using electric resistance heat upgraded to heat pumps, American families would save more than $20 billion every year while avoiding 38 million metric tons of CO2 emissions.

The benefits for the power grid are equally impressive. In Texas, switching to heat pumps could reduce peak winter demand by 7.5 gigawatts, the equivalent of 25 gas-fired power plants. That means fewer blackouts like the one during Winter Storm Uri that left 4.5 million Texans without power.

Lower peak demand also means utilities can delay building expensive new infrastructure, helping keep electricity costs down for everyone. It's a solution that makes the grid more reliable while putting money back in people's pockets.

RMI created a Green Upgrade Calculator that lets you see exactly how much you could save at your specific address. Many states and utilities also offer generous incentives to help cover the cost of switching, making the upgrade even more affordable.

Upgrading your home's heating doesn't just cut your bills—it helps build a more resilient future for everyone.