California is aggressively pursuing its goal of achieving carbon neutrality by 2045, which includes reducing greenhouse gas emissions by 85%. A central part of this plan is to replace gas-powered heating systems with heat pump technologies; in fact, the state has set an ambitious goal of installing 6 million heat pumps for space and water heating by 2030. That same year, a new mandate — unanimously approved by the California Air Resources Board — will ban the sale of new natural gas-powered space and water heaters, effectively requiring the installation of heat pumps in both new construction and existing homes.
In light of this transition, the California Energy Commission’s (CEC) Energy Research and Development Division recently published a study, conducted by the Western Cooling Efficiency Center at the University of California, Davis, aimed at identifying near- and medium-term solutions that could accelerate the deployment of affordable and efficient heat pumps. The near-term focus centered on heat pumps that use refrigerants with a GWP below 750, while the medium-term strategy explored advancing air-to-water heat pump technology as a viable alternative should refrigerant regulations become more stringent. Both solutions were developed in partnership with Rheem.
Near-Term Solution
The near-term solution involved replacing existing HVAC equipment with a split-system, air-source, R-454B heat pump with a variable-speed blower and compressor in 10 homes across California’s climate zones 2 and 12. Among the selected homes, eight used residential split air conditioning units for cooling, one home lacked cooling, and one already used a heat pump. All but one of the homes used a natural gas furnace for heating. The retrofitted heat pumps had cooling capacities similar to the existing air conditioning units.
Researchers compared energy use before and after the retrofits and found that electricity savings for cooling ranged from -41% to 68% across the sites. While the heat pumps generally performed more efficiently than the systems they replaced, the wide variation in energy outcomes was largely attributed to occupant behavior and the condition of the original equipment. It was noted that factors such as changes in operating hours and thermostat settings, which were reported through participant surveys, also played a significant role in the results.
The estimated annual space heating and cooling costs before and after the heat pump retrofits were also compared. Based on the analyzed utility rate structure, researchers found that operating the heat pump generally resulted in higher energy costs than the original natural gas systems; in fact, five of the eight sites with valid data saw cost increases ranging from 3% to 27%.
According to the report, “Both gas and electricity rates and rate plans used in this analysis have experienced significant price increases … in the past five-year period, the average annual increase has been much higher at 9.6% for gas and 13.8% for electricity. Based on an equivalent unit of energy delivered to a home, electricity was 7.3 times more expensive than gas with the 2024 rate, thus exceeding the cost savings potential of electric heat pumps over natural gas heaters, even though they are two to five times more efficient.”
The researchers concluded that if electricity prices continue to increase at a higher rate than gas prices, “this will significantly impact California’s electrification goals and reduce the pace of market transformation to electric heat pumps, especially in existing residential homes.”
In terms of decarbonization, the study compared the indirect GHG emissions from the new heat pump systems to those from the original gas systems. Results showed that the heat pump retrofits reduced GHG emissions by 44% to 98% across the sites.
Medium-Term Solution
The medium-term solution was aimed at advancing the performance of air-to-water heat pumps by developing new heat exchanger technology for the hydronic heat exchanger used in air distribution systems. To that end, innovative microchannel polymer heat exchangers (MPHX) were designed and tested at the University of California, Davis, using multiple manufacturing methods to determine the most cost-effective approach for commercialization.
Laboratory testing measured the efficiency improvement of the air-to-water heat pump when coupled with the MPHX compared to a typical commercial fin-tube coil constructed from copper and aluminum. These tests demonstrated a 5% improvement in coil effectiveness, leading to a corresponding increase in system efficiency. Modeling of injection-molded versions of the heat exchanger suggested a potential cost reduction of 8% to 20% compared to similar commercial coils.
The study noted that, “Overall, the findings indicate that the MPHX not only competes effectively with the commercial coil but also holds significant potential for enhancements in future designs currently in progress, which could position it as a more effective heat transfer solution. Furthermore, a process-based cost analysis showed the potential to reduce the cost of the product relative to commercial coils by 8% to 20%.”
Conclusions
The study concluded that continued research and innovation are needed to develop more efficient, cost-effective heat pumps. For the near-term program, researchers said that participants were happy with the comfort provided by their new heat pump, but opinions were mixed about whether operating costs were actually lower than those of their previous gas furnace. Higher upfront installation costs, largely due to required electrical upgrades, also posed a significant barrier compared to a standard gas furnace replacement.
Researchers added that further study was needed to validate the use of heat pumps without supplementary electric resistance heaters. They noted that a 120V indoor unit could significantly reduce installation barriers by avoiding electrical upgrades and lowering the system’s connected load on the grid. However, they added that manufacturers would need to develop new strategies to manage defrost cycles without auxiliary heat in order to maintain occupant comfort under this approach.