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

Upgrading the millions of US homes relying on electric resistance heating to air-source heat pumps (ASHPs) and heat pump water heaters (HPWHs) offers significant benefits for affordability, grid reliability, and climate goals. For single-family homes, these upgrades can save households an average of $1,530 annually and reduce total carbon pollution by approximately 40%. At scale, such transitions could reduce US residential summer peak demand by 11 GW and winter peak demand by 51 GW. The report advocates for updating building energy codes to discourage electric resistance in new construction and retrofits, setting specific replacement targets, and implementing midstream incentive programs and on-bill financing to overcome up-front cost barriers.

• Over 25 million US homes (approximately one in five) primarily use electric resistance for space heating, with a disproportionate concentration in multifamily housing, which accounts for nearly half of these homes despite making up only one-quarter of all US homes. Additionally, more than 57 million US homes—nearly half of all households—rely on electric resistance water heaters.
• Upgrading single-family electric resistance households to heat pumps for both space and water heating can result in an average annual energy bill saving of $1,530, totaling nearly $23,000 over a 15-year equipment lifetime. If all such homes in the US upgraded, annual savings would exceed $20 billion, with Texas residents alone saving nearly $2 billion.
• Transitioning single-family homes from electric resistance to heat pumps could reduce typical US residential peak electric demand by 11 GW in summer and 51 GW in winter. In Texas specifically, winter peak demand could be reduced by 7.5 GW, which is equivalent to avoiding the need for approximately twenty-five 300-MW gas-fired power plants.
• Heat pumps for space and water heating can reduce total carbon pollution from single-family electric resistance households by about 40%, or 2.8 metric tons of carbon dioxide equivalent (MTCO2e) in the first year. A full upgrade of all such single-family homes in the US would reduce 38 million MTCO2e per year, with Texas seeing the largest state-wide benefit at over 3.2 million MTCO2e annually.
• Building energy codes are identified as a primary tool for accelerating adoption. The report suggests prohibiting electric resistance as the primary heating source in the prescriptive pathway of new construction and retrofits, and encouraging the replacement of failing central AC units with heat pumps, as approximately 1 million central AC units are installed annually in electric resistance-heated homes.
• To overcome the higher up-front costs of heat pumps, the report recommends midstream program delivery (through distributors or installers), updated Technical Reference Manuals (TRMs) for accurate utility incentives, and Tariffed on-bill financing (TOBF) to remove initial costs and resolve renter-owner split incentives.

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} }