What is a Heat Pump? A Guide to Energy-Efficient Heating and Cooling

What Is a Heat Pump? A Canadian Homeowner’s Guide (2026)

Quick answer: A heat pump is an electric system that heats and cools your home by moving heat instead of burning fuel. It can deliver about 3 units of heat for each unit of electricity it uses. Newer cold-climate air-source models keep working down to about -15 °C to -25 °C, with a backup heat source below that.

Key takeaways

• Air-source heat pumps, ductless or ducted, suit most Canadian homes. Ground-source systems hold their efficiency better in deep cold but cost more to install.
• Packages on our heat pump cost and packages page start at $13,997 for a one-zone ductless system and $14,997 for central ducted, installed, before rebates and tax.
• In Ontario, the Home Renovation Savings Program pays up to $7,500 for a cold-climate air-source heat pump in homes heated by electricity, oil, propane or wood, and up to $2,000 in gas-heated homes. Pre-approval is required.
• Below a heat pump’s minimum operating temperature, a backup heat source takes over.
• Natural Resources Canada puts the service life of an air-source heat pump at 15 to 20 years.

A heat pump is one device that both heats and cools your home — and because it moves heat instead of burning fuel to create it, it can deliver up to three times more energy than it consumes. For Canadian homeowners facing rising electricity and heating costs, a modern cold-climate heat pump is one of the most efficient ways to stay comfortable year-round, especially when paired with solar. Here’s how they work, what they cost, how they hold up in a Canadian winter, and the rebates that apply in 2026.

What is a heat pump?

A heat pump transfers heat from one place to another to provide both heating and cooling for your home. Unlike traditional systems that generate heat by burning fuel or using electric resistance, a heat pump moves existing heat using a reversible version of the same vapor-compression process an air conditioner uses. In summer it pulls heat out of your home; in winter it pulls heat from the outside air (yes, even cold air contains heat) and moves it inside. That makes it a versatile, low-cost, year-round comfort solution.

Types of heat pumps

1. Air-source heat pump (ductless mini-split or central/ducted): the most common and affordable type, it transfers heat between your home and the outside air. Ductless mini-split systems mount on the wall and are ideal for homes without ductwork or for zoning specific rooms (single- or multi-zone); central/ducted systems tie into existing ductwork to heat and cool the whole house.
2. Ground-source (geothermal) heat pump: transfers heat between your home and the ground. Extremely efficient and consistent, but more expensive because of the trenching or drilling required.
3. Water-source heat pump: uses a nearby body of water to transfer heat. Highly efficient where available, but uncommon for typical residential homes.

For most Canadian homes, an air-source heat pump — ductless or ducted — is the right balance of cost, size, and performance.

How does a heat pump work?

A heat pump moves heat rather than generating it, operating like a refrigerator or air conditioner that can run in reverse:

• Absorption: even in cold weather there is heat in the outside air; the heat pump absorbs it.
• Compression: that heat is compressed, which raises its temperature to a level useful for heating your home.
• Distribution: the heat is released indoors and distributed through your ducts or a wall unit.

In cooling mode the cycle reverses — the system pulls heat from inside your home and releases it outdoors, exactly like central air conditioning.

Do heat pumps work in Canadian winters?

Yes. This is the biggest misconception about heat pumps. Older units struggled in deep cold, but modern cold-climate air-source heat pumps are specifically engineered for Canadian winters — most newer models have a minimum operating temperature of between -15°C and -25°C, according to Natural Resources Canada’s heat pump guide. Below that, a supplemental heat source has to take over. In the coldest snaps, systems are typically set up with a backup electric or existing furnace stage (a “dual-fuel” or “hybrid” setup) so you always have full heat. For the vast majority of the heating season, the heat pump does the work far more efficiently than a furnace or baseboards. If you’re choosing equipment, look for a model on Canada’s cold-climate heat pump list.

Heat pump vs. furnace: which is better?

A gas or oil furnace burns fuel to make heat; a heat pump moves heat using electricity. Here’s how they compare:

For most Canadian homes, a cold-climate heat pump (optionally with a backup stage) cuts on-site emissions and can lower operating cost, depending on your local electricity and fuel prices. If you generate your own electricity with solar, you can heat and cool your home on the power from your roof.

How much does a heat pump cost in Canada?

Cost depends on the type of system, your home’s size, whether you have existing ductwork, and how many zones you need. On the packages listed on our heat pump page (before rebates and tax):

• Ductless mini-split (single zone): from $13,997 installed
• Ductless multi-zone: add $3,497 for each extra indoor unit, up to 4 zones
• Central / ducted cold-climate system: from $14,997, with ductwork and the air handler extra

Ground-source (geothermal) systems cost more because of the drilling or trenching, but NRCan notes most keep a COP of around 3 even in the coldest months. Your exact price depends on your home, and the rebates below can reduce it.

Heat pump rebates & incentives (2026)

Federal and provincial programs can offset a meaningful share of a heat-pump project. If you heat with oil, the federal Oil to Heat Pump Affordability (OHPA) program paid up to $10,000 to switch, and NRCan says July 31, 2026 was the last day to apply in the provinces it serves directly. In Ontario, OHPA is co-delivered with the IESO through Save on Energy (NRCan’s page for participating provinces), where income-qualified, oil-heated homes can get a heat pump installed at no cost through the Energy Affordability Program; check with Save on Energy for its current status. Ontario’s Home Renovation Savings Program pays $1,250 per ton, up to $7,500, for a cold-climate air-source heat pump in homes heated by electricity, oil, propane or wood, and $500 per ton, up to $2,000, in homes heated by Enbridge natural gas. Ground-source systems can get up to $12,000 ($3,000 in gas-heated homes). Pre-approval is mandatory, and a participating HVAC contractor submits the application; see our Ontario heat pump rebate guide. For federal programs, see our federal heat pump rebate guide. Other provincial and utility programs vary by where you live and change often. See exactly which rebates apply to your address →