RMI Report: Replacing Electric Resistance Heating with Heat Pumps Could Cut U.S. Household Costs by $20 Billion Annually

One in five homes in the United States is heated primarily with electric resistance heating, according to a report from the nonprofit energy group RMI, as detailed by Grist. Replacing these devices with heat pumps would save households an average of $1,530 a year, amounting to $20 billion annually across the country.

These RMI calculations included only single-family homes, not multifamily units like apartment buildings.

Demand on the electrical grid would fall if homes switch to heat pumps for climate control and water heating, the report states. Total carbon emissions from such homes would plummet by about 40 percent. Heat pumps have a coefficient of performance, or COP, of around three, meaning they produce three units of heat for every unit of electricity used, while electric resistance heating has a COP of one and the most efficient gas furnaces operate well below a COP of three.

Gradient has been working with building owners and public housing authorities to deploy its heat pump units, which slip over window sills like saddles and plug into a standard wall outlet. The company installed 277 units in a Providence, Rhode Island public housing development that previously used electric resistance heating, completing the work in less than two weeks.

'It is very straightforward and a huge energy win for them,' said Vince Romanin, Gradient's founder and chief technology officer.

'You’re not just saving money. S. 5 million homes each year, with 200,000 of them equipped with electric resistance heating, according to RMI data cited by Grist. The country also installs a million AC units annually in homes with electric resistance heating.

Maine reached its goal of installing 100,000 heat pumps two years ahead of schedule. 'There’s a lot of benefits to the grid, which translate to lower rates as well,' said Ryan Shea, a manager in RMI’s carbon-free buildings program. Energy experts emphasized that heat pumps transfer heat rather than generate it, making them ultraefficient compared to resistance heating or gas furnaces.

Grist reported that heat pumps work by extracting warmth from outdoor air and pumping it indoors, similar to how a refrigerator operates in reverse. In summer, the process reverses to provide cooling. For homes without ducting, units can embed in walls; for those with ducting, they replace furnaces and connect to outdoor components.

The report notes the need for policymakers and utilities to incentivize these appliances through rebates. Additionally, experts like Gernot Wagner, a climate economist at Columbia Business School, stressed combining heat pump adoption with home efficiency improvements such as insulation and double-pane windows. 'Step one, don’t burn fossil fuels in your home, basically,' Wagner said.

'Step two: insulate, insulate, insulate. Grist also highlighted the importance of grid upgrades, including more renewables and batteries, to support increased electrification from heat pumps, electric vehicles and induction stoves.