Heat pumps are efficient because they use renewable heat sources in our surroundings. Even at temperatures we consider to be cold, air, ground and water contain useful heat that is continuously replenished by the sun. Heat pumps use a refrigerant liquid to draw that heat into an electric pump, which delivers it through ducts in your home in the winter months. In the summer, the process is reversed, and the indoor air is also dehumidified as it is cooled.

Air-to-air and geothermal (ground-source) are the basic types of heat pumps. Air-to-air heat pumps utilize heat in the air, while the geothermal variety draws heat from the ground or water (such as a nearby pond). Geothermal heat pumps cost more to install because of the required ground-loop piping, but the additional investment will be recovered many times over.
Often, the savings generated by a heat pump will pay for itself within six years. It is estimated that air-to-air heat pumps cost 40-65% less to operate than conventional heating and cooling systems. According to energy-efficiency expert Doug Rye, geothermal heat pumps are five times more efficient than gas furnaces, and since heat pumps do not burn fuel, they are safer and cleaner to run than a gas-powered furnace.