Lower Bills, Better Grids: Heat Pump Benefits for Electric Resistance-Heated Homes

This report by RMI analyzes the benefits of replacing electric resistance heating and water heating systems with heat pumps in US homes. It quantifies the potential for significant household energy bill savings, reductions in peak electric demand on the grid, and decreases in carbon pollution, while providing policy and program design recommendations to accelerate adoption.

• Over 60 million US homes use electric resistance for heating or water heating. Specifically, more than 25 million homes (approximately one in five) rely on it for primary space heating, with a disproportionate concentration in multifamily housing, which accounts for nearly half of these homes despite being only one-quarter of the total housing stock. Additionally, more than 57 million homes—nearly half of all US households—use electric resistance water heaters.
• Upgrading single-family electric resistance households to heat pumps for both space and water heating could result in an average annual saving of $1,530 per household, totaling nearly $23,000 over a 15-year equipment lifetime. If all such homes in the US upgraded, annual energy bill savings would exceed $20 billion, with Texas residents alone seeing nearly $2 billion in annual savings.
• Heat pumps significantly reduce peak electric demand compared to electric resistance systems. In summer, high-efficiency heat pumps are about 20% more efficient than older ACs. In winter, cold-climate heat pumps are 150%–200% more efficient than electric resistance; even at 5° F, they use about half the electricity for the same heat. Upgrading single-family homes could reduce typical US residential summer peak demand by 11 GW and winter peak demand by 51 GW.
• In Texas, upgrading single-family electric resistance homes could reduce residential winter peak demand by 7.5 GW, which is equivalent to avoiding the need for approximately twenty-five 300-MW gas-fired power plants. This is highlighted as a critical reliability benefit, noting that during Winter Storm Uri in 2021, high demand and 10 GW of outages led to 4.5 million Texans losing power.
• Transitioning single-family electric resistance households to heat pumps could reduce their total carbon pollution by approximately 40%, or 2.8 metric tons of carbon dioxide equivalent (MTCO2e) in the first year. If all such homes in the US upgraded, the total reduction would be 38 million MTCO2e per year, with Texas seeing the largest state-wide benefit at over 3.2 million MTCO2e per year.
• The report recommends several policy levers to accelerate adoption, including updating building energy codes to discourage electric resistance in new construction and retrofits, and encouraging the replacement of failing central AC units with heat pumps. Examples include Georgia's 2009 amendment prohibiting electric resistance as the primary system in the prescriptive pathway for new single-family homes, and Washington State's 2023 energy code encouraging high-efficiency heat pumps.
• Effective program design to lower the up-front cost barrier includes using midstream delivery (through distributors/installers), providing low-interest financing like Tariffed on-bill financing (TOBF), and targeted marketing. For example, the Tennessee Valley Authority used a midstream approach to drive over 1,800 HPWH installations in a few months, and Ameren Missouri implemented a PAYS program to cover up-front costs where bill savings exceed costs.

APA

RMI (2026). Lower Bills, Better Grids: Heat Pump Benefits for Electric Resistance-Heated Homes. https://rmi.org/resources/lower-bills-better-grids-heat-pump-benefits-for-electric-resistance-heated-homes/

Chicago

RMI. Lower Bills, Better Grids: Heat Pump Benefits for Electric Resistance-Heated Homes. 2026. https://rmi.org/resources/lower-bills-better-grids-heat-pump-benefits-for-electric-resistance-heated-homes/.

Wikipedia

{{cite report |author=RMI |title=Lower Bills, Better Grids: Heat Pump Benefits for Electric Resistance-Heated Homes |date=1 April 2026 |url=https://rmi.org/resources/lower-bills-better-grids-heat-pump-benefits-for-electric-resistance-heated-homes/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2026lower, author = {{RMI}}, title = {{Lower Bills, Better Grids: Heat Pump Benefits for Electric Resistance-Heated Homes}}, institution = {RMI}, year = {2026}, month = apr, url = {https://rmi.org/resources/lower-bills-better-grids-heat-pump-benefits-for-electric-resistance-heated-homes/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }