This week, two cool things happened that don't usually happen in the same week.

1. Canary Media published a feature on heat pump group buys, including the California Heat Pump Group Buy we ran with VoltHub this Spring.
   

2. And we just launched a Summer 2026 Group Buy.

What Canary Media found

The article looks at programs across the country that pool homeowner demand for heat pumps. The mechanics are simple: when an installer can buy equipment in bulk and schedule a batch of jobs in advance instead of chasing leads one at a time, costs drop. Those savings get passed back (typically 10–20% per install), which works out to thousands of dollars.

The price was right for Mittens. Mittens is a furry participant of a heat pump group buy that took place in Massachusetts organized by Laminar Collective.

It's the Costco principle. A group splitting a 12-pack of muffins pays less per muffin than someone buying one at Starbucks. Disclaimer: Costco's HVAC services work very different than Costco muffins. Perhaps we can unpack that in a later post.

Our trusted sources say that Costco Muffins live up to the hype. Just like heat pump group buys.

There's a second benefit the article gets right: group buys remove the sales pressure. You join a list, get a real assessment, see a real quote, and decide on your own timeline. Nobody is sitting at your kitchen table waiting for a signature.

One thing we’d add from our own experience: there's also something to not doing this whole heat pump thing alone. A heat pump is a big decision, and most people make it solo (though, sometimes with the moral support of kind strangers on reddit). In a group buy, you're one of dozens of California households making the switch at the same time. One homeowner in the Canary piece called it empowering.

Read the Canary Media feature →

Reminds us of this happy fellow from California Heat Pump Week. Who doesn’t want to be as smiley as this guy when it’s all said and done? But I digress.

Homeowner posing with his outdoor heat pump unit for the first ever California Heat Pump Week, hosted by Switch is On.

The summer 2026 round

We're running it again for the greater SF Bay Area and the LA area. The structure:

• Join by July 30. The summer cohort closes when we hit capacity or the deadline, whichever comes first.

• Installs begin fall 2026. The earlier you join, the earlier we install.

• Pooled demand, better pricing. Same mechanism the article describes.

And the headline change for this round: pricing is lower than previous group buys. We’re talking thousands of dollars lower for most system configurations. If you priced this out in the spring and held off, the math has changed.

Who this is for

A group buy works if you can wait a few months. Most HVAC replacements are emergencies. The furnace quits in January and you need heat now. That's not what this is. This is for those who know they want to upgrade, but are not in a hurry.

If your system is aging, you've been thinking about going all-electric, and you'd rather plan the replacement than have it ambush you on the hottest day of the year, this is the cheapest, calmest way to do it. Check out the details and drop us a line if you think this is a fit for you!

We talk a lot about equipment performance, install quality, and the slow, steady work of getting more heat pumps into more homes. What I didn’t fully appreciate (until I kept bumping into it again and again) is how much of electrification is gated by something way less glamorous:

Can the right stuff show up, in the right place, at the right time?

That’s why I was excited to sit down with RJ Cilley, CEO of Voomi Supply, a national B2B e-commerce distributor for HVAC (and related trades). Like me, RJ wasn’t always in the HVAC industry. His background is in finance and e-commerce. But that’s kind of the point: he’s bringing an “online retail” playbook to one of the most relationship-driven, offline-heavy supply chains in America.

The more we talked, the more it emphasized how distribution is one of the hidden levers behind whether heat pumps scale smoothly… or hit friction in places you’d never expect.

🎧 Listen to the full episode

It’s available on YouTube, or wherever else you get your podcasts! Don’t forget to subscribe.

HVAC distribution is a relay race (with a lot of handoffs)

RJ described the traditional flow like this:

OEM → master distributor → sub distributor → local distributor → contractor → customer

If you’ve never been exposed to that chain, it sounds almost comical.

How does everyone make money? Is it just markup on markup on markup?

What I appreciated in RJ’s answer is that he didn’t pretend the system is “clean”—instead, he framed it as an ecosystem where each step can provide real value if they’re excellent at their niche.

The more you sit with it, the more it makes sense that each layer is doing something real. The local supply house isn’t just a warehouse. It’s:

• a relationship

• a troubleshooting desk

• a “don’t worry, I’ll find it” hotline
  …plus, yes, a place that has the 10,000 things you need every day.

The problem is the other million things you don’t need every day—until you do.

Which brings me to something I’ve seen firsthand…

The sheer number of HVAC parts is… absurd

If you’ve never been behind the counter at a supply house, it’s hard to explain how much there is behind there. It’s not just “ductwork.” It’s six-inch duct, seven-inch duct, eight-inch duct… and all of them needed for different jobs. Then multiply that by every fitting, every control, every accessory, every brand, and every “this got discontinued in 2009 but someone still needs it”, because old equipment is still out there, still running, still breaking.

RJ made a point that stuck with me:

• It’s physically and economically impossible to stock everything in one location.

• There is a huge opportunity in aggregating nationwide inventory so that the weird control board sitting in Texas can solve an emergency in the Northeast.

And if you’re thinking about heat pump adoption in places where heat pumps aren’t yet “normal,” this matters a lot.

Heat pumps don’t scale if nobody stocks them

I keep thinking about something Nate Adams told me: in places like Chicago, supply houses just… didn’t stock heat pumps. Contractors couldn’t easily get equipment. Which means even motivated contractors hit friction.

RJ made a simple point: the internet “democratizes” access. If something is taking off in one region, a national digital channel can help other regions catch up—at least on the availability side.

Awareness and training are still huge. But availability is a quiet limiter we don’t talk about enough.

E-commerce isn’t replacing relationships (it’s learning to mimic them)

I probably text my distributor reps more than I text my wife… HVAC is built on relationships. Doesn’t e-commerce flatten all of that into a soulless “click to buy” experience?

What RJ has found: contractors still want help. Even if they’re ordering online.

He shared that roughly half of the calls their service center gets are pre-purchase calls; asking about pricing, availability, compatibility, and all the same things they’d ask across a counter.

So instead of pretending the industry will instantly become self-serve, Voomi is leaning into a hybrid model:

• Yes, you can order online.

• But there’s still human support when you need it.

If you try to “disrupt” an industry by ignoring what it does well, you usually faceplant. HVAC does service and trust well. Any online model that works here has to respect that.

We’ve learned the same lesson at Vayu, as we install heat pumps for California homeowners. While the majority of our sales and design process happens online, there’s still a ton of relationship building and personal touches that go into each project. You don’t just click a button and have a heat pump show up on your doorstep in a week.

Heat pumps are an education game

We got into heat pumps more directly (because of course we did). RJ made a simple point that I think is easy to overlook:

The internet democratizes awareness.

That matters because heat pump adoption is still uneven. There are places where contractors are fluent, equipment is stocked, and homeowners have heard the pitch. And there are other places where heat pumps are still treated like an exotic import.

RJ talked about seeing “pockets” of demand show up in the data. When certain cities or regions are ordering certain types of equipment, that’s a signal. And when they see that signal come up, they know to go after it.

He also mentioned he shared one of my heat pump explainer videos with his team, which made me laugh a little because it’s a reminder that even inside HVAC, education is ongoing. None of us are done learning.

Scaling heat pumps requires boring infrastructure to work really well

It’s hard to normalize heat pumps in a market if:

• contractors can’t reliably get equipment,

• replacement parts are confusing,

• data is messy,

• and the supply chain is still optimized for yesterday’s defaults.

RJ is approaching that problem from an e-commerce lens—catalog depth, inventory aggregation, data confidence, and making it easier to find the obscure thing you need when the local supply house strikes out.

Is that the whole solution? Definitely not.

But it’s one of those “unsexy” building blocks that, if done well, makes everything else easier.

And I’ll take easier, wherever we can get it.

🎧 Listen to the full episode for the complete conversation with RJ—especially if you want a clearer picture of how HVAC distribution really works and how it’s the bedrock of electrification.

PS: Onto a sexier topic…

Getting heat pumped! We’re organizing another group buy in LA and the SF Bay Area with Vayu with negotiated pricing, expert installations, and rebate support. The last one filled up quick.

Interested? Let us know below. Spots are limited once we reach capacity. 

This is the last issue in a 5-part series about accelerating heat pump adoption in America. If you missed the first, second, third, or fourth issues, check them out!

The complicated, often confusing process that homeowners looking to switch from gas heating to electric systems often face represents a gap in the HVAC market. In response, a new category of businesses has emerged to fill this need. These companies are increasingly known as “heat pump concierge” services.

The “Heat Pump Concierge” Model

These companies act as one-stop guides, managing the entire heat pump journey from education and planning to installation and ongoing support. They often work with vetted crews, handle all permitting and paperwork, secure rebates, and ensure system performance. 

Some also offer additional electrification services—such as induction stoves, EV chargers, heat pump water heaters, and weatherization—enabling a full-home transition. By streamlining every step, they remove the friction that typically holds homeowners back, making the process simple, affordable, and appealing.

By owning more of the process end-to-end than a traditional HVAC company would, concierge startups can streamline operations and even pass savings on to consumers. For example, Jetson found that vertical integration – working with an OEM to produce its own heat pump units – plus a tech-driven installation process can cut consumer costs by up to 90% after rebates.

Similarly, Boston-based Tetra redesigned the buying process with instant online quotes and automated workflow management, yielding cost savings of up to 30% compared to typical contractors. These efficiencies attract venture funding and fuel rapid growth. 

The early success of many of these businesses has been driven by venture capital investments. Elephant Energy, a Colorado-founded concierge provider, raised $5.8 million since 2021 to expand beyond its home market, and Tetra recently secured a $10.5 million round to support bi-coastal expansion.

By combining homeowner education, incentive capture, and streamlined business models, “heat pump concierge” companies simplify the buying process and can significantly reduce upfront costs. This is a powerful lever—cost parity with traditional systems changes the conversation entirely. If a heat pump costs the same or less than a gas furnace, runs more efficiently, lowers energy bills, and delivers a cleaner, healthier, more comfortable home, it becomes the obvious default.

Spotlight: Jetson

Jetson differentiates itself in the “heat pump concierge” category through a rare combination of vertical integration, modern software design, and a smart, connected heat pump. While most concierge companies act as sophisticated intermediaries, Jetson is building a fully integrated electrification stack.

Building the First End-to-End Platform

By co-developing and manufacturing its own heat pump, Jetson bypasses traditional HVAC distribution layers, dramatically reducing equipment and installation costs. The company’s signature unit—the Jetson Air, integrated with Jetson’s SmartHub and real-time monitoring platform— provides live performance data, fault detection, and predictive maintenance insights. Its consumer-friendly design earned the Jetson Air a spot on TIME’s Best Inventions of 2025.

Jetson’s quoting tool give homeowners instant, transparent pricing and a clear path to installation, eliminating the multi-visit, multi-bid friction that often discourages homeowners. The emphasis on software creates rare predictability and clarity in a process that is usually slow and confusing.

While competitors differentiate on contractor networks, customer service, or streamlined workflows, Jetson is effectively building the first vertically integrated, software-native heat pump company. Its model resembles Tesla or Nest far more than a traditional HVAC business: by owning the hardware, the software, and the customer relationship end-to-end, Jetson gains the ability to update system logic over time, incorporate fleet-wide performance learnings, and continuously reduce installation costs at scale.

The Jetson Air is a smart, connected heat pump that the company calls “the heat pump from the future.” (Source)

Editor’s Note: I love Jetson’s ambition, and in fact there are many parallels in their vision to my last heat pump company, where we worked to vertically integrate installations.

But even without vertical integration, I’m confident that many of the other heat pump concierge companies will make a meaningful dent.

At my current company, Vayu, we partner with talented local installers and equipment distributors and align incentives, with quality installations and competitive prices even without making our own heat pump equipment.

There was a great conversation on LinkedIn recently about these different approaches, with representatives from equipment OEMs and even the CEO of Jetson chiming in. The comments are really insightful.

Different strategies will resonate in different markets, with different customers and different constraints. I’m grateful to have so many smart peers tackling the challenge of heat pump adoption!

Climate vs. Comfort

A notable divergence among these companies is how they market the benefits of electrification to customers. Broadly, two go-to-market messaging strategies have emerged:

Climate/Decarbonization-First Messaging

Many electrification concierge startups lean into an environmental pitch, seeking to attract the climate-conscious early adopters. Jetson and Elephant Energy are prime examples.

Jetson identifies “replacing outdated fossil-fuel systems” as a key component of its mission and emphasizes how switching to a heat pump can drastically cut a home’s emissions. Elephant’s entire brand is built around “climate-friendly homes” – the company frequently cites the carbon emissions avoided by its projects and urges homeowners to stop “burning stuff” to heat their homes. 

Elephant Energy aims to capture eco-aware early heat pump adopters with their climate-forward messaging (Source)

This climate-forward messaging resonates with sustainability-minded consumers and early-adopters while giving these startups a distinctly mission-driven identity. It’s also a powerful tool for attracting talent and investors who prioritize climate impact. 

But companies like Jetson and Elephant don’t rely on climate appeals alone—they link the green narrative to tangible homeowner benefits like cost savings, comfort, and cleaner indoor air, making the case both values-driven and practical.

Comfort, Health, and Value Messaging: 

Other companies downplay the climate talk and instead sell heat pumps as a lifestyle upgrade – a better product for the homeowner’s comfort, safety, and wallet, installed by true experts.

Foundry, a Toronto-based heat pump installer, focuses its messaging on comfort, health, and safety—emphasizing that heat pumps are “the only system that can be properly sized to match the needs of the house.” Foundry also draws a clear distinction between traditional contractors, who service all types of HVAC systems, and its own specialized technicians, who work exclusively on heat pumps.

Some companies like Foundry emphasize comfort, health, and safety in their messaging over energy or efficiency (Source)

Similarly, Forge brands itself as “the heat pump experts,” spotlighting the systems’ versatility and cost benefits rather than leading with their climate impact. The company also highlights its fully in-house technician model—not subcontractors—and leans heavily on quality customer service as a key differentiator.

While this messaging is designed to broaden the appeal beyond the eco-aware niche, the fact remains that many of the homeowners reaching out to these “heat pump concierge” companies already have some understanding of the technology and its climate benefits—and that’s a primary motivator:

This is the next phase of heat pump adoption: reaching beyond early adopters. Once the climate-conscious and home efficiency enthusiasts are on board, the challenge becomes engaging homeowners who aren’t already invested in sustainability.

But before we can get there, we need to ensure every homeowner has a great experience—from education to installation to long-term performance. They need to feel comfortable in their home and confident in their choice. That’s what will ultimately allow heat pumps to thrive.

Summary and Final Solutions

If you’ve gotten this far—first of all, congratulations! You must really be PUMPED about heat pumps (sorry, couldn’t resist).

By now, it should be clear: heat pump adoption in the U.S. is at a critical inflection point. The technology is solid. The benefits are clear. But cultural inertia, misinformation, and complexity are still slowing things down.

To accelerate adoption, we need to focus on the following key goals:

Make heat pumps an easy, obvious choice for homeowners.

That starts with education and trusted guidance. Community groups, national platforms, and “heat pump concierge” companies all play a vital role. The more consumers understand what a heat pump is—and how it can improve their comfort, lower their bills, and reduce emissions—the more confident they’ll be in making the switch. Even small shifts in language, like referring to heat pumps as a “2-way AC,” can make the technology feel more familiar and approachable.

We’ve seen this play out before: early EV adoption was bogged down by skepticism, range anxiety, and myths. Over time, familiarity and visible benefits (plus improvements in the technology) helped turn the tide. The same can happen with heat pumps—and it should be even easier, because the technology is already fully viable in virtually every climate. But it will only happen if we meet people where they are and make the experience simple, affordable, and rewarding.

If you have a heat pump in your home and you love it—tell your neighbors, tell your family, tell your friends. Host a party and showcase your heat pump in action. Become a heat pump advocate in your local community!

Build the next-gen heat pump workforce

We must expand the pool of skilled heat pump system designers and installers. As a new generation replaces the aging HVAC workforce, it’s essential that they’re equipped not just with the technical skills to properly size and install heat pumps, but also free from the skepticism and outdated assumptions that have held the industry back.

Investing in training programs—whether through trade schools, public initiatives, or private companies—is key. Every new tech trained in heat pumps isn’t just another installer; they’re a front-line ambassador who can confidently recommend the technology to homeowners and deliver high-quality results, thus accelerating demand.

Upskilling legacy HVAC pros is another key component, but this won’t be easy. There are nearly 150,000 HVAC establishments in the U.S, with most being small, family-owned businesses. Even as trade organizations begin to promote heat pump adoption, they simply don’t have the reach to rapidly shift behavior across such a fragmented market.

That’s why consumer education is so critical. As homeowners learn to ask for heat pumps by name, market demand will push contractors to adapt—or risk being left behind.

Leverage better tools and data

We also have an opportunity to modernize the way heat pumps are sold, installed, and monitored through new tools, data, and diagnostics. Software like Amply can make right-sizing and commissioning faster, more accurate, and more transparent, cutting down the time to produce an accurate heat load-calculation from hours to minutes and opening the door to a conversation with the homeowner that focuses on value over cost.

But modeling tools, if used incorrectly and in isolation, risk leading to bad sizing and bad outcomes for homeowners. That’s why we also need to standardize performance-based heat loads, using either energy consumption or runtime data. Pairing each heat pump with a smart thermostat—and incorporating the use of that data into service and maintenance contracts—will allow heat pump-focused companies to build feedback loops, improve outcomes over time, and close the gap between modeling and real-world performance.

Prioritize quality and build trust 

Ultimately, the quality of installations will make or break public trust in heat pumps. A poorly installed or undersized system can underperform and leave a bad impression—reinforcing the very myths we need to erase. On the other hand, a well-executed project creates a comfortable home and a happy homeowner who will spread the word. Every successful heat pump is a living advertisement to neighbors and friends, building social proof that drives the next wave of interest. 

“Heat pump concierge” companies like Jetson, Elephant, and Forge are leading the way on creating these high-touch, trust–building, delightful experiences for homeowners. By using modern software solutions for design and quoting, sorting out rebate paperwork, and positioning themselves as a partner on the homeowner’s electrification journey, these companies remove friction at every step of the process. This also allows them to escape the “race to the bottom” commodification of HVAC services and sell their customers on value—a more comfortable, healthy, and efficient home.

In doing so, they’re raising the bar for what homeowners should expect from HVAC contractors and proving that heat pumps can deliver on comfort, cost savings, and climate benefits. If we want to scale adoption, this model—centered on trust, simplicity, and homeowner experience—needs to become the norm, not the exception.

Policy: The final piece

Needless to say, public policy needs to continue to align with the goals of heat pump adoption and the home electrification movement in general. At the federal level, the Republican majority’s budget bill, which kills a variety of clean energy initiatives and incentives, would deal a huge blow to electrification and climate goals broadly. Specifically, ending the Energy Efficient Home Improvement Credit would cost homeowners up to $2,000 in tax credits on a qualified heat pump.

Editor’s note: Since this piece was originally written, OBBB passed, and most federal tax credits phase out at the end of 2025.

But there are other efforts beyond the federal level that must be protected. A full 48 out of 50 states have state-level or utility-level heat pump incentives—and that doesn’t include local programs. You can use the DSIRE (Database of State Incentives for Renewables & Efficiency) tool at www.dsireusa.org to find incentive programs offered by your state. So whatever state you live in, pay attention to the discussions around electrification and vote for representatives who support homeowner incentives and workforce development programs.

The political environment at the federal level is unfavorable currently, but as we’ve seen over the last 4 years, that can change quickly. One federal policy that has been discussed proposes to  essentially pay manufacturers to stop making one-way ACs and make heat pumps instead. The HEATR Act, which was introduced in the Senate in May 2022 but never made it out of committee, proposed establishing a tax credit at the manufacturer level for high efficiency heat pumps and heat pump water heaters. 

Because a heat pump is essentially an AC that just works both ways, getting manufacturers to stop making traditional ACs solves a variety of problems not only for manufacturers but distributors, contractors, and consumers. 

Editor’s note: this line of thinking is gaining traction at the local level across California, with jurisdictions adopting AC2HP rules encouraging heat pumps at the time of replacement.

If the manufacturers don’t make traditional ACs (saving assembly line costs), the distributors won’t stock them (saving inventory costs), and finally, contractors won’t recommend them—and will instead recommend a “2-way” AC. The consumer doesn’t even really need to know it’s a heat pump; they just need to know it will cool their home in the summer—and oh, by the way, it will also heat their home in the winter (potentially with some supplemental backup heat).

This means that every time a homeowner replaces an old or broken central AC system, they’ll be getting a heat pump—which will go a long way in moving their home completely off of direct burning of fossil fuels. When the gas furnace in the basement breaks, they won’t need to replace it—they’ll already have a perfectly capable piece of heating equipment already installed. 

Because the average lifespan of an AC or gas furnace is 15-20 years, we need to cut down significantly on the number of new systems that are installed in the next 5-10 years if we want to achieve net zero goals by 2050. Replacing old ACs with heat pumps will go a long way in getting us there.

Final Thoughts

Just recently, I had conversations with several people in my life that confirmed many of the things I learned in the course of researching this piece. They didn’t know what a heat pump was, much less how it would benefit them or the planet. 

This is the problem we face in a nutshell. The transition to heat pumps is mostly a social shift, supported by incremental improvements in tech, tools, and policy. It’s about people – homeowners, contractors, suppliers, policymakers – collectively learning while moving past old habits and comfort zones. It means turning the “2-way AC” from an oddity into the default.

With each well-informed homeowner, each newly trained technician, each successful project, we are building confidence in this solution. In the end, homeowners simply want a comfortable, reliable, expertly-installed system for their families. Deliver that consistently, while keeping costs down, and heat pumps will become not just a climate-friendly alternative, but the automatic choice for comfort and quality. 

The transition is already underway; now it’s up to all of us to accelerate it.

Are you working on solutions to accelerate heat pump adoption?

Connect with me on LinkedIn—I’m especially interested in speaking with:

• Electrification concierge companies redefining how homeowners navigate upgrades with full-service guidance and support

• Adjacent technology companies creating tech-based solutions for contractors

• Government agencies or policymakers (especially in Massachusetts) working to advance electrification through local or national initiatives

• Community-based organizations or nonprofits creating tools, education, or advocacy campaigns to guide consumers through the transition

Whether you're in the field, behind a desk, or building resources for your neighbors, I’d love to hear what you're working on!

This is the final issue in a 5-part series about accelerating heat pump adoption in America. If you missed the first, second, third, or fourth issues, check them out. Thank you to Climate Drift for letting us share this piece with the Heat Pumped community!

Want a heat pump in your own home?

The first Heat Pumped group buy is now closed! It generated a ton of interest, and we’d like to do something similar in the future. If you’re thinking about a new heat pump HVAC system for your home in 2026, and don’t have an urgent timeline, you might be a good fit. Let us know if you’re interested!

Usually I’m the one interviewing people about electrification on the Heat Pumped Podcast. Recently, I got to flip roles a bit as a guest on Less Talk, More Action. I was stoked to get the invite - I loved their interview with Panama Bartholomy from Building Decarbonization Coalition, who is ever the optimist reminding us that we ARE making progress electrifying.

Joel and Owen peppered me with questions about heat pumps, bad incentives, and why on earth someone would leave rockets for HVAC.

🎧 Listen to the full episode

It’s available on YouTube or wherever you get your podcasts.

The Question Everyone Asks: “Will a Heat Pump Save Me Money?”

Let’s start with the uncomfortable part.

Owen opened with the question I hear constantly:

“How do we get the masses to adopt heat pumps when gas is so much cheaper than electricity, especially in California?”

Here’s the honest answer I gave them (and I’ve given you before if you’ve been following this newsletter):

• Heat pumps really are 3–4x more efficient than gas furnaces.

• But in much of California, electricity is also 3–4x more expensive than gas.

• That means the operating costs often come out roughly even, maybe a bit better, maybe a bit worse, depending on the house and rate structure.

I wish I could tell people, “Install a heat pump and your bills will drop by 50%.” Right now, in most of California, I can’t. And I don’t try to force that narrative.

So instead of pretending there’s a huge savings where there isn’t, I lean on what is true:

• You get heating and cooling in one system.

• Comfort is better and more stable - no more furnace cycling on and off at full blast.

• There’s no combustion, no carbon monoxide risk.

• With incentives, upfront cost is often lower than installing a traditional AC and furnace.

Is it a financial slam dunk everywhere? No.
Is it a better system that future-proofs the home, often at similar lifetime cost? In most cases, yes.

A Quick Heat Pump Explainer

When I say “3–4x more efficient,” here’s what I mean in plain terms:

• A gas furnace is ~80–95% efficient. You burn gas, some energy goes out the flue, the rest warms your home. You’re creating heat from fuel.

• A heat pump doesn’t “make” heat; it moves it.

  • Even on a cold day, molecules in the air are moving—that motion is heat.

  • A heat pump pulls that heat out of the air, concentrates it, and moves it indoors.

  • It’s the same physics as your refrigerator or air conditioner, just run in reverse in winter.

Heat pumps move heat instead of generating it

Because you’re only spending energy to move heat, not generate it, you can get 3–4 units of heat out for every unit of electricity in. The fundamentals of heat pumps are actually really simple!

How I Ended Up Trading Rocket Engines for Heat Pumps

People love to ask how I went from working at companies like SpaceX and Blue Origin to HVAC.

Standing by a Blue Origin lunar lander - I helped design its engine

To be honest, I didn’t wake up one day and ~decide~ to go into heat pumps. It was a winding path, but I’m grateful I found my way to this space. 

When I eventually started DMing homeowners on Reddit and Nextdoor asking them, “What was your experience getting a heat pump?”, the answers were almost all identical:

• “It’s really expensive.”

• “I don’t trust my contractor.”

• “I’m getting conflicting advice.”

Seeing the obvious pain from real people and realizing that I already understood the technical side was enough to pull me in, eventually leading to my heat pump installation company Vayu.

The Bar Is Still So Low

What’s wild, and a little sad, is how low the baseline for “good contractor” still is.

• My mom texts four contractors; one replies. That’s who gets the job.

• My in-laws had multiple appointments rescheduled by their solar installer, often with techs showing up hours late.

• Owen talked about winning a $7M contract basically by just being responsive.

This is part of why I keep saying:

If you want to do something meaningful in climate and have a high tolerance for chaos, start an HVAC company.

Hearing the same frustrations over and over led me to starting my own heat pump company

You don’t need to be the biggest. You just need to show up, do what you say you’re going to do, and care about the quality of your work.

Incentives, the IRA, and Why Some “Climate Money” Backfires

We also talked a lot about the Inflation Reduction Act and rebates.

Many of you lived this alongside me:

• People heard for years that huge electrification rebates were coming.

• Some homeowners delayed critical work, hoping for $8,000+ off a heat pump.

• In places like Northern California, once funds finally went live, they were gone in a month or two.

So what did we actually achieve?

• We froze some homeowners in place waiting for programs.

• We created a huge expectation mismatch.

• We did not fundamentally change the default equipment being installed.

I’m increasingly convinced that midstream incentives would be more powerful:

• The cost difference between a one-way AC and a heat pump is basically a reversing valve (~$30–$50 in parts).

• Every major manufacturer already sells both the AC and corresponding heat pump versions of their product.

• If we subsidized that tiny delta at the manufacturer or distributor level, one-way ACs could just quietly fade out.

Every “normal” AC replacement would automatically be a heat pump. Not because the homeowner read a whitepaper, but because that’s what’s on the truck.

Perfectionism Is Quietly Killing Decarbonization

One of my biggest frustrations with the building decarb conversation is the obsession with the “perfect sequence” - which persists even though the data doesn’t support it:

1. Air seal and insulate

2. Replace windows

3. Upgrade panel and wiring

4. Maybe, finally, install the heat pump

On a whiteboard, that looks great. In real life:

• Furnaces die right before a cold snap.

• People don’t have unlimited capital, bandwidth, or patience.

• The more steps you stack up front, the more likely they are to say:
  “Just put in another gas furnace.”

In California, at least, I’m very comfortable with electrify first, optimize later:

• Even leaky, old homes can usually be handled by a modestly sized inverter heat pump.

• If you upgrade windows and insulation later, the same heat pump just runs at a lower output.

Coming from rocketry, I think in test cycles. You build, test, learn, adjust. If you wait for the perfect model, you never launch anything.

Homes are no different.

Why I’m Still Optimistic

We often talk about the ugly in this newsletter - the barriers that are slowing down widespread heat pump adoption. I see a lot of dysfunction up close: bad incentives, messy rates, hilariously low contracting standards.

But here’s what gives me real hope:

I’m in a Facebook group with a bunch of small HVAC contractors. Recently someone asked: “Who’s installing heat pumps these days?”

A couple of years ago, that would’ve drawn skeptical or hostile replies. This time, I’d guess 80–90% of the responses were some version of:

• “We’re doing a lot of heat pumps now.”

• “Most of our installs are heat pumps.”

• “We only do heat pumps.”

Not from giant, well-branded west coast climate companies. From one- and two-truck shops all over the place.

This is market transformation in action

That’s the kind of quiet, unglamorous market shift that actually matters.

So I’m going to keep doing what I’ve been doing: Talking about heat pumps and installing them.

If any of this nudges one more person to leave the sidelines - whether that means starting a trades business, fixing a broken rate design, or just replacing a dead furnace with a heat pump instead of another gas box - it’s worth it.

Listen to the whole conversation wherever you get your podcasts! And subscribe to the Heat Pumped Podcast for more conversations like this.

This is part 4 in a series about accelerating heat pump adoption in America. If you missed the first, second, and third issues, check them out!

With contractors and consumers both climbing the learning curve, the next piece of the puzzle is giving them the tools and data to make smart decisions. 

The Load Calc Problem

As discussed earlier, designing and installing heat pump systems can be technically complex. One of the most important steps that a contractor needs to take to right-size a heat pump system for a home is to complete a load calculation, which helps determine how much heating or cooling a home needs. 

The Manual J load calculation method was designed to bring rigor and accuracy to HVAC sizing—but in practice, it’s often ignored, misused, or manipulated. Many contractors either skip it or fudge the numbers, leading to oversized systems and poor performance. Worse, inflated load calculations frequently steer homeowners toward gas systems or dual-fuel setups, undercutting electrification goals. 

Manual J Barriers

Historically, contractors have relied on “rules of thumb”—like calculating BTUs based on square footage—to perform quick and simple load estimates. The alternative was far more time-consuming: taking detailed measurements of every room, assessing insulation levels, and manually inputting data into spreadsheets or even paper-based calculators. For most contractors, especially when swapping out a gas furnace was the norm, that level of effort simply wasn’t worth it.

But heat pump systems are different. These old shortcuts often lead to oversized equipment that performs poorly or even fails. Fortunately, there are several alternative approaches that can lead to more accurate load calcs without a huge amount of effort.

Software To The Rescue

Software tools from companies like Amply Energy and Conduit use real-time LiDAR scanning and AI to generate accurate 3D models of a home, saving contractors hours of manual data collection. Augmented reality features allow quick visual design mock-ups, helping homeowners understand system layout like mini-split head locations or duct placement. 

Critically, the software produces ACCA-certified Manual J reports, giving contractors precise heating and cooling load calculations while satisfying permitting and rebate requirements. Additional capabilities include auto-importing publicly available property data, setting climate-specific design conditions, customizing the building envelope, and producing clear design documents for both homeowners and installation teams.

Amply’s iPad app gives contractors an efficient method to achieve accurate, ACCA-certified Manual J load calculations (Source)

These tools not only help contractors speed up their load calculation considerably, but also create an opening to have a more in-depth discussion with the homeowner.

Contractors who leverage these tools can produce more accurate load calculations, save significant time, and shift the sales conversation toward outcomes and long-term value—rather than just price. But there’s a catch: without a solid understanding of Manual J fundamentals, even the best software can lead to flawed results. As the saying goes, “garbage in, garbage out.” 

It’s worth noting that the Manual J methodology is currently under review by ACCA, with an emphasis on the “survey” component of the process—the data that contractors need to collect in the field. The hope for the industry is that the updates will reduce inconsistencies and create a more reliable, streamlined process that delivers more accurate results and clearer guidance for contractors.

Performance-Based Heat Loads

There’s another way to achieve a load calculation that has nothing to do with energy models like Manual J, and some professionals believe it’s an essential step in the process.

A performance-based heat load uses real-world data from the existing heating system in the home to accurately and reliably size the equipment for the new system. As outlined in Drew Tozer’s book Feel Good Homes, there are two methods of using performance data:

Method 1: Energy Consumption

This method looks at a home's actual energy consumption—typically from heating fuel or electric bills—paired with local weather data to estimate how much heat the home truly needs. By converting fuel usage into BTUs and analyzing it relative to outdoor temperatures, contractors can calculate a more accurate heating load based on real-world conditions rather than theoretical models. This method relies on consistent historical data and can underestimate needs if the home was underheated or supplemented with other heat sources. 

Method 2: Runtime Data

This refers to how long an existing furnace operates over a period of time. This data can be used to estimate a home’s actual heat load by tracking how often and how long the furnace runs at the design temperature (typically the coldest days of the year). By analyzing this data—especially during the coldest periods—contractors can infer how much heat the system is delivering to maintain indoor temperatures. If the furnace short-cycles frequently during extreme cold—for instance, running for only 30 minutes over the course of an hour—that indicates that the system is oversized (by two times, in this example). A right-sized system would run at close 100% capacity at the design temperature.

Gas bills can be used to determine a home’s actual energy consumption, which can then be paired with local weather data to estimate a heating load (Source)

Energy consumption is typically easier to get than runtime data because almost every homeowner can scare up some old gas bills, whereas some homes don’t have equipment (either the furnace or the thermostat) that provides accurate data. Needless to say, both of these methods only work for retrofits where an existing system is being replaced.

Performance-based data can be used to verify a Manual J load calculation by serving as a real-world cross-check against the modeled heating load. If the energy use or runtime data shows significantly lower heating demand than the Manual J suggests, it may indicate the calculation was overly conservative. 

One company that is operationalizing performanced-based heat loads is Thermentor. Their software product analyzes a home’s actual energy consumption and local weather data to estimate heating and cooling loads. It interprets utility bills and combines them with temperature data to produce actionable design metrics and even estimates future bill impacts. 

Additionally, Thermentor flags available rebates and incentives based on the proposed system, helping contractors present everything clearly to homeowners. By comparing actual performance to predicted loads, contractors can catch oversizing errors, justify smaller, more efficient equipment, and design systems that better match the home’s true needs.

Equipment Ratings ≠ Real-World Performance

Once a contractor has an accurate load calculation, the next step is to choose the right heat pump to match that load. In order to maximize the homeowner’s savings on electricity bills, he needs to choose a heat pump that is right-sized in terms of capacity (BTUs) but also efficiency. 

SEER (Seasonal Energy Efficiency Ratio) and HSPF (Heating Seasonal Performance Factor) are two standard metrics developed by AHRI (Air-Conditioning, Heating and Refrigeration Institute) used to measure the efficiency of HVAC systems. The ratings are determined by lab testing done by the manufacturers, and certain equipment must meet minimum efficiency standards as required by DOE. 

The problem is that the efficiency ratings often don’t reflect how heat pumps actually perform in real homes. The lab tests are done under controlled conditions and the results are plugged into a computer model that estimates seasonal performance. But that model is based on climate assumptions and test points that don’t line up with how most systems run day to day.

The discrepancy between lab-testing data and real-world performance is more than academic, and it affects more than just efficiency. Chasing ultra-high SEER ratings (higher = more efficient) can sometimes come at the cost of comfort. Some equipment achieves impressive SEER numbers at the expense of humidity control – but unless a contractor has tested that equipment themselves, they would have no way of knowing this: 

This can lead to a range of negative outcomes, from mild discomfort—like a home that feels cool but clammy—to more serious issues, such as hidden moisture buildup and mold growth. The tradeoff between efficiency and performance isn’t obvious to the homeowner—or even to many contractors—unless more granular performance data is available.

One potential solution comes in the form of load-based testing. Unlike conventional lab tests that fix indoor and outdoor conditions to evaluate performance under idealized settings, load-based testing simulates real-world dynamics. One testing methodology, developed in collaboration by a series of international working groups led by the Canadian Standards Association (CSA), applies a virtual building load to the system in a controlled laboratory environment, letting the equipment respond using its built-in algorithms—just as it would in a real home.

Instead of testing fixed speeds and conditions, the load-based method continuously adjusts the heating or cooling demand depending on outdoor temperatures. This simulation allows for more complete and accurate data about how a heat pump will perform across a realistic range of scenarios. 

The result is performance data that’s far more representative of what a homeowner will experience, helping contractors make better design decisions and reducing the risk of oversizing or misapplication.

Quilt: The Smart(est) Heat Pump

If real-world performance data and smarter system design are the future of home heating and cooling, there’s one company that’s already building that future into every unit they ship.

Founded in 2022, Quilt is a vertically integrated OEM building ductless heat pump systems with software, connectivity, and user experience baked into every layer of the product.

Rather than relying on third-party thermostats or outdated controls, Quilt’s system is designed as a complete stack: hardware, software, and user interface all working together. This allows their equipment to operate as a true smart system—able to sense, adjust, and optimize in real time. 

Unlike traditional thermostats, which have no insight into what's happening inside the unit, Quilt’s system knows exactly what speed the compressor is running, the temperature of the coils, and how fast the fans are spinning. With this data, it can intelligently modulate performance to balance efficiency and comfort based on conditions in the home.

At the core of this system is an unusually powerful onboard computer—reportedly over 1,000 times more capable than the chips in typical mini-splits—enabling sophisticated algorithms to run continuously. 

The result is not just higher efficiency, but better lived experience: consistent temperatures, faster response times, and reduced energy waste. This is especially impactful in homes with varying thermal loads, where traditional systems struggle to maintain even comfort.

In short, it’s the Cadillac (or Tesla) of heat pumps.

Smart Thermostats

Quilt may be the gold-standard for a completely optimized, data-based system, but there is still plenty of room for improvements in all kinds of heat pump systems using a real-world, performance-based data approach.

Smart thermostats can serve as a valuable bridge by collecting runtime data, tracking temperature trends, and detecting patterns that reveal performance issues or inefficiencies. Paired with cloud connectivity and analytics, they can provide both homeowners, contractors, and even utilities with powerful insights: 

While they may not have full visibility into equipment internals like Quilt’s system, smart thermostats can still enable basic diagnostics, trigger alerts, and help fine-tune control strategies while creating a trove of performance data—all steps toward a more responsive, efficient home heating experience. 

Pairing a heat pump with a smart thermostat optimizes performance and creates data sets that provide valuable feedback to homeowners and system designers (Source)

What’s more, with enough anonymized data points, we could refine our understanding of what causes heat pump failures or inefficiencies. 

For example, by analyzing hundreds or thousands of installations, algorithms might detect that homes of a certain style in Climate Zone 5 consistently struggle to maintain setpoint when winds are high, which could lead to better sizing recommendations or envelope fixes. 

In short, feedback loops from field data will help continuously improve both technology and installation practices.

There is one significant caveat: there is evidence that suggests that third-party smart thermostats should only be used with non-variable speed heat pumps. When used with variable-speed units, third-party thermostats generally don’t support proper operation in variable-speed mode, and it has been shown that their use results in on/off cycling behavior that greatly reduces efficiency. 

One solution? Smart thermostats provided by the OEM and natively integrated with the unit, as such products become available.

Solutions Summary

Designing better heat pump systems requires moving beyond outdated rules and unreliable sizing. New tools—from advanced software to performance-based methods and smart controls—offer faster, more accurate, and data-driven ways to match equipment to real-world home needs. Better tools and data are force multipliers for the trained workforce and educated consumers we discussed earlier.

This is part 4 in a series about accelerating heat pump adoption in America. If you missed the first, second, and third issues, check them out. Thank you to Climate Drift for letting us share this piece with the Heat Pumped community!

This is part 3 in a series about accelerating heat pump adoption in America. If you missed the first and second issues, check them out!

Now that we’ve covered challenges to heat pump adoption, we turn to solutions. 

The good news is that none of these barriers are insurmountable. In fact, a growing number of HVAC pros, startups, nonprofits, and policymakers are already rolling up their sleeves and making real progress.

What follows are practical, scalable ways to move the needle—solutions that close the information gap for homeowners, address the workforce bottleneck, and rewire the systems that shape how heating and cooling decisions get made.

Solution: Consumer Education and Guidance

Many homeowners are in the dark (or worse, misinformed) about heat pumps. They’ve heard myths that heat pumps “don’t work in cold weather” or will jack up their electric bill. They might not know about incentives or how to find a quality installer. 

This knowledge gap leads to hesitancy and sticker shock, and it lets low-cost, low-quality contractors win jobs that end in disappointment. 

In short, uninformed consumers = slow heat pump adoption.

Heat Pumps, Meet the Neighborhood

One of the most effective ways to combat misinformation is through peer-to-peer education. When someone hears about a heat pump from a friend, neighbor or local homeowner they trust, it makes the idea more tangible and less intimidating. The key is meeting people where they are: usually overwhelmed, confused, and looking for reassurance. 

Go Electric Colorado is a nonprofit community organization helping homeowners make sense of home electrification. Founded by local residents motivated to decarbonize their lifestyles, the organization guides fellow residents through the maze of incentives, technologies, and decisions through community events, one-on-one coaching, and educational campaigns.

That kind of peer-to-peer model can make a huge impact:

Major Programs Leading The Charge

While grassroots efforts are crucial, large organizations are also stepping up to educate consumers and streamline the path to electrification. These major players are developing tools, programs, and resources to make heat pump adoption more accessible and understandable.

Rewiring America is a nonprofit focused on electrifying homes and communities across the U.S. They offer a suite of tools to demystify the process:

• Incentive Calculator: A user-friendly tool that helps homeowners identify available tax credits and rebates for electrification projects, including heat pumps.

• Personal Electrification Planner: This planner provides tailored recommendations based on a homeowner's specific circumstances, outlining steps to transition to electric appliances and systems.

• Electric Coaches Program: A training initiative that equips community members with the knowledge to guide others through electrification decisions, fostering peer-to-peer support networks.

The Building Decarbonization Coalition (BDC) is working to shift the cultural narrative around electrification by making clean electric homes feel desirable, not just responsible.

• Consumer Inspiration Initiative: Uses storytelling, visual design, and lifestyle branding to make home electrification relatable and aspirational.

• Switch is On Campaign: Offers videos, homeowner guides, and simple explanations to help everyday people understand the benefits of heat pumps and other electric upgrades.

• Ambassador Program: Trains homeowners, contractors, and community leaders to serve as local electrification advocates—answering questions, sharing personal stories, and helping others get started.

Peer-to-peer advocacy like BDC’s Ambassador program build familiarity and confidence in heat pump adoption (Source)

Mass Save, a collaborative initiative by Massachusetts' electric and gas utilities, offers comprehensive programs to guide homeowners through energy-efficient upgrades.

• No-Cost Home Energy Assessments: Homeowners can schedule in-person or virtual assessments where Energy Specialists evaluate energy usage, identify inefficiencies, and provide personalized recommendations. These assessments often include the installation of energy-saving products at no cost.

• Rebates and Incentives: Mass Save offers substantial rebates for heat pump installations—up to $10,000 for whole-home systems and up to $16,000 for income-eligible customers.

• 0% Interest HEAT Loans: Through the HEAT Loan Program, homeowners may qualify for 0% financing up to $25,000 for energy-efficient upgrades, including heat pumps.

Northeast Energy Efficiency Partnerships (NEEP) is a regional nonprofit that works to accelerate energy efficiency in the Northeast and Mid-Atlantic.

• Consumer Resources: Provides guides and tools to help homeowners understand and select appropriate heat pump systems for their needs.

• Cold Climate Air Source Heat Pump (ccASHP) Specification: Develops and maintains a product list to ensure consumers and contractors have access to high-performing heat pump models suitable for colder climates.

• Market Transformation Strategies: Collaborates with stakeholders to promote policies and programs that support the adoption of energy-efficient technologies.

  

Contractors Educating Homeowners

Arguably the most powerful teachable moment is the sales visit in a customer’s home. The contractor’s comfort advisor or salesperson has a prime opportunity to enlighten (or unfortunately, to confuse or mislead) the homeowner. 

Part of the solution is training contractors how to educate customers as part of their process. This benefits both the customer and the contractor. The customer gets a better understanding of their home and how the right equipment can maximize its performance. The contractor gets to sell on value rather than on price and avoid the “race to the bottom” trap: 

By educating the client, the contractor builds trust and often justifies a higher price because it comes with real solutions, not just swapping out like-for-like equipment. In doing so, he can sidestep the “race to the bottom” that plagues most legacy contractors.

Unfortunately, many contractors will decline to do this—opting instead for the easy, reliable path of swapping out like-for-like equipment, thus perpetuating the cycle of poor performance, continued fossil fuel use, and the “race to the bottom.”

But those that do will have a powerful lever to differentiate their businesses while shifting the conversation from cost to outcomes. This builds long-term customer loyalty and stronger word-of-mouth—an invaluable advantage in a commoditized industry that will also result in more high-performance, decarbonized homes. 

Consumer Education Solutions Summary

Educated customers are more likely to be satisfied customers, which means better word-of-mouth for heat pumps overall. Informed homeowners make smarter decisions, prioritize quality over price, and often become vocal ambassadors for the technology. 

Just as the EV adoption curve went through a period of misinformation, skepticism, and growing pains before reaching mainstream acceptance, heat pumps are on a similar path. The more we equip consumers with knowledge, the faster we move through that curve—turning early adopters into educators and accelerating the transition for everyone.

Solution: Training and Workforce Development

As we’ve discussed, one of the biggest obstacles to heat pump adoption is a shortage of contractors who are comfortable installing them. Even among experienced HVAC techs, many haven’t had the chance to get hands-on training with modern heat pump systems.

That’s a problem—not just because it slows adoption, but because a poorly installed heat pump can perform worse than a fossil fuel system. And when that happens, people talk. It erodes trust and reinforces outdated myths.

Fortunately, there are a slew of solutions coming from both inside and outside the industry.

Forge: Training The Next-Gen Heat Pump Pro

Some forward-thinking contractors are making training a core part of their company DNA. Forge, based outside Boston, is tackling the labor shortage head-on by recruiting young talent and training them quickly on heat pumps.

Forge is one of a number of young “heat pump concierge” companies (a business model we’ll discuss further in a bit) that aim to make transitioning to a heat pump an easy choice for homeowners. But Forge stands out—they’re vertically integrated and have built their own internal training academy with the express mission of expanding the skilled trades workforce.

The urgency is real. The average HVAC professional is 54 years old, and many are expected to retire within the next decade. There are simply not enough “bodies in trucks”—and there will be even fewer if nothing changes.

Students learn from Forge’s Head of HVAC at the company’s training facility in Newton, MA (Source)

That’s why Forge is investing in the next generation. By focusing on bringing Gen Z into the trades, they’re not only bridging the heat pump knowledge gap that plagues legacy contractors, they’re also rebuilding the pipeline of skilled labor from the ground up:

Forge doesn’t charge for training, and aims to hire everyone who goes through their training program. The results speak for themselves: in just 18 months, this venture-backed startup went from zero to over 10 installation crews in Massachusetts, all while maintaining high quality results.

If that kind of rapid scaling sounds unusual in HVAC, that’s because it is. It’s the kind of growth typically associated with software startups, not construction companies.

Building Training Capacity Through Policy

As heat pump adoption surges, a nationwide public policy push is on to train an army of HVAC pros who can install and service these systems. From New England to the Pacific Northwest, initiatives are springing up to bridge the skills gap.

Efficiency Maine and the Rural Heat Pump Boom

Tiny Maine has become a big inspiration for heat pump adoption and a case study in how workforce development can keep up with policy ambition. Back in 2019, Maine set a goal of 100,000 new heat pump installations by 2025. Surprise: they hit the mark two years early, prompting Governor Janet Mills to up the target by another 175,000 heat pumps by 2027.

A flagship effort is the heat pump training lab at Kennebec Valley Community College, launched in 2021, which has already trained over 300 students in installation and maintenance. Meanwhile, Efficiency Maine – the quasi-state agency overseeing efficiency programs – has poured over $400,000 into heat pump and weatherization training at KVCC and supports 29 similar programs at other Maine institutions each year. 

Students at the heat pump training lab at Kennebec Valley Community College (Source)

The Governor’s Energy Office, through a Clean Energy Partnership, has also awarded nearly $5 million in grants for clean energy training since 2022, reaching 3,500+ participants statewide. This is all in service of Maine’s larger goal of training 30,000 clean energy workers by 2030.

Denver’s Building Decarbonization Program

In mid-2024, the Denver Regional Council of Governments (DRCOG) won a $199 million EPA Climate Pollution Reduction Grant to fund a comprehensive building decarbonization program across the region. A big chunk of this grant will fuel coordinated initiatives that reduce building emissions, foster workforce development, and provide rebates for electric appliances like heat pumps and efficient water heaters. 

The program is projected to train over 4,800 workers in clean electrification trades – including upskilling 1,000 existing workers into new specialties. Additional resources include programs to scale small heat pump focused businesses and a “heat pump agent” program that will provide free administrative support to assist businesses in navigating rebates and other paperwork. 

Finally, DRCOG will support a number of equity-driven programs, including training currently incarcerated individuals with a pathway to direct placement post-incarceration, programs taught entirely in Spanish with placement in language-aligned firms and homes, and youth programs with afterschool mentorship opportunities. 

Oregon’s Energy Workforce Training Program

Out West, Oregon is tackling the talent gap head-on with a new $2 million Energy Workforce Training Program. Rolled out by the Oregon Department of Energy in late 2024, this initiative aims to prepare both new and existing tradespeople for the state’s aggressive building decarbonization goals – 500,000 heat pumps to be installed by 2030.

The program funds community colleges, technical high school programs, trade unions and more to provide training in four key areas: HVAC systems, home energy auditing, contractor business development, and efficient home upgrades. This training will help contractors properly size equipment and deliver quality installations.

New England Heat Pump Accelerator

Launched with a massive $450 million EPA grant in 2024, the New England Heat Pump Accelerator is a five-state coalition (MA, CT, RI, NH, ME) designed to “supercharge” the move from oil and gas furnaces to electric heat pumps. 

The program’s to-do list is ambitious: incentivize manufacturers to bulk up heat pump supply, help low- and middle-income households afford installations, and set up a central resource hub to share data and best practices in adoption and workforce training. Notably, at least 40% of the funding is earmarked for disadvantaged communities, including support for workforce training and community-based heat pump programs. 

Along with additional funds and workforce development programs from Northeast Energy Efficiency Partnerships (NEEP), the region is well-situated to make a sizeable dent in residential decarbonization over the next decade.

The Industry Is Stepping Up

As heat pump adoption gains ground, the HVAC industry is stepping up with better training, more peer support, and accessible education. A new wave of platforms and events is helping contractors stay ahead of the curve—not just technically, but also in how they run their businesses.

HVAC School has become a go-to resource for technicians nationwide. With a mix of podcasts, how-to videos, and hands-on content, it’s one of the few platforms offering free, practical education for working techs. The annual HVACR Training Symposium offers presentations on a number of topics in HVAC and building science, including an increasing number of heat pump-related discussions.

Meanwhile, the U.S. Heat Pump Summit, now in its third iteration, is creating space for contractors to learn from one another. The event offers both technical and business training in an environment focused specifically on heat pump adoption. Editor’s note: if you missed it, check out my interview with Brent Davidson, the founder of the Heat Pump Summit on the Heat Pumped Podcast!

Also contractor-focused, Amply Energy’s Heat Pump Podcast shares interviews with forward-thinking professionals across the country—from high-performance builders to small business owners. The podcast is a living library of best practices, hard-won lessons, and business models that work. 

A big component of these resources involves getting HVAC contractors up to speed on basic building science—an area historically siloed from the HVAC trades but increasingly essential to high-performance installations.

Workforce Solutions Summary

With more training programs, better resources, and community support, the contractor base can grow in both size and competence. The bottom line is that heat pumps should become a standard part of every HVAC professional’s skill set, not a niche specialty. 

This is part 3 in a series about accelerating heat pump adoption in America. If you missed the first and second issues, check them out. Thank you to Climate Drift for letting us share this piece with the Heat Pumped community!

This is part 2 in a series about accelerating heat pump adoption in America. If you missed the first issue, check it out here.

If we want to accelerate the heat pump transition, we have to start by understanding the reality on the ground: 

Very few people—contractors and homeowners alike—fully understand what a heat pump is, or how it can deliver better comfort, efficiency, and air quality than legacy heating and cooling systems.

That may come as a surprise, especially given another important reality that we’ve already discussed: heat pumps are a viable, high-performance solution in nearly every U.S. climate.

In the sections that follow, we’ll explore the human factors slowing adoption, from the challenges HVAC contractors face on the front lines, to the confusion and mistrust many homeowners bring to the table.

Then, we’ll look at a host of potential solutions, including education, workforce development, improved tools and techniques, and business model innovations. 

Let’s start with perhaps the most important link in the chain: the HVAC contractor.

The Current State of HVAC

For decades, HVAC (Heating, Ventilation and Air Conditioning) contractors have made their living designing, installing, and servicing the systems that keep homes warm in the winter and cool in the summer. Traditionally, these systems have relied on gas furnaces for heating and central air conditioners for cooling—a familiar, dependable setup that most contractors know inside and out. 

The HVAC industry runs on speed, familiarity, and minimizing risk. Systems are often oversized and relatively forgiving, and most replacements are emergencies. That means contractors are incentivized to default to what they know: gas furnaces and central ACs. It's faster, more reliable, and less likely to lead to a callback.

While heat pumps are gaining visibility, limited training, inconsistent results, and a general bias against the technology has made adoption slow. Many in the trade remain skeptical, and understandably so.

To understand the dynamics shaping today’s HVAC industry, it’s helpful to look at a common figure who represents a large portion of the field.

The Legacy HVAC Contractor Archetype

These kinds of contractors fit into an archetype that we can call the “legacy HVAC contractor.” 

The legacy HVAC contractor is typically an owner-operator, often a sole proprietor or the head of a small team with a few service technicians. He has built his business over the course of several decades on reputation, reliability, and responsiveness.

From a technical standpoint, his skills and knowledge are “good enough” as far as he’s concerned.  He’s not properly trained on “Manual J” (a standardized method for performing a heating and cooling load calculation in a home that we will discuss later in detail), and even if he does complete one prior to recommending a system, he’s probably doing it to satisfy a permitting requirement or regulation. 

More often than not, he’s just using a good old “rule of thumb” to determine which heating or cooling equipment is right for which house.

That’s because he almost exclusively installs what he already knows: mostly gas furnaces, maybe central ACs. He’s generally skeptical of any other kinds of equipment, especially heat pumps. If a customer wants one, he’s more than likely to try to steer them back towards a furnace, especially if he’s working in a colder climate. 

Why? Because he doesn’t trust that the heat pump is going to provide enough heating on the coldest days of the year. He may have even installed a heat pump for a homeowner in the past—but it did not go well. And the absolute last thing he wants is to get a call from an angry homeowner in the middle of January complaining about how cold their house is.

That would mean he has to make a house call, diagnose a problem with equipment that he may not be overly familiar with, and, worst-case scenario, rip out an under-performing unit and install something new. This costs time—which he doesn’t have—and money.

Furthermore, most customers he works with are calling him because it’s an emergency: their 20 year old gas furnace just quit on them and they’re standing in a frigid basement, staring down the barrel of an unexpected expense that amounts to one of the biggest investments outside of their home and vehicle that they will ever make. They’re emotional, uncomfortable, and they want a solution now. 

Enter the legacy HVAC contractor: the trusted (and often only) advisor in the moment of truth, standing in that basement alongside the homeowner, ready to recommend what comes next.

He’s likely going to recommend the lowest risk option, the one that is the cheapest, and the one he knows best: swapping out a like-for-like gas furnace that will almost certainly keep the homeowner warm and will not result in a callback. In fact, he’s probably already got a unit on his truck that he can put in today.

Unless the contractor brings it up, most homeowners will never even know a heat pump is an option—let alone consider it. They’ll simply go with whatever the contractor recommends.

And, to be fair to the contractor, he has good reason to shy away from a heat pump recommendation. 

The Legacy HVAC Business Model is Hard for Heat Pumps

HVAC is one of the most demanding and multidisciplinary trades in the building sector. It draws on elements of electrical work, plumbing, sheet metal fabrication, and refrigeration—all while requiring technicians to perform physically taxing labor in hot attics, cramped crawl spaces, and unpredictable field conditions.

Unlike many other trades, HVAC also demands a solid grasp of science. Technicians must have at minimum a working understanding of fluid dynamics (how air and refrigerants move through ducts and coils), thermodynamics (how heat is transferred and removed), and building science (how air sealing, insulation, and moisture impact comfort and energy use).

And unlike static systems, HVAC systems are dynamic—they respond to weather, ductwork, occupant behavior, and load conditions in real time. That means contractors aren’t just installers; they’re troubleshooters and systems integrators, often diagnosing complex problems under pressure.

To make things even more difficult, most HVAC pros are also running small businesses. The majority operate with fewer than five employees and under $1 million in annual revenue. That means juggling technical work with sales, scheduling, and customer service—often for anxious homeowners in the middle of a heating or cooling emergency. 

Source: Workyard

That downward pressure on a contractor’s time and availability also means that most HVAC businesses aren’t built for long decision cycles. Their business model is optimized for speed, not consultation. 

Most contractors are paid to fix problems quickly, not to educate homeowners, spend lots of time understanding the specific problems they are facing in their home, or walk them through the nuances of heat pump performance and rebates. None of these activities are revenue-generating, which means taking the time to recommend a heat pump is not only risky, but also potentially less profitable. The same reasoning applies to larger shops—including those that have been rolled up by private equity. 

In that context, it’s no surprise many contractors are risk-averse and skeptical of new technologies like heat pumps, which can feel untested or unfamiliar compared to the like-for-like gas furnace and central AC installations they’ve done for decades.

What HVAC Contractors Get Wrong – And Why It Matters

Unfortunately, following the standard playbook of swapping out like-for-like systems often leads HVAC contractors to do a disservice to their customers that they likely don’t even fully understand. 

Let’s take heating as an example. The legacy HVAC contractor, upon entering a customer’s home for an emergency replacement, finds that the customer has a 100,000 BTU (“8-ton”) gas furnace installed that has just broken down on them. Since the customer’s only complaint is that the furnace is no longer working, the easiest and most direct path to solving their problem is to swap out a like-for-like system and install a brand new furnace of the same size.

The problem is that this furnace was never the right size for this home. It was always too big. Studies have suggested that up to 50% of homes in the US have heating systems that are oversized, but reports from the field are even worse:

When a furnace is oversized, it will still provide heat to the home – but it will do so in short bursts, turning on and off frequently. This is called short-cycling, and it makes the home much less comfortable than it could be. It’s like taking a shower by pouring a bucket of hot water over your head. Frequent short-cycling can also lead to inefficiency, increased energy consumption, and even potential damage.

The same thing can happen with an oversized AC, but there’s an additional negative outcome. When an AC is oversized, it short-cycles just like a furnace does, which may keep the home generally cool. But an AC should also pull moisture and humidity out of the air—and when it turns on and off too quickly, it doesn’t run long enough to properly dehumidify the space. 

The result is a home that feels clammy, not comfortable—cool on the thermostat, but sticky and unpleasant in real life. Too much humidity in a home can also cause damage and promote mold growth, leading to a host of poor health outcomes. Setting the thermostat lower to compensate for poor dehumidification can help on the margins, but it will still often result in an uncomfortable home—while using excess energy.

This is typically what happens when a contractor swaps a like-for-like furnace or AC or uses a “rule of thumb” to size a system. These systems “work”—but they often lead to uncomfortable or even unhealthy homes. Oversized systems also cost more to operate.

Heat Pumps Work – If Sized Right

Here’s the good news: A right-sized, properly installed heat pump will fix essentially all of the problems that oversized gas furnaces and ACs create. 

The bad news? Just like with legacy equipment, most contractors do not understand how to properly size heat pumps.

There are a few reasons for this, and it starts with the fact that a heat pump is simply a more complex piece of equipment:

If a contractor installs an oversized heat pump based only on the size of the existing gas furnace and a general “rule of thumb”, the equipment will almost certainly be oversized for the heating load that the house requires in the winter. And if it’s oversized for heating, it will definitely be oversized for cooling, which will lead to all of the negative outcomes discussed above.

So how do contractors make sure they are right-sizing heat pumps? 

Enter Manual J – Friend or Foe?

Manual J is a standardized method developed by Air Conditioning Contractors of America (ACCA) for calculating how much heating or cooling a home actually needs. It’s meant to replace guesswork with math—taking into account factors like square footage, insulation, window types, and air leakage. This is referred to as a load calculation.

In theory, it’s a critical tool for right-sizing HVAC equipment. In practice, it’s rarely used—and when it is, it’s often done incorrectly. Many contractors either skip it altogether, rely on outdated rule-of-thumb sizing (like BTUs per square foot), or plug in conservative estimates that inflate the heating and cooling loads. 

The result? Systems that are still too big, too loud, too short-cycling—and still delivering the same problems for homeowners.

When it comes to using Manual J for heat pumps, the problems are no different. If a contractor does complete a load calculation using Manual J, he will often end up with a number that is 2x or higher than the actual heat load of the house. This has been observed over and over again in the field by professionals and is a topic of much debate in building science circles. While the underlying formulas provide precise figures, experienced professionals often find that the results simply don’t accurately reflect real-world conditions:

The upshot? When a contractor overestimates a heating load for a heat pump system, they will often default to recommending a “dual-fuel” system – one that includes a gas furnace for backup heat in the coldest parts of the year – or to simply forget about the heat pump altogether and install a new gas-only system. This leads the homeowner back to square one – burning stuff.

(As an aside: “dual-fuel” systems are not necessarily the worst-case scenario. A system that mostly relies on the heat pump and only switches over to gas in extreme cold can still be hugely beneficial for the homeowner and effective in reducing the majority of their fossil-fuel usage. Some experts in the field even recommend moving to mostly “dual-fuel” systems as a way of easing the transition from gas to electric. But that’s a debate for another time.) 

There’s another layer of complexity – many states require contractors to perform a Manual J or equivalent load calculation in order to receive permits and rebates. The result is that contractors often rush the process (or even falsify numbers) just to push projects through, adding more confusion.

Homeowners: The Other Side of the Equation

So far, we’ve looked at the HVAC contractor – the trusted source making the recommendation in the basement, often under pressure and with limited tools, time, or training to change course. Contractors hold immense power and sway with homeowners, who will ultimately be making the final decision as to how to heat and cool their homes. 

But the homeowner’s side of the equation brings its own set of challenges, ones that are equally important in understanding why heat pump adoption still lags.

Nobody Cares About HVAC

For most homeowners, HVAC is a black box. 86% of U.S. homeowners lack detailed knowledge of their HVAC system. They often don’t know how it works, or even understand the full scope of the equipment they have in their home. They just want to be comfortable, especially in an emergency, which is unfortunately when the vast majority of HVAC installs are completed. 

Source: Workyard

When the furnace dies in the middle of winter, they’re not researching variable-speed inverter technology or weighing decarbonization benefits. They’re cold, stressed, and looking for the fastest fix. That often means relying entirely on the contractor standing in front of them.

But what kind of information do they actually want or need?

It turns out that—big surprise—most people don’t even want to know how their HVAC system works. They don’t want to have a discussion about BTUs or a 2-ton vs a 3-ton system. They just want to avoid getting more overwhelmed than they already are, feel confident about their decision, and be comfortable in their home.

The Race to the Bottom

This limited understanding puts the homeowner in a vulnerable position when it’s time to choose a contractor for a new installation or replacement. Lacking the technical expertise to evaluate system design or installation quality, many default to more relatable metrics: courtesy, friendliness, and responsiveness. Was the contractor polite? Did they take off their shoes when they came in the front door? Did they return my call quickly?

Source:Workyard

But courtesy isn't the same as competence. And when a homeowner can’t tell the difference between high- and low-quality work, they often fall back on the most important metric they do understand: price.

This dynamic hurts everyone. It rewards speed over precision, discourages proper system design, and turns the sales conversation into one about price rather than value.

In short, it commodifies work that should be customized. 

And in an emergency replacement scenario, the odds of any kind of nuanced conversation between the contractor and the homeowner are slim:

In this scenario, there’s not much of an opening for a contractor to educate a distressed homeowner on the benefits of choosing a heat pump, even if that contractor wanted to do so. In the end, it's homeowners who pay the price in the form of oversized systems, higher energy bills, and uncomfortable homes.

What Does a Heat Pump Cost?

Let’s say that a motivated homeowner and their contractor do have a conversation about installing a heat pump. One of the most common—and most confusing—questions they will ask is: “What’s this going to cost me?” 

Unfortunately, the answer is rarely straightforward.

Heat pump pricing varies wildly. There’s a mix of factors at play: system type, installation complexity, local labor rates, contractor business models, and whether ductwork needs to be added or upgraded. 

For instance, a study by Laminar Collective gathered quotes from 15 different contractors for both ductless mini-split systems—wall-mounted units that deliver heating and cooling without ductwork—and ducted systems, which connect to a home’s existing central air ducts. The test case: a 1,500-square-foot, 3-bedroom home in Wakefield, MA.

The costs of installing a heat pump system can vary wildly (Source)

The results are staggering. Ductless systems averaged around $29,000, but quotes ranged from under $20,000 to over $40,000. Ducted systems averaged $38,000, with bids spanning from under $25,000 to over $50,000—an astonishing 100% difference from low to high for both systems.

Massive price discrepancies like these are not uncommon. This undermines homeowner confidence and makes it nearly impossible to know what a “fair” price actually is.

What About Incentives?

It’s an understatement to say that the incentive landscape for home electrification is confusing. Even in a relatively stable policy environment, homeowners face a dizzying array of programs at the federal, state, local, and utility levels, each with its own eligibility rules, paperwork, deadlines, and equipment requirements.

For example: a homeowner in Boulder, CO looking to install a heat pump and take advantage of rebates has to navigate all of the following:

And if you live just a few miles away, across a city or county line, the available rebates could look completely different—even if you're still within the same utility’s territory.

The sheer number of programs, combined with inconsistent eligibility criteria, makes it nearly impossible for the average homeowner to figure out how much money they can actually save or what steps they need to take to qualify. Many incentives require specific equipment types, certifications, or pre-approval processes. Miss one detail, and you could lose out on thousands of dollars.

Unfortunately, many legacy HVAC contractors are also in the dark when it comes to taking full advantage of incentives. They don’t have the capacity to take on the additional administrative burden of tracking constantly shifting rebate rules, managing paperwork, or helping homeowners apply for tax credits. It’s simply not within the scope of their business model.

In many regions, this leaves homeowners with few options if they want a contractor who can help them navigate available incentives.

The Bottom Line

Between lack of information and guidance, inconsistent pricing, and confusing incentives, it’s no wonder many homeowners either delay upgrading their systems or fall back on the status quo, even when better solutions exist.

If we want heat pump adoption to scale, we have to fix these human problems. In the next section, we’ll look at the solutions starting to break through.

This is part 2 of a series about accelerating heat pump adoption in America. If you missed part 1, check it out here. Thank you to Climate Drift for letting us share this piece with the Heat Pumped community!

Struggling to get a heat pump in your own home?

The Heat Pumped group buy is a way to avoid many of these challenges - finding a heat pump centric contractor you can trust, getting a fair price, and planning the replacement when you’re not under duress. Today is the last day to sign up for an installation in 2025, so if you’ve been thinking about it, submit the form today!

Editor’s note: This is a guest post by Joseph DeNatale, an entrepreneur and project coordinator at Jetson Home. It originally appeared in Climate Drift earlier this year, and is republished on Heat Pumped with permission.

Joseph interviewed me when he was researching the piece, and I was excited to see that the final product touched many topics that I've been wanting to write about.

A big thank you to Joseph and Climate Drift for sharing with the Heat Pumped community - it's incredibly in-depth. Since there’s so much to digest, we’re splitting it up into 5 parts that we'll be sharing over the next few weeks.

Why Execution Is Everything: A Personal Perspective

As a small business owner, I’ve built a career not around inventing new things, but around making things happen: making sure systems run smoothly, projects get completed on time, and clients feel taken care of. 

My work has been rooted in the real-world, hands-on, often chaotic rhythm of operations, logistics, and direct client service. Whether it’s organizing teams to execute live events, refining workflows to scale a growing business, or managing the delicate art of closing a sale, I’ve learned one simple truth: the hardest part is never the idea. It’s the execution.

So when I began diving into the world of home electrification—particularly heat pumps—that same truth surfaced again, just with higher stakes. 

The technology isn’t the issue. In fact, the technology is there. It’s been there for decades, and it is continuing to improve. We’re not waiting on some magical breakthrough or futuristic device. 

We’re waiting on people—mostly homeowners and home contractors, but also manufacturers and policy makers—to embrace, understand, and implement what already works.

This piece isn’t about reinventing the wheel. It’s about understanding why we’re not using the wheel we already have—and what it’s going to take, from the human side of the equation, to make heat pumps the obvious, accessible, and default choice for millions of American homes.

Heat Pumps Aren’t New—But This Moment Is

In the world of climate solutions, it’s easy to get distracted by what’s shiny and new—sleek devices, breakthrough technologies, futuristic models of sustainability. 

But not every climate solution is some new-fangled wonder gadget. Some of them already exist. Some of them are sitting in basements and behind houses, quietly doing the work.

The heat pump is one of them.

Heat pumps are not new. In fact, the idea has been around for well over a century, and the technology has been used widely for decades—mostly in Europe and Asia, but also in pockets of the U.S.—for everything from water heating to whole-home climate control. 

Modern heat pumps are highly efficient—anywhere from 2-4x more efficient than a furnace—and capable of replacing both a furnace and an air conditioner with a single system in virtually every climate. For millions of homes across the country, they offer a cleaner, quieter, and more precise way to stay comfortable year-round.

Importantly, heat pumps have also been shown to match or beat the operating costs of even the cheapest heating option—natural gas—in many cases. This has been demonstrated through both local and national studies. One study showed that over 90% of American households would save on energy bills by replacing worn-out heating equipment with the right-sized heat pump. 

Installation costs vary wildly depending on many factors in a home, but with the introduction of generous incentives via the Inflation Reduction Act (IRA) and additional state programs, even these costs can be on-par with fossil fuel alternatives. 

So why aren’t they everywhere?

The answer isn’t technical. It’s cultural, economic, and human. 

TL;DR

Heat pumps are proven, efficient, and climate-friendly—but adoption is still slow. 

The barrier isn’t the tech. It’s people: 

• Contractors who default to what they know

• Homeowners who need education and guidance

• A fragmented market full of noise and misinformation

This piece discusses these challenges, and then explores five keys to accelerating adoption:

1. Educate homeowners so heat pumps feel familiar and trustworthy.

2. Train the next-gen workforce and upskill legacy HVAC pros.

3. Leverage better tools and data to size and install systems right.

4. Prioritize quality and trust to build social proof and demand.

5. Align policy to phase out one-way ACs and normalize heat pumps.

Execution—not invention—is what will move the needle.

Hold On.. What’s A Heat Pump Again?

If you’re reading this piece, you probably know what a heat pump is (and you can feel free to skip this section).

But if you’re among the uninitiated – like, believe it or not, most people – here’s a (very) quick primer. (Editor’s note: check out Heat Pumps 101 if you want to dive deeper)

A heat pump works by drawing thermal energy (heat) out of the atmosphere and “pumping” it into the home. This process works in reverse for cooling. (Source)

The 2-Way AC

The term “heat pump”, it turns out, is a fairly unhelpful name for most people. In fact, there are some leaders in the home electrification industry who believe the name itself is one of the barriers to adoption. It’s one of many ways that the heat pump is misunderstood.

Think of a heat pump as a “2-way AC.” An air conditioner cools your home by pulling heat from inside an enclosed space and transferring it outside. Your refrigerator works the same way.

A heat pump does the same thing, but can also reverse the process to bring heat into the home. It uses a few key components to make this happen:

• The fan pulls air across the system’s coils to help move heat in or out of the space.

• The evaporator coil absorbs heat from the air inside your home (in cooling mode) or from the outside air (in heating mode).

• The compressor pressurizes and moves a fluid called refrigerant through the system, enabling the heat transfer process.

• The refrigerant is the working fluid that captures and carries heat from one place to another—either out of your home or into it.

What’s important to understand is that a heat pump does not create heat. It also doesn’t create cold (cold is the absence of heat, just like darkness is the absence of light). A heat pump simply transfers – pumps! – heat from one place to another.

But what about in the winter when it’s below freezing? In any environment where the temperature is above absolute zero (remember the Kelvin scale?) there is still a significant amount of heat in the air in the form of thermal energy. 

That’s why a heat pump can still heat your home even on the coldest day of the year.

Why Heat Pumps Matter 

The fact that heat pumps simply transfer heat—and do not create it—gives them the potential to heat homes without doing the thing that humans have done since time immemorial to keep warm: burn stuff.

In the U.S., over half of all homes still rely on burning fossil fuels for heat. Replacing those systems with electric, air source heat pumps (ASHPs) can significantly reduce household emissions, especially as the grid gets cleaner and moves towards a higher percentage of renewable energy (i.e. not burning stuff). 

And, because they’re so efficient, heat pumps can lower operating costs over time—although this is highly dependent on where you live, as the cost of fuel and electricity varies widely. They’re also safer (no burning stuff), can improve indoor air quality (again, no burning), and create healthier, more comfortable homes. 

Finally, heat pumps are a crucial component of an energy-independent home. Paired with solar panels and battery storage, a homeowner can heat and cool their home entirely with energy they generate on their own. Try that with a furnace!

This is not a marginal climate solution. According to the IEA, global heat pump adoption could reduce carbon emissions by half a billion tons annually—roughly equivalent to the annual emissions of all cars in Europe.

The Heat Pump Moment Has Arrived

For years, heat pumps were a niche topic, something discussed by green building enthusiasts, early adopters, or homeowners with unusually high energy awareness. 

But that’s no longer the case. Here are four reasons why:

Cultural Momentum Is Building

The electrification movement is no longer a fringe concept. The push to “electrify everything” has gained traction among policymakers, climate advocates, startups, utilities, and even popular media. 

From Substack newsletters to YouTube explainers, there’s growing awareness that building decarbonization—and especially heating and cooling—is one of the most practical, scalable ways for regular people to cut their emissions. Campaigns like Rewiring America’s “Go Electric” initiative frame heat pumps not just as energy-efficient appliances, but as a gateway to modern, climate-aligned homes. 

This momentum is turning into real action. Heat pumps have now outsold gas furnaces in the U.S. every year since 2022.

Federal and State Policy Is Aligned (For Now)

For the time being (Republicans’ “One Big, Beautiful Bill” notwithstanding), both federal and state governments are backing this transition with significant financial and structural support. Editor’s note: Ouch. Since this piece was originally written, OBBB passed, and most tax credits at the federal level phase out at the end of this year. If you’ve been on the fence about getting a heat pump, now might be a good time to act!

The Inflation Reduction Act (IRA) has introduced a suite of rebates, tax credits, and grant programs designed to make heat pumps more affordable and accessible. Single-family households can receive up to $8,000 in upfront rebates for heat pump installations and up to $2,000 in federal tax credits, not to mention additional support for electrical panel upgrades and home energy audits. Editor’s note: the IRA rebates are federally funded, but implemented at the state level. Not all states are participating, and some that are haven’t rolled out their programs yet. In other states like California, the funds are already exhausted.

State and local governments are also leading the way in the transition away from fossil fuels on both the demand and supply sides. Programs like Efficiency Maine, TECH Clean California, and Mass Save offer generous incentives and no-interest financing to homeowners that drive the cost of electrification upgrades down even further. Meanwhile, New York City has banned gas in new construction, and Massachusetts has ordered public utilities to begin phasing out natural gas, a move which is being studied in at least 11 other states. 

Private Capital Is Following

The heat pump space is no longer just a niche for contractors and utilities—it’s attracting serious private investment. VC-backed companies like Quilt are reimagining the user experience with sleek, design-forward equipment and app-based controls. Others, like Elephant Energy and Forge, are building “heat pump concierge” platforms that manage the customer journey end-to-end—from sales to install to rebate navigation.

The Cold-Climate Performance Myth Has Been Fully Debunked

One of the biggest myths about heat pumps—that they can’t handle cold weather—is now being debunked at scale. While older, single-speed models may have struggled in colder temperatures, especially when size and installed incorrectly, modern cold-climate, variable-speed air-source heat pumps can provide reliable heating even at outdoor temperatures of -20°F.

These systems are already in use in northern New England, the upper Midwest, and Canada. In Nordic countries—some of the coldest climates in the word—the technology has been viable for decades.

And yet, despite all this momentum, heat pump adoption is still slow. 

Why? Because the hardest part isn’t scaling the technology. It’s aligning the people—contractors, homeowners, policymakers, and market actors—who need to make it happen.

That’s where we go next.

This is part 1 in a 5 part series about challenges and solutions in accelerating heat pump adoption across the US. Stay tuned for the next issue!

Want a heat pump in your own home?

The first Heat Pumped group buy generated lots of enthusiasm! There are still a handful of slots left, but you’ll have to act fast if you’re interested. Sign-ups close later this month (or when all the slots fill, whichever comes first).

PS: Want to break into a heat pump career? Vayu is looking for a part time project manager - no prior HVAC experience required!

I recently sat down with Brent Davidson, founder of the US Heat Pump Summit, for the latest episode of the Heat Pumped podcast.

The summit is the first event of its kind, built specifically for heat pump contractors. With structured technical training and business support, it’s helping build the workforce necessary to deploy heat pumps at scale.

Building a successful heat pump business is really hard, and the Summit helps contractors bridge the gap and become local spokespeople for electrifying buildings. I think it’s a great model. Deploying these systems in every American home is going to take thousands of heat pump businesses, and a space to learn from the experts and each other is immensely valuable.

🎧 Listen to the full episode

It's available on YouTube or wherever you get your podcasts.

🚧 Why HVAC Startups Fail

Brent's seen it up close: far too many contractors try to go solo thinking great technical skills will carry the business.

They don’t.

According to Department of Energy data we discussed, 70% of HVAC companies fail in year one, and 20% more every year after. Why?

The missing pieces:

✅ Pricing correctly (hint: markup ≠ margin)

✅ Understanding your cost of customer acquisition

✅ Tracking conversion rates from lead to close

✅ Building financial sustainability from day one

✅ Thinking like a CEO, not just a technician

📈 Competing with Private Equity

We dug into the other big trend: the rise of PE-backed HVAC rollups.

They've got sales engines, ad budgets, and ops teams most contractors can’t match. But Brent had a surprisingly grounded take:

That means:

• Investing in your own management training

• Dialing in your customer experience

• Measuring and improving core business metrics

• Streamlining your offerings and ops

PE is temporary. Your reputation and team are not.

🧰 Tactical Advice for Scrappy Contractors

Brent shared some of the most actionable advice I've heard on the podcast so far:

🛠 Specialize in a housing type. Know triple-deckers in New England? Be the expert.

📦 Simplify your offerings. Fewer models = less training, faster installs.

🌱 Start local. Word-of-mouth and community presence still work — even in a Facebook Ads world.

🔁 Partner creatively. Know a solar company? Bundle and tag-team sales.

🧪 Test your own process. Have a friend call your business. Is it easy to book? Would you buy from you?

🎟 Join the U.S. Heat Pump Summit

📍Worcester, MA (yes, it's pronounced “Wooster”)

📆 November 18–19, 2025

🔗 www.usheatpumpsummit.com/partner/shreyassudhakar (you’ll get 10% off if you register through this link by October 18th!)

It’s a full-blown conference + trade show — with content tracks for both business strategy and technical training. Brent emphasized this is not just another AHR-type wanderfest. It’s focused. Curated. And designed to help people selling heat pumps succeed.

Speakers include:

• HVAChicks Jennifer, Chris Morin, Alex Meaney, Ty Branaman, Nate Adams (technical training)

• Chad Simpson, Peter Troast, Brian Alexen (business training)

• And many more — manufacturers, marketers, workforce leaders, rebate programs

If you're serious about building a heat pump company that lasts, this should be on your calendar.

Subscribe for more

If you like the episode, make sure to subscribe wherever you get your podcasts! And if you missed our past episodes, be sure to check them out - Brendan, Clay, and Nate each helped us think about heat pumps from a unique lens.

Expensive electricity is the single biggest roadblock to decarbonizing buildings and deploying heat pumps at scale.

We can solve these problems, but it’ll take public awareness, outrage, and policy changes.

I teamed up with the brilliant Katherine Ellison to write an op-ed about it in the San Francisco Chronicle today. Katherine is a Pulitzer Prize-winning journalist and author who writes about climate change and renewable energy.

If you haven’t seen her previous piece in the Washington Post documenting her experience electrifying her home, it’s a great read.

I’d also recommend my earlier piece about heat pump operating costs if you missed it.

Check out the op-ed here and let me know what you think!

ICYMI - Heat Pump Group Buy

We’re organizing a heat pump group buy in California, offering simple, fair, and transparent pricing for quality heat pump installations. Check out the details here!

“Is this a fair price?” remains one of the biggest questions for heat pump shoppers. And it’s a really hard question to answer!

Reddit is filled with homeowners trying to understand if they’re being ripped off

Each home is different, each unit has a different cost and efficiency, and labor rates vary across the country. Not to mention that contractors have varying levels of quality, with some skipping important steps and doing un-permitted work.

On top of that, having a parade of different contractors trodding through your house and giving conflicting recommendations with wildly varying quotes can be overwhelming.

This is what getting a heat pump can feel like!

Shrouded in secrecy

Contractors guard their pricing like nuclear launch codes. Rarely do you go on a website and see flat-rate pricing.

There are very good reasons for this.

First is the competitive bidding process. HVAC companies know that most homeowners are going to shop around for a system. The in-home visit gives them an opportunity to get in your house and make a good impression.

They hope that they can be charismatic and build trust with you, before they even show their numbers.

If they shared their numbers upfront, you might shop that quote around with other contractors before you even give them a call. Imagine playing poker with your cards face up?

It’s hard to win at poker if everyone else can see your cards

Then there’s the seasonality. Much of the year is “shoulder season”, where temperatures are mild. Most homeowners aren’t thinking about their HVAC equipment during these times, so many HVAC companies have very low demand. They might be change their pricing to close a deal and keep their technicians busy. The first hot week of summer or cold week of winter, most contractor’s phones are ringing off the hook. They’re not going to be very interested in making a deal.

HVAC company revenue varies significantly throughout the year

On top of seasonality, the cost of HVAC equipment varies. Cost increases from distributors can be sudden, especially with unpredictable tariff actions. At other times, a distributor might have specials to clear out stale equipment inventory. All of this variability means that consistent fixed pricing doesn’t make business sense for most companies.

Power in numbers?

Laminar Collective, Gigaton Collective, and Collaboration Energy have all had success coordinating heat pump group buys across the country - everywhere from Boston to Seattle.

The premise is simple. Transparent, up-front pricing from trustworthy heat pump installers that do quality work.

Laminar Collective has negotiated group buys in the Boston area

It’s a win on both sides.

Homeowners get a heat pump from someone they can trust, without the hassle of shopping around. Equipment is ordered in bulk from distributors, so costs are lower.

Because the contractors don’t have to spend the advertising and sales costs they normally would for these customers, they can pass along the savings. They also have a predictable backlog of work for a few months, so they’re ok with lower revenue on each project.

Group buy in California

We think the group buy model is great, but nobody has pulled it off in California yet. So we want to try!

Just like the group buys in other parts of the country, we’d publish standard up-front pricing for certain heat pump project types. Pricing would be competitive, and the high quality installations would include permits and all testing necessary for energy code compliance.

My company, Vayu, installs heat pumps across California. I’m willing to devote the majority of the company’s energy for the rest of the year in support of this group buy. We’d gather interest over the next few months, and carry out the installations in the last quarter of this year. And we’d share case studies and learnings after we wrap up the installations. We can install systems in the San Francisco Bay Area and parts of Los Angeles.

Vayu’s service area in the San Francisco Bay Area and Los Angeles

I need your help!

Is this something you’re interested in? Maybe you have a friend or neighbor looking for a heat pump in California?

Please share www.heatpumpgroupbuy.com widely with your network and respond to the poll below. If there’s enough initial interest, we’ll put together pricing and more detailed information!

The biggest story in the business of heat pumps might be the rapid pace of private equity consolidation. Over the past few years, investment firms have been sucking up HVAC contracting companies and merging them into large conglomerates.

For most homeowners, this has been largely invisible, as acquiring companies often retain the branding of companies that they buy. But it’s no secret to those in the industry.

HVAC company owners routinely get acquisition offers

For example, one of the largest private equity rollup of home services companies in the country is Sila, which combined over 30 separate brands under a single umbrella. The combined entity is worth over a billion dollars, and generates more than a hundred million dollars in annual revenue.

This isn’t an exception - these mergers are happening across contractors, distributors, software providers, and even equipment manufacturers. My friends at Homepros track this activity, and it’s a constant drumbeat of new deals.

For many owners of mid-sized HVAC businesses, a sale to private equity means financial independence.

Medium sized HVAC contractors can sell their businesses at reasonably large multiples of their revenue

Given this pattern of acquisitions, many are now starting new contracting businesses with the explicit goal of an eventual sale to private equity.

The acquisition is just the start. For some companies, not too much changes after the acquisition. In other cases, it means reduced independence and more bureaucracy. In the worst situations, it can mean poor working conditions for employees and reduced service quality for customers.

Private Equity can degrade service quality for customers

Private equity owned businesses are motivated to increase the bottom line, which can incentivize a heavily sales driven culture.

There have been examples of technicians upselling unnecessary repairs or system replacements, as this exposé highlights. The technician who tried to sell unnecessary repairs worked for an HVAC company owned by private equity.

Many in private equity appear to have genuinely good motivations. The founder of Alpine Investors, whose subsidiary Apex Service Partners has grown into one of the largest private equity plays in home services, writes:

Yet, accounts from technicians who work at Apex companies are a mixed bag.

To help me unpack such a complex topic, I reached out to one of the leading experts in the private equity industry. Brendan Ballou is a former federal prosecutor and author of Plunder, a deep dive into how private equity is reshaping industries across America.

It was a pleasure speaking with him on the latest issue of the Heat Pumped Podcast about private equity in HVAC and how we should think about these dynamics.

🎧 Listen to the full episode

It's available on YouTube or wherever you get your podcasts.

Key Takeaways

🏢 What private equity actually does

Private equity firms buy companies with mostly borrowed money, restructure them for short-term profits, and sell them a few years later — often leaving behind more debt, worse service, and bigger prices for customers.

🔗 HVAC roll-ups are happening

Private equity is rolling up small HVAC companies under big umbrella organizations. From the outside, it still looks like you're getting quotes from three different companies — but they might all be owned by the same firm.

That means:

• Less real competition

• More pressure to upsell and cross-sell services

• A race to maximize short-term cash flow, even at the cost of quality

💸 Short-term thinking drives bad decisions

Many private equity firms aren’t planning to stick around for 20 years — just long enough to pump up the numbers and sell. That’s why you’re seeing aggressive sales tactics, overloaded techs working 16-hour days, and a push for service plans and upsells.

🏚️ Asset stripping and debt loading

Beyond service quality, these deals often load acquired companies with debt or sell off their real estate in “sale-leaseback” deals — bleeding assets out of the business for quick cash.

🌎 Local wealth is disappearing

Historically, skilled trades let people build wealth locally — your town’s best technician could build a thriving business. With private equity rollups, profits are siphoned off to investors hundreds or thousands of miles away.

📉 What could happen next

We might not see mass bankruptcies, but we will likely see a long, slow decline in service quality, pricing fairness, and competition unless independent companies fight back.

🛡️ How customers (and contractors) can fight back

• Customers: Look up the companies you're considering. Google the name + “private equity” to check ownership.

• Technicians: Ask hard questions if your company is being bought. Understand the deal structure and push for clarity.

• Small businesses: Build long-term trust. Being the company that actually cares about customers could be your biggest competitive advantage.

If you want to better understand the forces reshaping HVAC — and how to protect yourself as a customer, technician, or business owner — this is an episode you don’t want to miss.

Subscribe for more

If you like the episode, make sure to subscribe wherever you get your podcasts! And if you missed our past episodes be sure to check them out - Clay and Nate both brought unique perspectives on the industry.

PS: We’re on Reddit, too!

If you want to discuss this and other Heat Pumped topics, check out our new subreddit, r/HeatPumped! We’d love to have you join the conversation.

Editor’s note: My company, Vayu, installed a new heat pump HVAC system for Alan earlier this year. His timing was impeccable, and we were able to stack quite a few different rebates to get within striking distance of the holy grail of a free heat pump.

Alan wrote this report unprompted and shared it with many of his neighbors, to encourage them to electrify their own homes. I’ve reproduced it unmodified here with his permission. His experience mirrors many of my other customers and is a great snapshot into an average homeowner’s experience getting a heat pump.

If you have electrified your home, I’d encourage you to share your own experience with your community in the same way! People trust their friends and neighbors, and community action is one of the best ways to motivate more people to get their own heat pumps!

Howdy neighbors, and Happy New Year! I wanted to prepare a little write up summarizing my positive experience replacing our natural gas fired furnace with a heat pump system. For those unfamiliar, heat pumps are like refrigerators running in reverse: rather than generating heat by burning natural gas, they move heat from outside air into your house, sending cool air outside in exchange. The finished system consists of three main components: the external heat pump, the heat exchanger inside the house (where the furnace used to be), and new 220 wiring from our main panel. The first two are shown here:

Heat pump unit

Air handler / heat exchanger

Why Did I Embark on This Mission?

Two answers here:

1. I wanted to save money by getting off natural gas, especially since we have solar on our rooftops.

2. I’m determined to reduce our CO2 emissions.

In a typical home, around 60% of your natural gas use is for heating, versus around 20% for hot water (the rest is cooking, etc). So I started with HVAC and plan to tackle hot water next (hopefully very soon—stay tuned!).

I began researching various options early last year, even joining a couple of niche Facebook groups (hit me up if you’re a nerd and want to dive into all that!). I ended up having one of the “big names” in HVAC come out to give me a quote for a full system, including replacing the (original!) ductwork under the house (we have central air, as I suppose many of you do). Their estimate came to $38,000, which didn’t surprise me as I’d heard these systems are notoriously expensive. Still, it got the ball rolling, so I started shopping around.

Alternative Solutions: Harvest Thermal

Then I learned about a company called Harvest Thermal, which offers a high-tech solution for both hot water and heating. Essentially, it uses water to store energy by heating it to a very high temperature (180°F) using electricity during off-peak hours. This hot water is then passed through a heat exchanger to heat your home or provide hot water as needed.

While their technology is cutting-edge and likely the most energy-efficient solution currently available, I ultimately decided to go the conventional route. My concern was their newness as a company and the potential risk if they were to go out of business. Still, they are brilliant people with an excellent solution. If you’re interested, I have their quote and details on relevant tax incentives and rebates. It’s also worth noting that it is likely the most energy efficient solution for heating and hot water available, bar none, at this time. And… they do not provide cooling without adding another heat pump.

The Solution I Chose: Vayu

I met Shreyas Sudhakar on LinkedIn (I’m very active there). Shreyas recently launched his startup, Vayu, which is on a mission to install more heat pumps in the Bay Area. I was his third client. I wasn’t worried about lack of experience: he left his previous startup after close to 2 years and many heat pumps in order to start his own where individual attention was prioritized over fast scaling of the business. Before that, he was literally a rocket scientist at Blue Origin and SpaceX.

In his own words: “I know heat pumps inside and out. I founded a national heat pump installation company, raised millions in venture capital (including YCombinator), and built the business from the ground up. I worked alongside homeowners to build their understanding and trust, crawled through hot attics and tight crawlspaces, and installed countless heat pump HVAC systems with my team of talented technicians.”

So after coming to measure our house, and running the numbers on our heating bill, he proposed a system with the right heating capacity for our home. The numbers looked good! His bid came in at less than half of what Bellows originally quoted, but to be fair their quote included 6700 for the ductwork. But in the end, we now have a much improved home comfort and no longer need to burn natural gas for heat!

Incentives

It took some digging, but I think I’ve found most of the incentives available. A good place to start your own digging is the incentive finder at switchison.org 

Some have income requirements, some don’t. This table shows what I ended up using. DISCLAIMER: I have applied for, and been approved, all of these, but it will take a few months (possibly as late as April) before I receive any money.

Note that our income is low as we are on social security and my wife only works part time.

Income eligibility is based on tiers:

• Low-income (below 80% of the area median income)

• Low-middle income (80%-150%)

• Above 150%

For the HEEHRA incentive, you need to be in one of the first two. For example, in Santa Cruz, for a family of four:

• The $8,000 rebate applies to incomes below $145,000.

• The $4,000 rebate applies to incomes below $272,000.

Luckily, the fine people at switchison.org have a calculator for this here.

For our project, the net cost ended up at just under $3000 after incentives and tax credits:

Including the duct work (see below), we came out well below $9000. You might be able to save more if you can use your existing ductwork. Important: your price for the heat pump system would likely be higher, as we have a smaller home than many of you at around 1600 sq ft. Also, there’s a window of opportunity: some of these incentives will be depleted in coming months, so if you’re considering any of this, better get moving! Here’s a site that is current as of 1/14/25 listing the amount of money left in the various incentive funds.

Ductwork

In our case, we needed all new ductwork, for two reasons:

1. Ours was original, and in pretty bad shape.

2. Heat pumps produce air at a lower temperature than furnaces, so larger-diameter ducts may be needed for increased airflow to heat the home effectively.

This was a separate expense. Shreyas at Vayu gave me a quote of around 8k for this work but you might be able to do it for less if you shop around locally.

Here’s the duct routing diagram Shreyas made based on the floor plan I sent him (we have 11 floor ducts in our home):

I used a free trial of Houzz Pro to do the floorpan just by walking around the house for five minutes with my iPhone. It’s not super-accurate but it was good enough to size our system. The blue lines are the ducts going to our floor vents, and the red ones are the return (air intake to the heat exchanger, in our case these are in the attic and the red squares are two large ceiling grills).

The light blue numbers are the diameters of the ducts. These were all calculated for us by Shreyas who has some fancy HVAC design software. Shreyas also recommended we install dampers at each branch point, which allows balancing the airflow after the fact if some rooms end up being too hot or too cold (you just shut down the damper a bit in the hot zones).

Conclusion

At the end of the day, we have:

• A new efficient central air heating system that provides better comfort and saves money.

• A smart thermostat that optimizes our heating to avoid peak electricity rates.

• A home that emits far less CO2 than before.

I’m thrilled with the results and am happy to answer any questions. Feel free to email, call, or knock!

Thanks for reading!

Alan Peevers

Closing note from the Editor: The situation is a bit different today. The HEEHRA rebate in Northern California ran out of funds just a couple months after it went live. Soon after, the TECH Clean CA rebate program abruptly ran out of funds. The budget for the local utility rebate from 3CE that Alan was able to take advantage of is almost exhausted, and the federal tax credit is under threat. And between the refrigerant transition and tariffs on imports, the cost of heat pump equipment has increased from the prices reflected in this article.

I’ll write about the challenges of changing rebate program landscapes in a future article.

If you live in Central or Southern California, the large HEEHRA rebates are still funded, for now. If you meet the income qualifications, you may be able to get a heat pump installed for a significantly reduced cost. Likely not as low as the total out-the-door pricing reflected in this article, but still meaningfully lower than a standard gas furnace + one-way AC. Feel free to drop me a note (you can hit reply to this email) if you’re in SoCal and want to take advantage of the HEEHRA rebates, I’d be happy to help guide you through the process.

The second episode of the Heat Pumped podcast is live, and this one is all about the people behind the heat pumps.

This time I sat down with Clay McCombe, a workforce development expert helping build the heat pump labor pipeline in Colorado. Clay didn’t even know what a heat pump was when he got hired to grow the heat pump workforce. Now, he’s running some of the most ambitious workforce initiatives in the country.

🎧 Listen to the full episode

It's available on YouTube or wherever you get your podcasts.

Key Takeaways

🥇 Hire for grit, not resumes

Clay’s career started in reentry programs, helping people leaving prison find jobs. He quickly realized that many were ideal HVAC technicians: hungry for opportunity, willing to learn, and driven by something bigger than a paycheck.

💥 We need more than warm bodies in trucks

There’s a nationwide labor gap in HVAC. But just throwing people into the field doesn’t cut it. Clay talks about programs that aim to attract, train, and support new techs - especially from underrepresented backgrounds - through apprenticeships and mentorships, and wraparound support like childcare and transit.

🧑‍🏫 Old school contractors want to teach

There’s a lot of generosity in the trades. Clay and I both shared experiences of veteran contractors offering time, mentorship, and advice to newcomers. If someone is willing to learn, there’s probably someone else willing to teach.

📦 “Hit the easy button” for contractors

Clay’s team is rolling out a first-of-its-kind “heat pump agent” program in Colorado—dedicated admin support to handle the rebate paperwork, equipment spec matching, and compliance side of installations. That means more time installing, less time at a desk.

🌉 Bridging the gaps

Clay is launching three specialized programs to bring more people into HVAC:

• Returning residents: A training cohort for currently incarcerated folks, prepping them for jobs upon release

• Addressing language barriers: Not just translation, but full programs led by Spanish-speaking instructors

• Youth pathways: Supporting young people exploring trades with mentors and afterschool programs

💡Advice for future workforce leaders

If you’re curious about building a career in climate workforce development, Clay has simple advice:
Ask questions. Show up. Be a sponge.
And don't underestimate how many people want to help you succeed.

Subscribe for more

If you like the episode, make sure to subscribe wherever you get your podcasts! If you missed the last episode, an interview with Nate Adams (also known as the House Whisperer), you should check it out. It’s a good one.

A commodity is something meaningfully undifferentiated and priced by market forces. Items from Supplier A and Supplier B are interchangeable, without meaningful differences in form, fit, or function.

When you think about commodities, you probably picture bags of rice or barrels of oil.

Bags of rice at a processing factory in Vietnam - food is often a commodity

Commodities can be filtered by attributes or quality levels. For example, the USDA defines different grades of ketchup, which must meet specific texture, taste, and consistency criteria.

Different grades of ketchup

If you ran a restaurant and wanted to source packets of ketchup, it’d be reasonable to ask a few different suppliers for quotes on USDA Grade A ketchup, sort from price low to high, and order the cheapest one.

Differentiating the undifferentiated

Because a commodity is priced by market forces, it’s a race to the bottom by default. If someone sells a commodity, it’s in their best interest to convince you they aren’t, because that’s the only way for them to gain pricing power.

Commodity producers generally have a few options:

• Sell at market rate. Farmers selling soybeans in bulk to their co-op.

• Make the product differently, moving it into a different class. “We produce these non-GMO organic soybeans with no chemicals or pesticides, using heirloom seeds. That’s why they cost more.”

• Differentiate through branding or influence. Imagine if MrBeast had a line of soybeans...

• Process it into something unique. “These are soybean chips made from my grandma’s 200-year-old recipe. Time Magazine says they're the most unique chip they've ever tasted.”

• Convince customers their product is different when it actually isn’t. “Green Pod Farms’ soybeans are garbage. Ours are plumper, fresher, and last weeks without refrigeration.”

I’m fascinated by this strawberry. It’s a great example of differentiation through brand.

Gas furnaces are a commodity

Let’s tie this back to HVAC.

Residential furnaces in the US come in 4 basic widths - ‘A’ cabinets are 14.5” wide, ‘B’ cabinets are 17.5”, ‘C’ are 21”, and ‘D’ are 24.5”. They’re all roughly the same depth and of similar height.

Virtually every furnace is powered by a standard 15A, 115V electrical circuit.

There are a couple efficiency tiers - "standard efficiency" models convert 80% of their input fuel into heating, while "high efficiency" turn 90+% of the input into heat.

And there’s range of capacities - how much heat the furnace can put into the house.

You can visualize these options in a simple table:

You’d likely replace a high efficiency C Cabinet 100,000 BTU/hr furnace with an equivalent one when it breaks

In most cases, an HVAC contractor would measure the existing furnace, find a matching one from their supplier, and "swap boxes". Just like a restaurant owner would choose a Grade A ketchup.

Sure, there are different manufacturers that offer varying warranty terms, paint colors, or availability of spare parts. But for all intents and purposes, these furnaces are interchangeable commodity products with an identical function.

Many mechanical components are commodities!

Furnaces aren’t unique in being a commodity. As a mechanical engineer, I’d often order parts from McMaster-Carr for my projects. They stock nuts and bolts, pumps, and pretty much everything in between.

If I was rigging up a test stand and I needed a pump, I’d pick out one that met the specifications I needed and had the right interface. I didn’t care if it was made by Grundfos or Baldor or Goulds. McMaster abstracts that information away.

I might receive a Goulds pump for my order today, but a Baldor pump when I placed another order in 3 months. No worries! I designed my system with a few key requirements for the pump, and as long as the pump met those requirements, it would work.

Equipment doesn't always feel like a commodity

Interestingly, when you talk to many contractors, you wouldn’t get the sense that HVAC equipment was a commodity. You’ll hear a lot of technicians say things like "I'm a Carrier guy", or "I'm a Trane guy".

Sales conversations in homes often revolve around brand, and attributes of different models.

HVAC sales brochures try to differentiate against other brands

And this makes a lot of sense, because HVAC systems are big purchases, and we’re used to brand being an important factor when making other big purchases! Contractors can lean on the professionally produced literature from the brands that they sell to highlight how their proposal is better.

We compare car brands, so why shouldn’t we compare HVAC brands in the same way?

But much of this is Coke vs Pepsi tribalism. Furnace designs are fairly consistent with each other, with some minor layout differences. Most brands use the same handful of suppliers for core parts like blower motors and gas valves.

Seriously, furnaces are a commodity

I’m pretty sure that most HVAC manufacturers know that the equipment they sell is a commodity. When you look at how furnaces are named, you can see a consistent structure across brands.

The model naming convention for Lennox furnaces

The model naming convention for Trane RunTru furnaces

When a contractor goes to their supplier, they typically rattle off a few key attributes and the rep lets them know what’s in stock. Depending on availability or cost, a contractor might switch from their “usual” brand.

It probably explains why manufacturers have incentives like luxury vacations and invitations to sporting events for contractors that install a lot of their equipment. They need to find things beyond their product to differentiate themselves with.

Many HVAC manufacturers offer vacations to contractors when they hit sales targets

You know who else offers luxury vacations for their customers? Soybean seed producers.

Heat pumps aren’t really a commodity yet

For something to be a commodity, it needs to be easily interchangeable with other options on the market. And right now, that’s not the case for ducted heat pumps in the US. While furnaces generally share the same voltage, similar outer dimensions, and other key parameters, heat pump designs can vary wildly.

Not only are they different from the gas furnaces that they’re replacing, but they’re inconsistent with other heat pumps (often, even heat pumps from the same manufacturer have significantly different interfaces)!

Excellent 4 post thread detailing a heat pump challenge in US residential retrofits that I didn’t know existed on the air handler side. Of course those DOING this critical work this is obvious. Is this an opportunity for an upstart to design for drop in? Thanks @shreyassudhakar.com 🔌💡

— Jeremy Hoffman (@380vdc.bsky.social)
2:31 PM • May 4, 2025

This adds a substantial amount of overhead and engineering to every single retrofit project. HVAC contractors are used to box swapping - and for heat pump equipment to truly become a commodity, it needs to be designed to enable that.

Over the past year or so, I’ve started to see a glimpse of this future. Equipment manufacturers are starting to develop heat pump hardware specifically targeting gas furnace retrofit.

Some manufacturers are catching on. This system by Cooper & Hunter is designed to match the voltage and dimensions of a standard gas furnace.

They’re paying attention to the little details - where the ductwork hooks up, the equipment voltage, interoperability with parts from different brands. This heat pump air handler from ADP exemplifies what a retrofit-focused design could look like (and it’s a piece of equipment we often use at my own company, Vayu, for our heat pump installations).

Heat Pumps can be commodities

That’s not to say that heat pumps can’t be commodities. In fact, single zone mini-split heat pumps exemplify this. They all have roughly the same form factor, wiring, dimensions. In some countries, you can buy them at an electronics store.

Mini-split heat pumps are pretty standardized

I’m hopeful that heat pump designs will converge into consistent standards that are shared across brands. We’re already starting to see this, with some of the designs I highlighted earlier.

But I have good reason to worry that this won’t happen. And the thing that worries me the most is proprietary controls.

Tailwinds to commoditization

For the longest time, HVAC controls have been built around 24VAC wiring. The logic is pretty simple - the thermostat will tell the equipment when to turn on and off. The thermostat is nothing more than a fancy switch.

But manufacturers realized that they could squeeze extra efficiency out of HVAC equipment if the thermostat tells it more than just to turn on or off.

If the heat pump knows that the inside of the house is 72 degrees, and has been increasing at 1 degree per minute, it can adjust the speed of the compressor to minimize energy and maintain a steady temperature.

The problem is that these thermostats have been built with proprietary communications protocols. A Carrier thermostat won’t work with Mitsubishi equipment, a Mitsubishi thermostat won’t work with a Gree system. And a Carrier indoor heat pump unit won’t work with a Mitsubishi outdoor heat pump unit.

An example of a thermostat using a proprietary communication protocol

This crushes the dream of commoditized heat pump equipment. Remember that ADP air handler I was raving about earlier? ADP actually doesn’t make any heat pump outdoor units. They only make the indoor units - that’s what they specialize in.

That same ADP unit could be used with outdoor units from multiple different brands, and controlled by a variety of different thermostats. This has historically been true with ACs and furnaces. You could use a Trane furnace with a Carrier AC and not cause any big issues.

The same ADP indoor unit can be paired with outdoor units from Gree, Bosch, and other manufacturers

While it comes from a noble goal of increasing performance, I suspect the push to proprietary standards has been intentional. It’s a way to move equipment away from being a commodity, giving the manufacturers more pricing power.

HVAC Contractors definitely aren’t a commodity

All this talk about HVAC equipment being a commodity might have you thinking that HVAC contractors are a commodity, too.

And it’s understandable to think that, given the general advice that you should shop around for quotes and get proposals from a few different contractors before you choose one.

Many homeowners take that to mean that they should get 10 quotes and choose the cheapest one. Which would be a good strategy, if every single HVAC installation was the same. Unfortunately, that’s just not the case.

A Department of Energy study found that 70-90% of AC and Heat Pump systems have at least one performance-compromising fault, many introduced at the time of installation.

Even HVAC experts can have challenges with their contractors! Bill Spohn, an industry veteran that runs a company which sells HVAC tools, had an improperly installed heat pump in his own home.

Many installers skip important steps like making high quality flare connections or pulling a proper vacuum to prevent the formation of acids that will break down the components over time. Even more cut corners with their sizing, using rules of thumb and dramatically oversizing systems.

Until the average quality of installations increases, choosing the right installer might be one of the most important decisions you’ll make when you’re getting a heat pump for your home.

Commoditization is important for market transformation

Why does it matter if heat pumps are a commodity?

We can look at other technology transitions for a clue. Lithium-ion battery cells are the core commodity for electric cars, home batteries, and utility scale energy storage. We look at their price with a simple metric, $/kWh. Similarly, the cost of solar panels can be tracked by $/Watt.

We don’t have to distinguish whether a solar system has SunPower, LG, or GAF modules - they’re all graded by the same cost metric.

For heat pumps to follow similar adoption curves, the equipment needs to become a commodity. And I believe we can get there, with the right nudges.

The first episode of the Heat Pumped podcast is out, and it’s a fun one.

If you know anything about home electrification, you’ve probably heard of Nate. He pulled his first gas meter back in 2014, long before electrification was trending. He co-founded HVAC 2.0, wrote The Home Comfort Book, and has been a blunt and deeply informed voice pushing this industry toward better outcomes for homeowners, contractors, and the planet.

🎧 Listen to the full episode

It’s available on YouTube, or wherever else you get your podcasts! Don’t forget to subscribe.

Key Takeaways

💡 Air conditioners are dumb

This quote sums up Nate’s thesis. He makes a strong case for eliminating one-way air conditioners and switching to two-way systems (i.e. heat pumps). He wants policymakers and manufacturers to stop producing one-way ACs altogether, and thinks the small $150–$400 difference in part cost could easily be subsidized.

🏡 Hybrids are the gateway drug

Nate isn’t a heat pump purist. In fact, he says hybrid systems (furnace + heat pump) are the only realistic way to move the mainstream market in cold climates. They're easier for contractors to sell, can be cheaper for homeowners to run depending on energy cost, and can sometimes cost less up front.

🔁 Feedback loops > ideology

Nate walks the walk. He’s lived in five all-electric homes. He measures everything. He watches runtimes. He installs energy monitors and indoor air quality sensors. And he’s not afraid to change his views based on data.

📉 The IRA was a swing and a miss

We touched on policy too. Nate’s brutal assessment of the Inflation Reduction Act heat pump rebates?

He argues that if we’d just subsidized manufacturers to stop making one-way ACs, we’d be halfway to decarbonization by now.

Subscribe for more

If you like the episode, make sure to subscribe wherever you get your podcasts! We’ve got a great list of people coming on for this first season!

Editor’s note: This issue of Heat Pumped was written by Drew Tozer. He’s the author of Feel-Good Homes and runs an HVAC company in Toronto, Canada called Foundry Heat Pumps.

Drew’s writing parallels my own experience in the heat pump industry. I don’t have formal HVAC training, but my previous background as a rocket propulsion engineer gave me a unique lens that has paid dividends in my own HVAC company, Vayu.

I got into HVAC for climate reasons. Heat pumps are a path to sustainable heating—which makes them a key part of decarbonization.

As far as the climate’s concerned, every heat pump counts the same, regardless of why a homeowner chooses to install one.

That’s good news. 

It means we can sell and install heat pumps based on all their merits, not just sustainability.

When a right-sized heat pump replaces an oversized furnace, it can make a house more comfortable, eliminate temperature swings, improve air quality, reduce maintenance, and increase safety. Heat pumps are a tool to improve quality of life.

The goal is to find the right heat pump for each house, and install it properly.

But the HVAC industry isn’t delivering.

The market is mostly emergency replacements—swapping like-for-like equipment. That means homeowners are left with the same comfort and health problems and it puts contractors in a “race to the bottom” where quotes are compared on speed and price. 

Oversized furnaces and ACs are the default option over heat pumps.

So, how did we get here, and what can we do?

I have three ideas—and they’re all related to skill:

1. Skilled labour is commoditized. That’s a problem. Homeowners and contractors are stuck in a feedback loop of emergency replacements and low expectations. We need to talk about HVAC in a new way to reframe its features and benefits.

2. Stacking personal skills can put you in the top 1% of your field. You can leverage a combination of above-average skills that you already have to build a personal brand and authority.

3. Four business skillsets are a throughline for successful companies. Business is a team sport and it’s easier to succeed when you’re surrounded by the right talent. I’ll commit to the team sport analogy and compare those skillsets to the most important positions in baseball.

By the end of the article, you’ll have a clear path on how to leverage skills to build your influence in the industry.

The state of the industry

HVAC is a commoditized product.

Here’s an excerpt from my book Feel-Good Homes that explains what that means and why it’s a problem:

A big reason for commoditization is that homeowners can’t tell the difference between good and bad HVAC contractors even after the work is done.

It can take months or years for low-quality equipment or poor installation methods to surface. This was especially true for older low-efficiency gas furnaces with inefficient but reliable fan motors that were easy to install. They were clunky, oversized, inefficient, and led to comfort and safety problems—but they slogged along for years without a care in the world.

They were more forgiving to poor installation quality, and that’s why we undervalue skilled labour today.

But heat pumps are different. They can transform average houses into comfortable, healthy, sustainable homes, but only when they’re sized and installed properly. Poorly installed heat pumps will fail early and often, increasing maintenance and repair costs.

There’s a growing risk of bad homeowner experiences, but it’s a tremendous opportunity for high-quality heat pump installers to emerge.

While traditional contractors continue to focus on fast and cheap emergency replacements, heat pump installers can spend their time delivering transformational results for homeowners. 

Now, let’s talk about practical steps.

Delivering results means understanding the needs, goals, and budget of the house and the homeowner, and finding the right solution within those limitations.

Since everyone has access to unlimited information, contractors need to start giving away expertise, knowledge, and advice for free—and charge for proper implementation.

The most successful contractors will provide free homeowner education that’s accessible and engaging.

They’ll have longer conversations with homeowners to deliver value and support upfront, and then install higher-quality All-in-one HVAC systems with skilled labour that doesn’t cut corners. 

“All-in-one HVAC”

The upfront costs can be justified by homeowners because the core offering is to solve comfort, health, and safety problems rather than delivering fast and cheap emergency swaps like other contractors.

When it’s done properly, All-in-one HVAC is a single piece of equipment (a right-sized heat pump) that creates a comfortable, healthy, sustainable home while reducing maintenance.

Integrated add-ons can add functionality: fresh air ducts, larger return air drops, thick MERV 13 media filters, and central air quality monitors allow the heat pump to replace standalone equipment like ERVs and UV purifiers that are traditionally upsold by contractors.

Instead of the negative spiral of the “race to the bottom”, heat pump contractors will enjoy a positive feedback loop as an oversubscribed, top-performing contractor.

That’s how an HVAC contractor can become a leader in the industry—but what can you do, personally?

Build authority by stacking skills

What are your strengths?

It’s a classic interview question, and I’m just starting to see the appeal.

I was asked recently about character traits that make successful leaders, and I talked about a part in James Clear’s Atomic Habits. It’s a story about Scott Adams, the cartoonist who created Dilbert, and the character traits that led to his success.

Scott Adams, creator of Dilbert (image source)

Unintuitively, Adams doesn’t consider himself a great artist, comedian, or businessman. But it’s clear that he’s better at drawing than the average person, and he’s certainly funnier than most artists. 

The way he talks about his strengths is important—because the most successful cartoonists aren’t great artists or stand-up comedians. They’re above-average at drawing and comedy, while holding a point-of-view or topic that resonates with readers.

He worked in a corporate job for 15 years (at a bank and then a phone company) before becoming a full-time cartoonist. That gave him a topic that few other cartoonists personally experienced: office culture.

It was his combination of skills, not any deep expertise, that let him stand out.

When you combine (stack) skills, you’re choosing to play a game that lends to your strengths. Instead of competing with comedians at the local comedy club, he competes with a small group of cartoonists around the world.

Skill stacking is an actionable framework to build authority.

How did it work for me?

Well, my focus is on climate and decarbonization. My early career was spent in the solar industry and then energy efficiency and conservation, which largely focused on Excel tools and data analytics.

I was competing with professionals that were much more passionate (and frankly, more skilled) at data analytics. I’m thinking specifically about Nabeel Jadavji and AJ Canavor during my time at the IESO.

I wasn’t flourishing, for the same reason that Scott Adams wouldn’t flourish if he focused exclusively on his art. I was competing against deeply-skilled specialists.

In hindsight I realize that I wasn’t inherently skilled at data analytics—I just had an ability to hyperfocus on technical subjects for long enough to understand them. And that allowed me to be good enough to get by.

When I became interested in electrification as a climate solution, I used that skill to learn about building science, HVAC, and entrepreneurship.

I used Nate Adams (for building science and HVAC) and Daniel Priestley (for business and entrepreneurship) as virtual mentors.

And I dug further into building science by reading articles from industry experts like Joe Lstiburek, Allison A. Bailles III, and Martin Holladay.

I’m not a building science expert, and I can’t fix or install HVAC equipment, but I certainly know more about those topics than an average person.

My breakthrough was connecting that technical knowledge to my above-average writing skills. An area where most HVAC professionals struggle.

I followed the framework: pick a field and stack skills to stand out.

I know more about heat pumps and building science than most people in the climate industry, and I’m a better writer than most people in HVAC.

Like Scott Adams being funnier than artists, and better at drawing than comedians—my skills aren’t exceptional, but I’m among the best in my industry for that combination of skills.

There’s an opportunity for other climate folks to do the same.

You don’t need to be the best at anything. 

You just need to find the right combination of above-average skills that you already have, and stack them to stand out and build authority.

Once you’re viewed as an expert in your niche, it’s easier to create partnerships or pull talent onto your team.

But you need to build that team the right way, if you want long-term success.

Combine skillsets to create a winning team

The common origin story for any HVAC company is a skilled tradesperson getting hired as an apprentice for another contractor. 

They work their way up and become a top-performing technician. Eventually, they leave to start their own company, usually for reasons like The boss is making money off my work, or I don’t like the choices the owner makes, or It’s not that hard to run a business, I could do better.

They’re reasonable thoughts.

Whether a new business succeeds or not depends largely on the team—specifically, the individual strengths and skillsets of the players on that team.

Business is a team sport. Yes, there are successful solopreneurs and AI tools are making it easier to succeed with smaller teams—but every business still has foundational roles.

Daniel Priestley talks about the four skillsets that show up in every successful business. He compares them to the suits in a deck of cards, which align with the main roles on executive teams: CEO, CFO, COO, and CMO.

I’ll follow a similar framework but stick with the team sport analogy and compare baseball to business.

In baseball, you can’t win a World Series with one great player, even if it’s the best player in the sport (sorry, Angels fans). You need a full team.

Anything can happen in baseball, and you can luck your way into a championship—but it’s not a blueprint for sustained success.

So, how do we build a team that wins?

By filling the most important positions with top-performing players.

The consensus “most important positions” in baseball are pitcher, catcher, and shortstop. I’ve included the manager to round out the top four—not because a manager has more impact than an elite center fielder, but because a good manager is behind the scenes, using analytics and metrics to position the team for its best chance to win.

Why are those positions important, and what does it mean for business?

 Pitcher (CEO): They’re standing in the mound with all eyes on them. If your pitcher is at the top of their game, it makes it easy for the rest of the team to perform.

This analogy is right on the nose because a CEO’s primary job is to pitch their vision of the future. Top CEOs bring in leads, opportunities, and partnerships that make it easier for a business to stay profitable. 

A pitcher in action (image source)

Catcher (CMO): It’s less flashy than a pitcher or shortstop, but the catcher controls the game. They have the best viewpoint to keep track of opposing players and they work closely with the pitcher to see what’s working, what’s not, and what to do next.

A great catcher also frames the pitch, increasing its odds of success. A good CMO sees opportunities in the market where the business can gain an advantage.

A catcher (image source)

Shortstop (COO): A great shortstop is vital to a championship team. They organize the infield defence, they see the most action when a ball gets hit, and they’re expected to be an elite batter that carries the offense, too. 

They’re the ones doing the work on both sides of the ball. That’s evident in little league (kids baseball), where the best player is always the shortstop because it’s the position with the most opportunity to deliver results over the season.

An MLB team plays 1,458 innings per season, and eight shortstops played 90%+ of those innings for their team in 2024. By comparison, the top catcher was around 80% and the top pitcher was only 208 innings (less than 15%).

All that to say, shortstops (COOs) put in the time to deliver results.

A shortstop (image source)

Manager (CFO): A great manager works behind the scenes. They’re thinking about what needs to happen over the course of the season for sustained success. Managers are the only ones focused on the team as a whole, and they use metrics and data to make informed decisions to give the team its best chance of winning.

A baseball manager (image source)

But a great manager on a bad team can’t do much to help the team win—and it’s the same in business, where a great CFO is useless in a company with no vision, products, or revenue. 

So, the pitcher is in the spotlight with the most leverage to make a game easy or difficult based on the quality of each pitch. The catcher frames the pitch and adjusts the plan based on what’s working and what’s not. The shortstop spends the most time on the field while consistently delivering results on both offense and defence, and the manager is behind the scenes making sure everything aligns for the team to be successful.

The positions (skillsets) are equally important.

Bringing it back to the HVAC industry: contractors are shortstops (COOs).

They’re incredibly skilled at doing the work and delivering results. HVAC companies are built entirely around that strength with no focus on the other skillsets. There’s no product ecosystem, or plan to create a company that solves high-value problems for homeowners. There’s no one pitching, framing, or analytics in the business.

That’s an opportunity for professionals from outside the industry (like climate folks!) to join or partner with contractors to build businesses that are more profitable, deliver better results for homeowners, and contribute to the energy transition.

It’s an opportunity to add high-performing players to key positions for a better team.

It might sound similar to private equities (PE) firms buying mid-sized HVAC companies—but I’d liken a PE takeover as trading an all-star shortstop to get a prestigious manager. The resulting company cares deeply about analytics (manager) and they’re skilled at marketing (catcher), but they fail to deliver results on the field because they’re lacking the other skillsets.

PE-backed contractors are the 2024 Oakland Athletics of the HVAC industry.

Be a leader in the energy transition.

The path is clear: 

Find a combination of above-average skills that could put you in the top 1% of your field—and stack those skills to become an authority and build a personal brand. 

That gives homeowners and companies a reason to know, like, and trust you.

Then take a moment and realize that you can’t do it alone. Find a co-founder or partner with an existing company that has a complementary skillset.

Next, hire the remaining skillsets to build a team that delivers a product ecosystem (including free homeowner education) and installs high-quality projects that solve difficult problems that matter to homeowners.

That’s the way to use your existing skills to build authority, scale an HVAC business, and be a leader in the energy transition.

The goal of Heat Pumped has always been to bring you insights and perspectives from the smartest people in the space.

I’m excited to share today that we’re expanding beyond the newsletter, to bring you candid conversations with those people in podcast form.

You can find the first episode wherever you get your podcasts - Spotify, Amazon, Pocket Casts, Youtube and many others (I’m still working on Apple Podcasts, it should show up there in a few days).

Check it out!

In the preview episode, you’ll get a chance to learn more about me, how I got into the space, and some of the biggest challenges I see to heat pump adoption. You might also be able to figure out who our first guest is (hint: he’s pretty cool).

If you prefer to listen

If you prefer to watch

ICYMI

If you want to hear more about heat pumps and can’t wait for the next episode, you should also check out my recent conversation with Nathan Gambling on BetaTalk!

Nathan’s family has been installing heat pumps in the UK for over 4 decades. We talk about the differences in heat pump adoption between the US and UK, and lessons that we can learn from each other.

More heat pump voices!

Beyond the podcast, I’m excited to continue bringing diverse voices to this newsletter. We have some guest issues from really smart people lined up, and I’m excited to share those with you soon.

If you missed them, I’d encourage you to check out some of our previous guest articles, like this one from Michael Rochmes about heat pump regulations in Southern California, or this one I wrote with Dasha Cherepennikova about heat pump incentives.

If you think you have an interesting angle about heat pumps you’d like to share with the community - please reach out by hitting reply to this email. If it’s a mutual fit, we’d love to feature your perspective in a guest article or as a podcast guest.

This issue of Heat Pumped was written by Michael Rochmes, a clean air and green building advocate in Southern California.

Back in December, Shreyas wrote about the California Bay Area Air Quality Management District’s zero-emission space and water heating policies. Those rules were approved in 2023 and take effect in the coming years (and there’s still work to be done to make sure they are implemented in full).

Bay Area rules will improve air quality and health across the region

After this Bay Area policy development, both the state and the South Coast Air Quality Management District (SCAQMD) began developing similar policies to phase out NOx and CO2 emitting gas furnaces and water heaters by requiring zero-emission alternatives at the time of replacement.

BAAQMD’s Southern Neighbor

It is this SCAQMD policy that I have been tracking as the volunteer Chair of the Green Buildings Committee for Los Angeles Climate Reality Project. The South Coast AQMD is the largest and oldest air district, with more than 17 million people across four counties (Los Angeles, Orange County, Riverside, and San Bernardino). 

The air district is massive

Notoriously bad air

SCAQMD has had low-emission standards for gas furnaces and water heaters since 1978, with more stringent standards implemented in the subsequent decades. Historically, this region has had terrible air quality, and while the smog here is not nearly as bad as it has been in prior decades, our air quality remains among the worst in the nation and continues to fall short of federal standards.

Although LA air quality has improved, it still lags the rest of the country

Health impacts from gas appliance pollution in the region cost households and businesses $2 billion per year. This non-attainment spurred the SCAQMD to commit in 2022 to adopting zero-emission standards across a variety of sectors.

Big ambitions under attack

When SCAQMD first proposed to follow in the footsteps of the Bay Area AQMD, the zero-emission appliance rules were projected to be the largest package of emissions reductions in the agency’s history.

Unfortunately, the agency began to bow to pressure to chip away at the proposal and delay a vote.

The rulemaking process has dragged on for 18 months, with a final vote currently scheduled for May 2. At every opportunity, SCAQMD has caved to business and fossil fuel interests, until they recently revamped their plan altogether, leaving it significantly less impactful and creating a schism with Bay Area’s policy.

Fossil fuel interests have pushed back against the rules

Significantly neutered rules

The air district’s new proposal sets manufacturer-level zero-emission sales targets that ramp up from just 30% in 2027 to 90% in 2036, never reaching 100%. Nominal per-unit mitigation fees will contribute to a heat pump incentive program targeted primarily to supporting installations of heat pumps in low-income communities. If manufacturers miss their zero-emission sales targets, they will face higher mitigation fees for every NOx emitting unit over the threshold, which will further support this incentive program, while causing the rules to fall short of already-reduced emissions reductions forecasts.

SCAQMD also changed the maximum size of furnaces covered by the rules, reducing maximum emissions reductions by 30%. They say they will address this class of larger furnaces in a separate, new rule.

Due to the 15 to 25 year lifespan of gas appliances, the rules were going to take until the 2050s to be fully implemented. And any delay locks in pollution emissions for decades.

Each new gas furnace installed will stay in place for decades, locking in emissions

Advocates for zero-emission appliance standards want these rules strengthened in two key ways, with no further delays to the final vote in May.

Weaker rules mean less impact

But first, let’s observe the decimation applied to the rule proposal over the past 18 months. At full implementation, NOx emissions reductions are 6.1 tons per day, compared to 10 in the original proposal, and full implementation is delayed from 2054 to 2060. In 2037, emissions reductions from the rule are just 2.1 tons per day, compared to 4.2 in the original proposal.

The main reason for adopting a manufacturer sales-target approach is to address affordability concerns. The prior proposal addressed this by including delayed implementation and alternative compliance options for more complicated or expensive installations (e.g. when construction is needed to address space constraints).

The devil is in the details

I actually like this approach, because it does give building owners the option to avoid the more costly and expensive installations, while significantly simplifying the rule. Due to the number of exceptions introduced into the prior approach, enforcement of the rules was going to be challenging.

The problem is that SCAQMD set very low targets in the first six years of the policy. This gentle glide path lets manufacturers off the hook and allows many installations of NOx-emitting gas appliances where a cost-effective clean alternative is already available.

Sales targets under the revised rules

Room for improvement

A more ambitious flight path to zero-emission appliance sales would increase the health benefits of the rule. It would also send a much stronger market signal. Higher production volume of heat pumps will bring down costs.

Manufacturers have the ability to ramp up sales of zero-emission appliances like heat pumps in the region by improving pricing, increasing availability of models that address installation challenges, increasing marketing, training installers, and lobbying for more heat pump-friendly permitting rules. The current “glide path” is too close to current sales trajectories to push manufacturers to take these steps – one reason why most manufacturers appear to be embracing this proposal.

An example of heat pump equipment specifically designed for the California market

The second area for improvement of the rule is the fees applied to NOx-emitting gas appliances, which are much too low. The district will add fees of $50 for all NOx-emitting gas water heaters covered by the rules and $100 for NOx-emitting gas furnaces. This fee is meant to partially mitigate pollution from using these appliances, but to truly mitigate this pollution, the fees should be closer to $850 for water heaters and $3,000 for furnaces. They are also too low to influence consumer behavior or meaningfully support a heat pump incentive program.

Manufacturers will also be assessed a $500 fee per unit for all appliances sold above their threshold. This will be applied after the end of the year. This fee is also too low to mitigate pollution and may not be high enough to motivate manufacturers to increase zero-emission sales. They may instead accept it as a cost of doing business and try to pass it along to consumers. Since the purpose of this fee is to enforce the sales targets, the penalty should be designed to increase quickly for manufacturers that repeatedly or flagrantly miss their targets.

It is also unfortunate that SCAQMD decided to limit the size of furnaces covered by the rule. While it is possible this will result in a stronger policy for these units, it needlessly creates additional work for the agency and all of us participating in the rulemaking process and delays regulation of these devices.

We can make these rules better

There is still time for the rules to be strengthened, and advocates for a stronger policy may have momentum. Before SCAQMD released its new plan, there was a vocal opposition, fueled by fearmongering and misinformation.

But in the most recent meeting to review the rule, supporters of a strong zero-emission policy outnumbered opponents 43 to 6, and recent comments have been more than 90% in favor of setting zero-emission sales targets.

It is apparent that SCAQMD succeeded in addressing opposition with its latest plan, but in the process sacrificed too much ambition and impact. If these rules aren’t strengthened, it will result in calls to weaken the Bay Area AQMD rules and make it harder for California to set meaningful statewide standards.

Public comments can influence policy and help strengthen these rules

If you want to get involved in the effort to finalize strong clean appliance standards in the South Coast region, please visit SoCalCleanAir.com.

Editor’s note: I want to thank Michael for his leadership and organizing around this issue. His organization, along with many others, are helping defend clean air for Californians.

Below is the letter I sent to the SCAQMD board:

Even if you don’t live in Southern California, the outcome of these rules could have ripple effects in policy across the country. I would encourage you to send in a letter of support, encouraging SCAQMD to strengthen their rules. It only takes 30 seconds, and every letter counts. -Shreyas

A few weeks ago, my feed exploded in celebration – not only have heat pumps maintained their sales lead over gas furnaces, but the gap has continued to grow year-on-year.

Each year, I see a similar article and celebration. If I didn’t know any better, I’d think we’ve already won the war on fossil fuels.

My social media feeds were celebrating the latest set of HVAC shipment data

It doesn’t pass the sniff test

While they’re exciting, these statistics don’t correspond with my anecdotal experience, nor with the submissions that we’ve collected to date in our HVAC quote database.

When I tried getting heat pump quotes for my parent’s home in the midwest, every contractor I spoke with recommended a gas furnace and 1-way AC, refusing to even quote a heat pump. These issues are common in the marketplace.

Plenty of 1-way air conditioners and furnaces continue to be installed in the US. It seems like there’s more to this data than what’s at the surface, and others are thinking the same thing.

How meaningful is this stat? A lot of natural gas heaters sold are boilers, and we don't know how many of those are being sold. AHRI told me they collect that info, but don't publish it. Also, at least some heat pumps sold are almost exclusively used for A/C.
www.canarymedia.com/articles/hea...

— Emily Pontecorvo (@emilypont.bsky.social)
6:32 PM • Jan 24, 2025

Let’s dig deeper.

What’s the hubbub about?

The Air-Conditioning, Heating, and Refrigeration Institute (AHRI) is an industry body that creates standards and tracks data across the whole HVAC industry. Each month, they release shipment data tracking sales of major HVAC equipment – heat pumps, furnaces, 1-way air conditioners, water heaters, among other things.

Over the past few years, the data has shown a cool trend. Heat pumps have continued to increase their market share, overtaking furnaces for the first time earlier this decade and maintaining their lead.

But this graph doesn’t tell the full story.

Comparing apples to oranges

To interpret this data, it’s important to understand how furnaces, heat pumps, and air conditioners are installed in homes and how they can work together to heat and cool a home.

To keep things simple, I’m going to focus on an example with a centrally ducted system.

In the olden days, homes were heated with gas furnaces. The concept is simple. Burn some sort of fuel to generate heat, and use a big fan to blow that heat all around your house through ducts.

A ducted central furnace heating a home

In the 1960s, homes started getting central air conditioning. By putting a big heat exchanger outside of our homes (the box that we think of as an “AC unit”) and another heat exchanger above the furnace (called a “coil”), we were able to turn entire houses into giant refrigerators.

A ducted central furnace and AC, heating and cooling a home

But the same technology that can move heat out of a building to cool it can also be used to move into a building to warm it. Voila – heat pumps! By adding a single valve to the outdoor 1-way AC unit, we were able to turn them into 2-way ACs that can both heat and cool.

A “dual fuel” or “hybrid” ducted system combining a central furnace and heat pump to heat and cool a home

Early heat pumps were pretty clunky and often still relied heavily on the furnace for heating the building.

As heat pump technology improved, we’ve gotten to a place where the heat pump alone can both heat and cool a home. No furnace required!

An all-electric ducted system, where a heat pump both heats and cools the home

This is what most people think of when they’re changing out their gas furnace with a heat pump.

Heat Pumps and Furnaces can coexist!

While all-electric setups are great, there are still many reasons to choose a dual fuel system, combining a furnace with a heat pump. A well-configured hybrid system can still reduce a large portion of household emissions, and hedge against high electricity costs!

Annual heat pump update: 2024 is gone and the heat pump has now operated for more than a year. There was a total of 1884 hours of heat pump heating and just 35.3 hours of gas heating (1.8% of total) for significant reduction in gas heating use and emissions. 🧪🔌💡☀️💨🔋

— Joseph D. Ortiz (@earthsciinfo.bsky.social)
1:27 PM • Jan 1, 2025

Because heat pumps and furnaces can be used together, it isn’t the best comparison to pit them against each other. If every single home in America had a new gas furnace installed paired with a well-configured heat pump, we could still make a massive positive impact on the climate.

The truly missed opportunities are when 1-way ACs are installed, as they can heat ONLY using fossil fuels.

Could I suggest doing like I'm doing and posting an article every month on AHRI sales?

About 1.5X as many ACs sell as heat pumps, that's the thing to watch.

bsky.app/profile/ener...

— Nate the House Whisperer (@energysmartwv.bsky.social)
4:34 PM • Dec 18, 2024

What data should we be looking at?

The AHRI shipment data is a great source of information, but it doesn’t tell the whole story on its own. After all, it just tracks shipments, which are defined as “when a unit transfers ownership”.

Since most HVAC equipment in the US is sold through multiple layers of distributors, this reflects when the first distributor purchases equipment from a manufacturer. While this is a decent analog to the market’s demand signal, it can be affected by dynamics like distributors stockpiling equipment prior to refrigerant rules changes.

Additionally, the AHRI data only reflects “U.S. manufactured shipments of central air conditioning, air-source heat pumps systems, gas and oil furnaces, and gas and electric tank water heaters”! While we have seen a large increase in domestic manufacturing of HVAC equipment in recent years, much of it is still manufactured overseas.

To really understand how far into the energy transition we are, we need to understand what equipment people use to actually heat and cool their homes. Luckily, this information exists.

The Residential Energy Consumption Survey

Since 1978, the US Energy Information Administration has carried out the Residential Energy Consumption Survey (RECS) about every 5 years.

The goal of this survey is to “collect energy characteristics on the housing unit, usage patterns, and household demographics”. Among other things, it provides excellent data on the primary equipment that people use to heat and cool their homes.

The latest survey was completed in 2020, and the 2024 survey is currently underway.

Looking at the EIA data, we can see that heat pumps indeed are gaining market share as the primary heating source in US homes! Great news!

But take a look at the market share of furnaces. It’s stayed flat over the past decade, hovering around 60%. This tells a much different story than the shipment data. We actually added 4.3 million new furnaces as primary heat sources between 2015 and 2020, and only 3.8 million heat pumps.

The story this data seems to tell is that heat pumps are making an impact in new construction, and in homes with uncommon heating types (baseboards, oil boilers), but furnaces remain the primary way to heat homes in the US.

But heat pump shipments only overtook furnaces in 2022!

The most recent EIA data is from 2020, before heat pump sales overtook gas furnaces. Perhaps the 2024 EIA dataset will tell a different story when it’s released?

Luckily, we can make some informed guesses by combining the EIA and AHRI data!

Since 2009, roughly 1/3 of the the new heat pumps delivered per AHRI data translated into additional heat pumps used as the primary heating source for homes as seen in EIA data.

Where are the rest of those heat pumps going? Some might be replacing existing heat pumps like-for-like. Others may be used in commercial applications (we’re focusing on residential data here). Many may be installed in tandem with gas furnaces, but configured only to cool with the furnace providing heating.

How many heat pumps did we actually add in our homes?

Extrapolating that pattern forward, we could expect that roughly 5.9 million additional heat pumps serve as the primary heat source for homes since 2020.

Assuming that other types of heating systems continued to fall at the same rate that they did in the previous period, then the prediction for where we are today looks very similar to where we were 5 years ago. Surprise: furnaces still sit at around a 60% market share!

The data doesn’t show any strong evidence that the growth in heat pumps is meaningfully larger than this extrapolation. In fact, the overall growth rate in heat pump shipments over the past 5 years has slowed when compared to the prior period.

Heat pump shipments actually decreased between 2005-2009, corresponding with the relatively small growth in new heat pumps as the primary heat source Heat pump shipments started growing between 2009-2015

Shipments of heat pumps continued to grow in 2015-2020, at the greatest rate seen While heat pump shipments continued to grow from 2020-2024, the growth rate slowed compared to the prior period

What does this all mean?

This data all seems to indicate that retrofits from furnaces to heat pumps aren’t happening at any real scale. Most of the new heat pump systems in homes are likely new construction, or retrofits of uncommon heating systems.

This aligns with my own anecdotal impressions, as well as conversations with leaders at home electrification companies devoted to installing heat pumps. Even the largest dedicated heat pump installers have only retrofitted on the order of 1,000s of systems - we need to be retrofitting at 100x this scale to make meaningful progress.

We shouldn’t delude ourselves

It’s exciting to see headlines like Heat pumps overtake gas furnaces and rising sales numbers, convincing us we’re moving in the right direction. But this optimism can be dangerous if it makes us overstate our progress. It creates a misleading narrative that the policies and incentives in place are working flawlessly, and that we can ease up on efforts to accelerate adoption.

The truth is that we’re just getting started.

Massive amounts of money have been poured into incentives, and many of those pools of money are already running dry. I fear that we’ll start seeing stories claiming that incentives have done their job and the market transformation is complete. But that won’t be true. The market is far from mature, and without continued effort, we risk stalling out before heat pumps become the default choice for homeowners.

I welcome any criticism or feedback in my interpretation of the data. The spreadsheet I used to generate these graphs lives here; you’re welcome to play with the data and draw your own conclusions.