Heat pump technology has gained recognition across many parts of the United States due to its higher energy efficiency and lower greenhouse gas emissions compared to other building heating and cooling solutions. The U.S. Climate Alliance, a bipartisan coalition of 25 governors, recently committed to increasing heat pump installations in member states to 20 million units by 2030. According to data from the clean energy think tank RMI, the current number of heat pump installations in the U.S. is approximately 4.8 million.

Progress varies by state. In Massachusetts, concerns about upfront costs and the complexity of equipment selection have slowed adoption, leaving it behind pioneers like Maine. Maine has already exceeded its goal of installing 100,000 heat pumps by 2025, two years ahead of schedule, and Governor Janet Mills has recently set a new target of 175,000 units by 2027.

However, facility managers deploying heat pumps in existing buildings are finding that, despite federal incentives, retrofit costs, the scale of work involved, and disruption to normal operations remain prominent challenges.

Physical Space Challenges

The feasibility of retrofitting existing buildings with heat pumps varies from building to building. "This is certainly a mature technology, but simply replacing an existing HVAC system with a heat pump system may not be the best strategy," said Ryan Colker, Vice President of Innovation at the International Code Council.

Kailash Viswanathan, Energy Director at Arch Energy, a division of Consigli Construction, points to two major challenges. The first is building occupancy. Whether large-scale renovations can be carried out within a building "highly depends on the occupants," Viswanathan said. "It would be easier if it were a centralized plan, but you still need to access the building, open walls, and replace piping to achieve it. In most cases, such changes can only be made when tenants move out or during turnover."

The second is maintaining space heating and hot water temperatures. Viswanathan stated that heat pumps operate most efficiently at lower water temperatures. Retrofitting existing buildings requires reducing water temperatures from 180 degrees Fahrenheit to between 120 and 140 degrees. To achieve equivalent heating output with lower water temperatures, water flow rates must be increased. "This means larger pipe diameters, which requires accessing occupied spaces to remove and replace piping—highly disruptive," he said. "As a result, retrofit plans often span 10 to 12 years; they cannot be completed overnight. For highly challenging projects like historic buildings, the retrofit cycle takes about 20 years."

Viswanathan is part of the team working on the heat pump retrofit of the high-rise building at 345 Hudson St. in New York City. This is the first project initiated by the New York State Energy Research and Development Authority aimed at rapidly advancing the electrification of a century-old building in the city. "We help engineers and clients find solutions and determine the best path to reduce the building's carbon emissions," he said.

He added: "Facility managers are always involved in the decision-making process. They consider the challenges of heat pump technology in terms of operation, maintenance, and control. This technology comes with a lot of automation, and they need to learn to master it."

Economic Cost Challenges

Another major barrier is the high installation cost. Rosen Consulting Group estimates that in 2022, the total cost of retrofitting a typical gas-powered office building in New York State to a ground-source heat pump system ranged from $17 to $24 per square foot, while air-source heat pumps ranged from $12 to $21 per square foot. These estimates include heat pump water heaters, necessary infrastructure, and electrical upgrades. The report notes that heat pump retrofits in office buildings are expected to yield sustained "significant electricity savings," but this projection is based on additional building envelope improvements, which would incur additional costs. The Inflation Reduction Act provides federal tax credits and state-managed rebates that can be used to offset the purchase and installation costs of heat pumps.

Doug Davenport, Founder and Executive Director of Prospect Silicon Valley, a nonprofit clean technology accelerator, stated that facility managers need a clear understanding of the financial costs and benefits of heat pumps, including long-term maintenance factors, to justify deployment decisions. He also noted that managers need more "education and training on aggregating and interpreting performance data from actual installations to prove the technology works as reported. This is especially important as new designed products flood the market."

One way to reduce retrofit costs is through hybrid systems. In September, the National Renewable Energy Laboratory reported that ground-source heat pumps with hybrid heat exchange can help owners and operators lower capital expenditures and improve the economic viability of retrofit projects. The laboratory has added analysis capabilities for such systems to its REopt tool, helping building managers evaluate combinations of renewable energy, conventional energy, energy storage, and ground-source heat pump technologies to meet cost, clean energy, and resilience goals.

Potential Grid Strain

Although heat pumps offer direct decarbonization benefits, widespread adoption could place greater strain on local power grids—existing grids may lack the generating capacity to handle the anticipated growth in building electrification. "You can't just install heat pumps without upgrading the grid. Everyone is waiting to see if the grid itself can become greener," said Owen Glubiak, Vice President of Revenue at Cortex Sustainability Intelligence.

Cortex recently launched automated features on its building decarbonization platform to help customers reduce energy consumption and carbon emissions. Glubiak stated that using heat pumps in demand-response-driven scenarios can alleviate grid strain. "The most severe problems occur on the hottest and coldest days. Therefore, demand response programs will become very important to ensure peak demand is met."

A Piece of the Decarbonization Puzzle

As Glubiak noted, heat pumps are not a universal solution for electrification. Thomas A. Kwan, Sustainability Research Director at Schneider Electric, stated that the benefits of building electrification are maximized when facility managers deploy heat pumps as part of an integrated approach alongside solar photovoltaic panels and battery energy storage systems.

When evaluating whether a heat pump retrofit project is economically justified, Colker of the International Code Council recommends conducting a thorough energy audit to fully understand "where capital investments will yield the greatest returns and where they will produce the best climate change impact."

Mark Grinis, Digital Transformation Leader for EY Americas Real Estate practice, stated that facility managers tasked with upgrading decades-old building systems often lean toward more pragmatic decisions. "If something breaks, fix it properly, but should you consider a complex retrofit?" he said, reflecting the typical mindset of managers. He also noted that the feasibility of heat pump retrofits depends on location—whether it can attract a broader tenant base and achieve higher economic returns. He added that older buildings might have opportunities to install cool roofs and rooftop photovoltaics, but "I get the sense that heat pumps appear more often in new construction projects."

According to the International Energy Agency, heat pumps currently meet only about 10% of global building heating demand, far below the deployment levels needed to achieve net-zero emissions by 2050. The agency calls for increased policy support and technological innovation to improve efficiency, reduce upfront purchase and installation costs, and remove market barriers to complex retrofits.