Benefits of Switching to Heat Pumps in Multifamily Buildings

Multifamily buildings are a significant source of energy consumption and greenhouse gas emissions in the United States. According to the U.S. Energy Information Administration (EIA), multifamily buildings account for 17% of the total residential energy use and 14% of the residential CO2 emissions in 20191. Most of this energy is used for space heating and water heating, which are typically provided by natural gas or oil boilers.

However, there is a better alternative: heat pumps. Heat pumps are devices that transfer heat from a low-temperature source to a high-temperature sink, using a small amount of electricity or other energy input. They can provide heating and cooling for buildings, as well as hot water, with high efficiency and low emissions.

Types of Heat Pumps for Multifamily Buildings

There are different types of heat pumps that can be used for multifamily buildings, depending on the source and the sink of heat. Some of the common types are:

  • Air-source heat pumps (ASHPs): These heat pumps use outdoor air as the source and sink of heat. They provide space heating and cooling by circulating refrigerant between an outdoor unit and an indoor unit (or multiple indoor units) connected by pipes. They can also provide domestic hot water by heating water in a tank or a coil using the refrigerant.
  • Water-source heat pumps (WSHPs): These heat pumps use water from a central system (such as a cooling tower, a boiler, or a lake) as the source and sink of heat. They provide space heating and cooling by circulating refrigerant between a water loop (a network of pipes connected to the central system) and an indoor unit (or multiple indoor units) connected by pipes. They can also provide domestic hot water by heating water in a tank or a coil using the refrigerant.
  • Ground-source heat pumps (GSHPs): These heat pumps use the ground or groundwater as the source and sink of heat. They provide space heating and cooling by circulating refrigerant between a ground loop (a network of pipes buried underground) and an indoor unit (or multiple indoor units) connected by pipes. They can also provide domestic hot water by heating water in a tank or a coil using the refrigerant.

Advantages of Heat Pumps

  • Dual-purpose: Heat pumps can provide both heating and cooling, which makes them a versatile solution for multifamily properties. This provides savings for property owners since they no longer need to purchase separate heating and cooling systems.
  • Heat pumps can save money and energy. Compared to conventional boilers, heat pumps can reduce energy consumption by 30% to 60%, depending on the climate and the system design. This translates into lower utility bills and maintenance costs for building owners and tenants. High-efficiency heat pumps can also qualify for rebates, tax credits, and other incentives from federal, state, and local programs that support clean energy. The Inflation Reduction Act has expanded incentives for heat pump installations that make qualifications for the incentives more attainable than they have ever been, with qualifying properties earning up to a $5 per square foot tax rebate.2
  • Heat pumps reduce greenhouse gas emissions and support decarbonization. By using renewable electricity from solar, wind, hydro, or other sources, heat pumps can operate with near-zero emissions of CO2 and other greenhouse gases. Heat pumps can also help integrate more renewable energy into the grid by providing flexibility and storage options. For example, heat pumps can shift their operation to times when electricity is abundant and cheap, or store excess electricity as thermal energy in water tanks or building structures.
  • Heat pumps improve indoor air quality and comfort. By eliminating the combustion of fossil fuels, heat pumps can reduce the exposure to harmful pollutants such as carbon monoxide, nitrogen oxides, particulate matter, and volatile organic compounds. Heat pumps can also provide more consistent and precise temperature control, as well as dehumidification and air filtration, which can enhance the comfort and health of the occupants.

Improvements in Efficiency

Image Source: LG

One of the main trends in heat pump technology is the improvement of efficiency, which means that heat pumps can deliver more heat or cooling output for the same amount of energy input. This reduces operating costs and emissions for building owners and occupants. Today, heat pumps are designed to be energy efficient while offering better comfort for building tenants. Some of the factors that contribute to higher efficiency are:

  • Dual or Variable Speed Motors: Modern heat pumps are more energy efficient because they use motors with variable speeds. These motors can adjust the speed of the compressor and the fan according to the heating or cooling demand, rather than running at full speed all the time. This reduces energy consumption and noise levels.
  • Cold Climate Operability: Traditionally, heat pumps have been more suitable for warm or mild climates, where they can easily extract heat from the outside air. However, new technology has enabled heat pumps to work efficiently in all but the coldest of climates. One of the key innovations is the use of a refrigerant that can absorb more heat at lower temperatures, allowing the heat pump to operate at higher efficiency and capacity. The Department of Energy has also announced a breakthrough in residential cold climate heat pump technology, which aims to achieve 25% higher efficiency and 20% lower cost than current models.3
  • Advanced Refrigerants: Refrigerants are substances that circulate inside the heat pump and absorb or release heat during the cycle. The choice of refrigerant affects the efficiency, environmental impact and safety of the heat pump. In recent years, there has been a shift towards using refrigerants with lower global warming potential (GWP) and ozone depletion potential (ODP), such as hydrofluorocarbons (HFCs), hydrofluoro-olefins (HFOs) and natural refrigerants (such as ammonia, carbon dioxide and propane).
  • Artificial Intelligence (AI): AI is another major trend in heat pump advancement. AI can optimize the performance of heat pumps by learning from data, adjusting settings, detecting faults and providing maintenance alerts. AI can also enable smart integration of heat pumps with other devices, such as thermostats, solar panels, batteries and electric vehicles, to create a more flexible and resilient energy system.
  • Smart Buildings: Combined with AI, Smart Buildings can allow integration across multiple building systems. Heat pumps can be optimized with thermal energy storage systems to deliver hot water and space heating with one central system, increasing efficiency and reducing the complexity of building infrastructure.

Role in Decarbonization

Graph above shows projected carbon emissions of a building with gas heating equipment vs heat pump technology through the year 2050, after grid decarbonization. Image Source: Partner Energy

  • Heat pumps can play a key role in decarbonizing multifamily buildings by replacing fossil fuel-based heating systems with clean electricity-based systems.  By switching to heat pumps, multifamily buildings can reduce their energy use and emissions significantly.
  • According to a study by the International Energy Agency (IEA), heat pumps could constitute approximately 90% of new heating unit sales by 2050, compared with 35% today. If implemented worldwide, using heat pumps instead of traditional boilers and furnaces could cut global CO2 emissions by at least 500 million metric tons in 2030 – equal to the annual CO2 emissions of all the cars in Europe today.4

Challenges of Heat Pumps

Heat pump technology is not new. It has been around for decades and has proven its reliability and performance in many countries. However, there are still barriers to its widespread adoption in multifamily buildings, such as high upfront costs, lack of awareness and skills, and market distortions.

To overcome these challenges, we need concerted efforts from all stakeholders in order to raise awareness of the benefits and potential of heat pumps for multifamily buildings, provide additional incentives and support for their deployment, develop standards and regulations that ensure quality and safety, foster innovation and research that improve performance and reduce costs, and create markets and business models that enable scale-up and integration.


Overall, heat pumps are an excellent option for property owners and investors looking to reduce their energy costs and carbon footprint. There is upfront cost to installation that is higher than traditional heating and cooling systems, but the savings on energy use over time makes up for the initial investment and helps increase the net-operating income.

If you are interested in learning more about heat pumps or installing one in your multifamily building, contact our energy efficiency and sustainability experts at Partner Energy. We are happy to help you find the best solution for your needs.






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