The benefits of installing a heat pump for your building

With this in mind, a growing number of households and businesses are turning to heat pumps to heat their buildings and reduce their climate impact. Heat pumps are both energy-efficient and the lowest-cost way to heat most buildings.  

Here’s what you need to know to get started with heat pumps in your building.

What is a heat pump?

A heat pump is an energy-efficient and environmentally friendly device often used for heating and cooling commercial and residential buildings. Typical installations include an outside unit and an inside coil which is either located in a wall-mounted unit or installed in the building’s ductwork. 

How does a heat pump work?

A heat pump works by transferring heat from one place to another (pumping heat) rather than generating it by burning fuels in a combustion process as seen in typical heating systems.

In heating mode, it extracts heat from the outside air (even when it’s cold) and transfers it indoors to warm the building.

In cooling mode, it reverses the process, removing heat from inside the building and releasing it outside, similar to how an air conditioner works.

A heat pump transfers heat from one location to another using the refrigeration cycle. With air-source heat pumps, the system uses a refrigerant, which cycles through a compressor, condenser, expansion valve and evaporator. The compressor circulates the refrigerant through the cycle. In the evaporator, the refrigerant changes phases from a liquid to a gas. The phase change requires energy, which is obtained by transferring heat from the surrounding air to the refrigerant, thus cooling the air. In the condenser, the refrigerant condenses, changing the phase from gas to liquid, and releasing heat to the surrounding air.

Utilizing the refrigeration cycle typically makes heat pumps a more energy-efficient solution for heating compared to the combustion process in traditional furnaces and boilers.

Air-source and ground-source heat pumps

There are different types of heat pumps, with the most common being air-source and ground-source (known as geothermal).

• Air-source heat pumps transfer heat between your home and the outside air.
• Ground-source heat pumps transfer heat between your home and the ground.

What are the benefits of installing a heat pump for a commercial building?

The heat pump’s electricity input is used to transfer thermal energy between locations, which allows the heat pump to operate with efficiencies over 100%. In other words, more thermal energy is produced than the amount of electric energy used to operate it. The major benefit of using a heat pump is the high efficiency it can provide for heating compared to typical systems like furnaces, boilers and electric baseboards. This can translate into significant energy use reductions and cost savings.

Heat pumps, in general, come with a higher upfront cost compared to traditional systems. According to Leslie Culbard, who designs heat pump systems for commercial clients, timelines for recouping costs can vary depending on factors such as local climate and utility costs. “Generally, if the project has a five year payback or less, we’d say it’s worth looking at it.”

A 2023 report by the Canadian Climate Institute found that the lifetime cost of a standard heat pump with electric backup was the lowest-cost option for most households over the lifetime of the system.

What is the difference between a heat pump and a furnace?

A heat pump system can offer cost savings and energy efficiency to commercial building owners when compared with furnaces that work with oil, gas or electricity.

Culbard says the local climate must be considered when calculating those savings. “Heat pumps are more efficient than their combustion counterparts for heating when operating in temperate conditions,” says the HVAC designer who works for Clean Energy Consulting in Prince George, B.C.

“If you’re trying to heat a building by transferring heat indoors from the outdoors and it’s very cold outside you have a larger temperature differential and it gets harder to do that. Transferring heat from minus-30°C air into a refrigerant is pretty inefficient.

In her energy studies for commercial buildings, Culbard takes into account how well-insulated the building is, utility rates and the amount of retrofitting that would be needed to install the heat pump—factors that can drive up the price.

“When we do an energy study, we look at the building and say, ‘If you install this heat pump, this is what you would be saving on your energy bill and the number of years it would take to payback the project’”

Is a heat pump more efficient than a furnace for heating a commercial building?

For heating a commercial building, a heat pump usually offers more efficiency than a furnace. Because it’s not generating heat through combustion, but drawing on heat that’s already in the outside air, the heat pump offers a more energy- and cost-efficient alternative to the furnace.

Depending on the climate, some systems will need a backup furnace or electric baseboards to supplement heat during extremely cold temperatures.

Is a heat pump more efficient than gas?

Culbard says heat pumps are generally more efficient than burning fuels like gas and oil. “They’re more efficient because, in combustion equipment, you’re generating heat by burning fuels. In this process, a significant portion of energy is lost as waste heat. That’s where you lose efficiency.”

Do you need to keep your furnace if you get a heat pump?

If your business is in a cold climate, it’s recommended that you use a furnace or electric baseboards as a backup to your heat pump. Temperate climate, where the temperature does not often dip below 0° C , is best suited for a heat pump alone.

Can you use heat pumps in the cold Canadian winters?

A heat pump has been proven to save energy and money in commercial establishments no matter the climate. While buildings will find less efficiency on the coldest days, much will be gained on the milder ones.

According to the Canadian Climate Institute, which tested heat pumps in several Canadian cities, heat pumps do save money in colder climates.

One of those cities was Edmonton, which experiences colder-than-average winter temperatures. Buildings in Edmonton saw savings with a system that combined a heat pump and backup gas furnace. It saved more with the combined system than it would have saved with just a gas furnace. 

What is the difference between a heat pump and air conditioning?

“Heat pumps and air conditioners use the same principles” says Culbard, adding that they offer a similar efficiency in cooling mode. “The pump would include a reversing valve while an air conditioner would not, allowing the heat pump to operate the refrigeration cycle in reverse to provide heat. But, essentially, they both operate using the refrigerant cycle and include the same major components.”

However, she says that if you want a unit to provide the versatility of both heating and cooling, she recommends the heat pump over the air conditioner.

“Many regions offer rebates, tax credits, and incentives for energy-efficient installations like heat pumps, making them a financially attractive option compared to installing an air conditioner.” 

“But in terms of both the air conditioner and the heat pump’s output, they’re going to use a similar amount of energy.”

Heat pumps are typically more expensive than air conditioning units.

How to decide on the size of your heat pump

The size of the heat pump you’ll need depends on your building size, construction, heating and cooling loads, and the objective of your installation.

“For discussion purposes, you can estimate that a typical 185 meter (2,000-sq-ft) facility will require a 5-tonne unit,” says Culbard. The tonne refers to the cooling capacity of the unit. “One tonne is equivalent to 12,000 BTUs per hour.”

How much a does a heat pump cost?

There is a wide range of prices for heat pumps.

The cost of the unit depends on the size of the unit, with installation considerations among the factors, says Culbard, who suggests you request a quote from a local HVAC contractor.

It may be best to meet with an HVAC designer, who can assess your needs and lay out the costs of the project.

What are the cost savings of installing a heat pump?

Culbard says if you’re a small commercial client, you can reasonably estimate that a heat pump could save you 10%-40% on your energy bills during periods of moderate outside air temperatures, assuming the current system uses a typical combustion heating system and has air conditioning. She adds that hiring an energy specialist to review the existing and proposed systems would help confirm those estimated savings.

Installing a heat pump will also lessen a business’ carbon footprint, says Culbard. “Heat pumps can significantly cut down on greenhouse gas emissions compared to heating using fossil fuels, assuming the electricity is produced from low-carbon sources.” 

Are there tax credits or grants to offset the costs of a heat pump?

Green Building Canada is an online network of professionals connected to the green building industry in Canada. They offer a comprehensive list of federal and provincial incentives to increase energy efficiency and cut down on greenhouse gas emissions.

You can also download BDC’s reference document of over 60 climate-related federal and provincial funding programs. 

Are certified heat pump installers hard to find? Are there supply chain challenges?

Culbard says finding a refrigeration technician to install a heat pump is generally not a challenge unless you’re in a remote location. 

“If a refrigeration technician is not readily available in the area, installation and servicing can become a challenge. I have encountered this at remote sites such as mines and in remote towns.”

As for supply chain issues, they are not a concern for heat pumps, she says, but adds that if you’re purchasing a larger unit, there could be a longer lead time for delivery. 

Will there be a phase-out for oil furnaces?

In its Canada Green Buildings Strategy, outlining Ottawa’s priorities for decarbonizing buildings, the Canadian government has laid out a plan for phasing out oil-fired furnaces. Its plan is to try and convince homeowners and businesses to switch to heat pumps.

Next step

For more information, Natural Resources Canada offers a comprehensive guide on heat pumps. You can also explore our loans to help finance the purchase and installation of a heat pump.