Heat Pumps 101: A Guide for 2025
What is a heat pump? Heat pumps provide air conditioning and home heating, but how do they work and what is best for your home? Read on to learn more.
Heat pumps are revolutionizing home heating and cooling by offering energy-efficient, all-electric solutions that work year-round—even in cold climates across the United States, like Colorado and Minnesota. At Zero Homes, we specialize in helping homeowners design and install heat pump and dual fuel systems that maximize comfort, efficiency, and savings. This guide breaks down:
How Heat Pumps Work
Heat Pump Types: Explained
Dual Fuel Systems: How They Work
Mini-Split, Multi-Split, Ducted Designs: Explained
Efficiency Ratings & Why They’re Relevant to You
Understanding Heat Pump Sizing
Leading Heat Pump Manufacturers
2025 Incentive Quickstart Guide
How to Install a Heat Pump
What Is a Heat Pump?
A heat pump is a device that moves heat rather than generating it. In winter, it extracts heat from the outside air, ground, or water and transfers it indoors. In summer, it reverses the process to cool your home. Because it transfers heat instead of creating it, a heat pump can deliver up to 3–4 times more energy than it consumes, making it highly efficient.
For comparison, furnaces and boilers use fossil fuel combustion from gas, oil or propane to generate heat. Furnaces, or forced-air systems, distribute heated air through ductwork and vents. Boilers first heat water via combustion, and then use it to provide heat via radiators, baseboards or radiant floor heating.
Main Types of Heat Pumps Explained
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These systems draw heat from the outside air in cold weather. They also extract cool air from outside in warm weather. They’re the most common, most affordable and easiest type of heat pump to install, especially in existing homes. Standard ASHP models may begin to decrease from its 100% energy efficiency capability as outdoor temperatures fall below 40 degrees F and are likely to become less efficient than a traditional furnace at 25 degree F.
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Modern cold climate heat pumps function the same as standard ASHP — by drawing heat from the outside air, even in cold temperatures. Cold-climate models are designed to perform efficiently even when outdoor temperatures drop well below freezing, maintaining reasonable efficiency down to -15 degrees Fahrenheit. These systems often include variable-speed compressors and advanced defrost cycles to ensure consistent heating performance.This makes ccASHPs suitable for winters in Colorado to Minnesota and beyond.
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Also known as geothermal systems, GSHPs use the stable underground temperature to heat and cool your home. They require buried loops and have higher upfront costs but offer excellent long-term efficiency. Those loops can be either horizontal (typically drilled 1-3 yards underground) or vertical (requiring boreholes drilled between 55 and 225 yards deep.)
Dual Fuel Systems: Heat Pumps Working in Tandem with Furnaces and Boilers
A dual fuel system combines an electric heat pump with a furnace or boiler powered by fossil fuel combustion (gas, oil, propane, etc.) The heat pump handles heating during milder temperatures, while the furnace takes over during extreme cold. This setup offers the superior efficiency of electric heat pumps with the reliability of fossil fuel backup, optimizing comfort and energy use year-round.
Dual fuel systems also have the benefit of providing cooling in the summer, replacing bulky central air conditioning systems or clunky A/C units.
Picking the Right Heat Pump Design for Your Home: Mini-Splits, Multi-Splits & More
Heat pumps come in several configurations to match different home layouts, comfort needs, and existing infrastructure. Here’s a breakdown of the most common types used in U.S. homes:
🔹 Mini-Split Systems (Single Zone)
These systems have one outdoor unit connected to a single indoor unit and are ideal for:
Individual rooms or zones (like bedrooms, offices, or additions)
Homes without existing ductwork
Targeted heating and cooling upgrades
🔹 Multi-Split Systems (Multi Zone)
Multi-splits connect one outdoor unit to multiple indoor units. Each indoor unit operates independently, allowing for customized temperatures in different areas of the home. Great for:
Homes with multiple living zones
Larger homes seeking ductless solutions
Retrofit projects
🔹 Ducted Heat Pump Systems
Ducted heat pumps use an outdoor air handler connected to ductwork to distribute air throughout the home, just like a traditional furnace and A/C system. These systems can be:
Full ducted systems: A central heat pump connected to ductwork for whole-home comfort.
Ducted mini-splits: A hybrid between ducted and ductless, serving multiple rooms with short-run ducts.
These are ideal for:
Homes with existing ducts
New construction or major remodels
Homeowners wanting to replace a furnace/A/C setup with a heat pump
Selecting the Right Heat Pump for Your Climate
When choosing a heat pump, it's important to understand how their efficiency in summer and winter is measured. Each season has its owner rating and these ratings help determine how much energy the system uses and how well it heats or cools your home.
🌞 SEER (Seasonal Energy Efficiency Ratio)
SEER measures how efficiently a heat pump cools your home over an entire cooling season. The higher the SEER rating, the more efficient the unit is.
Think of SEER like your car’s miles per gallon (MPG) — more SEER = less electricity used.
As of 2023, most new systems must have at least 14.3 SEER2 in Colorado, but many high-performance models rate 20 SEER or higher.
❄️ HSPF (Heating Seasonal Performance Factor)
HSPF measures how efficiently the heat pump heats your home over the winter season.
Higher HSPF = better cold-weather performance and lower energy bills.
Cold-climate models often exceed 10 HSPF, which is excellent for winters from Colorado to Minnesota and beyond.
🧊 HSPF2 and SEER2 (New Testing Standards)
Starting in 2023, manufacturers now also list SEER2 and HSPF2 ratings, based on more realistic testing conditions that better reflect how systems perform in real homes. These numbers are slightly lower than old SEER/HSPF ratings but more accurate.
Understanding Furnace and Boiler Efficiency Compared to Heat Pumps
What HSPF rates heat pumps’ winter efficiency, Annual Fuel Utilization Efficiency (AFUE) does for furnaces and boilers. While HSPFs are numerical ratings, AFUEs are expressed as a percentage. If you keep in mind that HSPF tells you how much heat a heat pump produced for every unit of electricity used and AFUE tells how much of the system’s fuel energy use is used to heat your home, you’ll be in a good place to make an educated choice.
A Zero Homes advisor can help you understand the difference in performance to make the best choice for your home.
Heat Pump Sizing: What You Need to Know
Heat pumps are sized in tons or BTUs (British Thermal Units).
1 ton = 12,000 BTUs/hour — enough for roughly 400–600 square feet depending on insulation and layout.
Proper sizing is key: a system that’s too small won’t keep up, while one that’s too large will short cycle and waste energy.
At Zero Homes, we use advanced software to calculate the perfect size and type of system for your home, ensuring optimal year-round comfort and efficiency. Our powerful, easy-to-use app is designed so walkthroughs aren’t necessary, freeing up your time.
Leading Heat Pump Manufacturers in the U.S.
Several major companies dominate the residential heat pump market in the United States. Here are some of the most trusted and widely installed brands:
Mitsubishi Electric – A leader in mini-split and multi-split technology.
Bosch – Known for high-efficiency models, dual fuel systems and geothermal solutions.
Daikin – Global innovator with a strong presence in ductless systems.
Carrier – Known for reliable, high-efficiency systems.
Trane – Offers durable, high-performance options with strong warranties.
Lennox – Focuses on quiet operation and smart home integration.
Rheem – Popular for cost-effective, efficient heat pumps.
American Standard – Sister brand to Trane with similar build quality.
Each of these manufacturers offers models tailored for cold climates, smart controls, and high SEER/HSPF ratings to qualify for rebates and maximize energy savings.
💰 2025 Heat Pump Incentives
Incentives for heat pumps, ranging from rebates to tax credits, are available at the federal level and often at the state and utility level, as well. Some can be combined with one another and others cannot. All will have specific criteria that must be met in order to qualify for the money back. That’s why it’s important to work someone who is an expert at managing and maximizing incentives, like Zero Homes (we do this automatically with our free, remote quote tool.) Below are several tax credits and utility rebates available in the Denver, Colorado area:
Federal Tax Credits
ENERGY STAR Certified Heat Pumps: Up to $2,000 per year.
Colorado State Tax Credits
Air Source Heat Pumps: $1,500 total credit, with at least $500 passed on to the homeowner.
Xcel Energy Rebates
Xcel Energy has significantly increased its heat pump rebates in 2025 for a limited time only:
Ducted or Mini-Split Air Source Heat Pumps: $900 per cooling ton.
Cold Climate Ducted or Mini-Split Heat Pumps: $2,250 per heating ton at 5°F.
Heat Pump Water Heaters: $2,250 per unit.
Additional bonuses are available through Xcel’s Whole Home Efficiency program, offering up to 25% more in rebates when combined with other energy-saving upgrades.
🏡 How To Install A Heat Pump: Zero Homes Has the Easy Button
At Zero Homes, we leverage advanced software and in-house expertise to:
Assess your home’s heating and cooling needs.
Design customized heat pump or dual fuel systems.
Navigate and apply for all available rebates and tax credits.
Ensure professional installation for optimal performance.
Our goal is to make your transition to efficient, electric heating and cooling seamless and cost-effective.
Ready to Upgrade?
Contact a heat pump expert at Zero Homes today to explore how a heat pump or dual fuel system can enhance your home’s comfort and efficiency while taking advantage of substantial, limited time 2025 incentives.
