Heat pumps could save the average Minnesota household $230 a year. Here's how

Rising energy bills have Minnesota households looking for ways to save. 

A new report from energy non-profit RMI finds wider use of heat pumps could help lower electricity rates statewide, potentially benefiting even homeowners who don't install one.

"We found that nearly a 20% electricity rate reduction could be realized. And I think that's the main opportunity in this state. We also found that nearly 30% reduction in carbon pollution would also be realized," said Ryan Shea, manager in the Carbon-Free Buildings team at RMI and one of the report's authors.

Researchers says Minnesota has enough unused winter electric grid capacity to support over 2 million additional heat pumps.

A heat pump keeps things cool when it's hot outside by removing unwanted heat from your home and "pumping" it outdoors.

In winter, it works in reverse, pulling heat from outdoor air into your home, even at cold temperatures. The report estimates widespread adoption would save households an average of about $230 a year.

That's because utilities build enough capacity to meet peak electricity demand, typically on our hottest summer days in July. That leaves more in the winter months. Using a bigger chunk of that capacity could spread grid costs across more electricity use, putting downward pressure on rates for everyone.

But the savings for individual homeowners depend on their current heating system, utility rates, and the cost of installation.

"Primarily for folks who have delivered fuels like propane can see a really big cost savings by switching to a really efficient electric heat pump," said Natalie Cook, coalition manager for Clean Heat Minnesota.

Utility rebates and special electric rates may help offset upfront costs, which can be as much as 20% higher than a traditional system.

Homeowners can explore available incentives and financing through the Minnesota Air Source Heat Collaborative or Electrify Everything MN. There are a variety of federal, state, and city incentives that can often be stacked.

Those incentives, homeowner education, and heat pumps in new construction could all help expand adoption.

"I hope decision makers across Minnesota see this report and really see heat pumps as one piece of the puzzle for making sure that we have a grid that is working, that is affordable, and that is increasingly clean and reducing carbon emissions," said Cook.