Heat pumps are gaining increasing recognition across many parts of the United States due to their energy efficiency advantages and lower greenhouse gas emissions compared to traditional building heating and cooling solutions. The bipartisan coalition of 25 governors, the U.S. Climate Alliance, recently committed to increasing heat pump installations in their states to 20 million units by 2030. According to data from the clean energy think tank RMI, there are currently approximately 4.8 million heat pumps installed in the U.S.

Progress varies by state. In Massachusetts, concerns about upfront costs and the complexity of equipment selection have slowed adoption, leaving it behind frontrunners like Maine. Maine has already met its goal of installing 100,000 heat pumps by 2025 two years early, and Governor Janet Mills has recently proposed a new target of 175,000 units by 2027.

For facility managers looking to deploy heat pumps in existing buildings, despite federal incentives, cost, construction workload, and disruption from retrofits remain major concerns.

Physical Retrofit Challenges

The feasibility of retrofitting existing buildings with heat pumps varies from building to building. "This is certainly a mature technology, but simply replacing an existing HVAC system with a heat pump system may not be the best strategy," said Ryan Colker, Vice President of Innovation at the International Code Council.

Kailash Viswanathan, Energy Director at Arch Energy (a subsidiary of Consigli Construction), pointed out two major challenges: The first is building occupancy. He stated that undertaking such a large-scale renovation within a building "depends largely on occupancy. It would be easier if it were a centralized plan, but you still need to access the building, open walls, and replace piping. In most cases, this can only be done when tenants move out or leases turn over."

The second is maintaining space heating and domestic hot water temperatures. Viswanathan stated that heat pumps operate most efficiently at lower water temperatures. Retrofitting existing buildings requires reducing water temperatures from 180 degrees Fahrenheit to between 120 and 140 degrees. To achieve equivalent heating with lower-temperature water, flow rates must be increased, which means enlarging pipe diameters. "This requires entering occupied spaces to remove and replace piping, which is highly disruptive. Therefore, retrofit plans often span 10 to 12 years; it cannot be done overnight. For challenging buildings like historic structures, the retrofit cycle is even longer, around 20 years."

Viswanathan is involved in a heat pump retrofit project for the high-rise building at 345 Hudson St. in New York City. This is the first initiative by the New York State Energy Research and Development Authority aimed at rapidly electrifying a century-old building. He said: "We are helping engineers and clients find solutions and determine the best path to reduce the building's carbon emissions."

He added: "Facility managers are always involved in the decision-making process. They consider the challenges of operating, maintaining, and controlling heat pump technology. This involves a lot of automation, and they need to learn."

Economic Barriers

Another major barrier is the high cost of installing heat pumps in existing buildings. Rosen Consulting Group estimates that the total cost of retrofitting a typical gas-fired office building in New York State to a ground-source heat pump system in 2022 was $17 to $24 per square foot, while air-source heat pumps ranged from $12 to $21 per square foot. These estimates include heat pump water heaters, necessary infrastructure, and electrical upgrades. The report notes that heat pump retrofits in office buildings are expected to deliver sustained "significant energy bill savings," but this estimate is based on additional building envelope improvements, which incur extra costs. The Inflation Reduction Act provides federal tax credits and state-managed rebates that can offset the purchase and installation costs of heat pumps.

Doug Davenport, founder and executive director of Prospect Silicon Valley, a nonprofit clean technology accelerator, stated that facility managers need a clear understanding of the financial costs and benefits of heat pumps (including long-term maintenance factors) to validate deployment decisions. He also noted that managers need more "training and education on aggregating and interpreting results from actual installations to prove the technology works as reported. This is especially important as a new wave of designs enters the market."

One way to reduce the cost of heat pump retrofits is to adopt hybrid systems. The National Renewable Energy Laboratory reported in September that ground-source heat pumps with hybrid heat exchangers can help building owners and operators reduce capital expenditures and improve the economic viability of retrofit projects. The laboratory has added capabilities to its REopt tool to analyze such systems, helping building managers evaluate combinations of renewable energy, conventional energy, energy storage, and ground-source heat pump technologies to meet cost, clean energy, and resilience goals.

Grid Strain Concerns

Despite the direct decarbonization benefits of heat pumps, widespread adoption could place greater strain on local power grids, some of which lack sufficient generation capacity to accommodate the anticipated growth in building electrification. "You can't just install heat pumps without upgrading the grid. Everyone is waiting to see if the grid can go green," said Owen Glubiak, Vice President of Revenue at Cortex Sustainability Intelligence.

Cortex recently launched automation features on its building decarbonization platform to help customers reduce energy use and carbon emissions. Glubiak stated that using heat pumps in demand-response-driven scenarios can alleviate grid strain. "The most severe problems occur on the hottest and coldest days. Therefore, demand response programs will become very important to ensure peak demand is met."

A Piece of the Decarbonization Puzzle

As Glubiak noted, heat pumps are not a universal solution for electrification. Thomas A. Kwan, Director of Sustainability Research at Schneider Electric, stated that the benefits of building electrification are maximized when facility managers adopt heat pumps as part of an overall package that includes solar photovoltaic and battery energy storage systems.

When evaluating the economics of heat pump retrofit projects, ICC's Colker recommends conducting a thorough energy audit to fully understand "where investments yield the greatest returns and where the best climate change impacts can be generated."

Mark Grinis, who leads EY Americas real estate digital transformation, noted that facility managers often take a pragmatic approach when upgrading decades-old systems. "If something breaks, fix it properly. But would we consider very complex retrofits?" he described the typical manager's mindset. He also pointed out that the feasibility of heat pump retrofits also depends on geographic location, involving the ability to attract a broader tenant base and achieve higher economic returns. He added that older buildings have opportunities to install cool roofs and rooftop photovoltaics, "but I feel heat pumps are more common in new construction projects."

According to the International Energy Agency, heat pumps currently meet only about 10% of global building heating demand, far below the deployment scale needed to achieve net-zero emissions by 2050. The agency calls for strengthened policy support and technological innovation to improve efficiency, reduce upfront purchase and installation costs, and remove market barriers to complex retrofits.