A heat pump system provides energy-efficient heating using electricity, so when the temperature is moderately cold outdoors, they can be less costly to operate compared to systems that use more expensive heating fuel sources such as natural gas, oil, or propane. As temperatures drop below freezing, the heat pump requires more energy to maintain comfort inside, reducing efficiency and increasing your electric bill. This problem is solved by pairing a heat pump with a furnace, thus creating a Hybrid Heat system. However, due to the higher initial cost for the heat pump unit, a hybrid system may be more expensive than a more commonly paired system of an air conditioner and furnace.
The energy efficiency rating for both air conditioners and heat pumps when in cooling mode is expressed as SEER ratings. The efficiency of a heat pump when in heat mode is expressed as HSPF. The higher the rating for SEER or HSPF, the more efficient the unit. However, the energy efficiency and cost to operate really comes down to location. In areas with more moderate temperatures, a heat pump is a better option for efficient heating than in places that have very cold winter temperatures.