Are Solar Panels Worth the Investment Compared to Heat Pumps?

Solar panels or solar collectors are not a great investment if you live in a cloudy state, have a house with a small or shady roof, and pay very low cost for electricity, or are planning to move earlier than 15 years after purchase.

Heat pumps efficiently convert ambient heat into usable warmth for buildings. Heat pumps are also reversible, meaning they can provide both heating and cooling for your home unlike solar panels, which directly harvest sunlight. This means that heat pumps can be up to three times or 300% more efficient than gas furnaces, according to a study by the US Department of Energy.

Heat pumps extract warmth from air, water, or ground but don’t generate it; they move the heat between the inside and outside. This process allows for operation even during nighttime or cloudy weather, unlike solar panels that rely on good sunlight during the day.

Heat pump types include air-source, ground-source, and water-source. Air-source pumps draw heat from outdoor air, ground-source pumps utilize the earth’s stable temperature, and water-source pumps extract warmth from nearby water bodies. Solar energy systems primarily consist of photovoltaic panels and thermal collectors, lacking the versatility of heat pumps in source utilization.

For most U.S. households, heat pumps likely provide a better return on investment in the near term due to their high efficiency, lower upfront cost than solar, and ability to reduce heating and cooling bills substantially. Heat pump water heaters, in particular, seem to be very cost-effective.

Hidden Costs of Solar Panels

A typical well-insulated 2,500 sq. ft. home might require a 10 kW solar panel system, which averages around $31,460 before incentives. The federal solar tax credit allows you to deduct 30% of the installation costs, bringing the average net cost closer to $22,000.

  1. The average cost to install an air heat pump ranges from $5,000 to $9,000, with most homeowners spending around $5,800 to $8,500 total.
  2. The average cost for a residential solar panel system ranges from $11,000 to $30,000, excluding incentives, with most homeowners paying an average of $22,000.
  3. With the federal tax credit, this comes down to about $8,400 to $14,000.
  4. An undersized solar panel system that doesn’t meet your energy needs will still leave you with utility bills. Over-reliance on add-ons like smart thermostats vs. proper system sizing is another hidden cost risk.
  5. Shabby installation by a low-quality provider may lead to system issues that require expensive repairs or reinstallation if the company doesn’t guarantee their work.
  6. Maintenance costs are low but may include occasional cleaning, inspections to check for loose panels/wires, and inverter replacement every 5-10 years, which can cost over $500.

Heat Pump Considerations

In some climates, a well-insulated 2,500 sq. ft. home might require a heat pump system around 10 kW in capacity. Costs for heat pump systems vary significantly, but could range from $6,000 to $12,000 before incentives. You can deduct 30% of solar installation costs, including a solar-powered heat pump system, from your federal taxes. This applies to the total cost of the system, not just the heat pump itself.

Many states and localities offer rebates, tax credits, or other incentives for installing heat pumps. The Database of State Incentives for Renewables & Efficiency (DSIRE) is a great resource to find these in your area.

Heat pumps are most efficient in milder climates and the better option than solar. Well-insulated, newer homes are usually better suited for heat pumps.

Solar energy can still be a good investment for the right property, with ideal roof orientation and minimal shading to maximize electricity generation. The key is finding a reputable installer who will size the system properly and offer strong product and workmanship guarantees.

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George Nicola

George is a seasoned interior designer and property marketing strategist with over 13 years of experience. He specializes in transforming properties into visually stunning spaces, helping clients recognize the potential and beauty in each property. With an impressive international client base of exciting projects throughout Europe and America.

Fundamentals of Heat Pumps and solar panels

How Heat Pumps Work vs Solar panels?

The efficiency of a heat pump is measured by its coefficient of performance (COP), which is the ratio of heat produced to energy consumed. The higher the COP, the more efficient the heat pump. The COP of a heat pump can range from 2 to 4 and even 5, which means that for every unit of energy consumed, the heat pump can produce two to four units of heat.

This means heat pumps use 1 kW (COP 3) of electricity to provide 3 kW of heat by transferring it from the environment, while solar panels generate 1 kW of electricity from sunlight to power heating systems.

Solar panels do not have a COP rating as they generate electricity directly from sunlight; the efficiency of solar panels is measured in terms of the percentage of sunlight converted into electrical energy, and most solar panels have an efficiency between 15% and 20%.

To compare the two using COP, we need to consider the efficiency of the heating system powered by solar collectors. If solar panels power a heat pump with a COP of 3, the overall efficiency would be the solar panel efficiency multiplied by the heat pump COP.
For example, if solar panels have an efficiency of 18% and power a heat pump with a COP of 3, the overall efficiency would be 0.18 × 3 = 0.54 or 54%, meaning that the solar panel and heat pump combination would provide 0.54 kW of heat for every 1 kW of solar energy input.

Types of Heat Pumps

There are three main types of heat pumps: air source, ground source, and water source. Air source heat pumps are the most common and use the outside air as a heat source. Ground source heat pumps use the ground as a heat source, and water source heat pumps use water as a heat source.

Air source heat pumps are the most affordable and easiest to install, but they are less efficient than ground and water source heat pumps. Ground and water source heat pumps require more space and are more expensive to install, but they are more efficient and can save more money in the long run.

A technician in a purple shirt and gray pants smiling at the camera while servicing an outdoor air conditioning unit that utilizes solar energy.
A technician in a purple shirt and gray pants smiling at the camera while servicing an outdoor air conditioning unit that utilizes solar energy.

When comparing the three main types of heat pumps (air source, ground source, and water source) to solar panels in terms of efficiency, ground source heat pumps (also known as geothermal heat pumps) are generally the most efficient, while air source heat pumps are the least efficient.

When comparing the three main types of heat pumps (air source, ground source, and water source) to solar panels in terms of efficiency, ground source heat pumps (also known as geothermal heat pumps) are generally the most efficient, while air source heat pumps are the least efficient.

Ground source heat pumps:

  • Most efficient among the three types of heat pumps
  • COP ranges from 3 to 5, meaning they can provide 3 to 5 kW of heat for every 1 kW of electricity consumed
  • Maintain high efficiency even in cold climates due to stable ground temperatures

Water source heat pumps:

  • More efficient than air source heat pumps but less efficient than ground source heat pumps
  • COP ranges from 2.5 to 4, depending on water temperature and system design
  • Require a large body of water or a well to function effectively

Air source heat pumps:

  • Least efficient among the three types of heat pumps
  • COP ranges from 2 to 4, depending on the outside air temperature
  • Efficiency decreases as the outside temperature drops, especially below freezing

Solar Power Basics

Modern stone house with large windows, heat pumps, illuminated interior at dusk, surrounded by manicured lawn and trees.
Modern stone house with large windows, heat pumps, illuminated interior at dusk, surrounded by manicured lawn and trees.

Solar energy is a renewable source of energy that comes from the sun. It is a clean and sustainable source of energy that can be harnessed in a variety of ways. Solar energy is collected and converted into electricity using photovoltaic (PV) cells, or used to heat water or air using solar thermal collectors. Every PV cell is made up of layers of semiconductor material, most commonly silicon. These layers create an electric field when exposed to sunlight. Inside a PV cell, you’ll find a top contact layer (for conducting electricity), an anti-reflective coating (to maximize sunlight absorption), the top and bottom semiconductor layers, and a back contact layer.

Types of Solar Energy Systems

There are two main types of solar energy systems: grid-tied and off-grid. Grid-tied systems are connected to the utility grid and can feed excess electricity back into the grid. Off-grid systems are not connected to the grid and rely on batteries for energy storage.

Solar energy is converted into electricity using PV cells, which are made of semiconductor materials such as silicon. When sunlight hits the PV cells, it creates an electric current. This current is then sent to an inverter, which converts the DC current into AC current that can be used in homes and businesses.

Energy storage is an important aspect of solar energy systems. Batteries are commonly used to store excess energy generated by solar panels. This stored energy can be used during times when there is no sunlight, such as at night or on cloudy days.

Can a house be Eco-friendly with a heat pump?

FactorHeat PumpsSolar Panels
Power Output3-5 tons (36,000-60,000 BTU/hr) for heating & coolingTypical panel: 250-400 W; system size varies with needs
Efficiency300-600% (COP 3-6)15-22% converting sunlight to electricity
UsefulnessHeating, cooling, hot water; works 24/7Electricity generation during daylight; needs batteries for storage
Man in a purple shirt kneeling next to a large outdoor *heat pump*, smiling at the camera.
Man in a purple shirt kneeling next to a large outdoor *heat pump*, smiling at the camera.

Yes, a house can be eco-friendly with a heat pump, but it is not 100% self-sufficient. Heat pumps are considered an environmentally friendly heating and cooling solution for several reasons:

Heat pumps run on electricity, but are highly efficient, as they move heat rather than generating it from scratch. To be truly self-sufficient, you’d also need a way to generate that electricity independently (e.g., with solar panels or a wind turbine).

A heat pump addresses heating and cooling, but your home likely uses electricity for other things like appliances, lights, etc. These need an independent power source for full self-sufficiency, similar to solar panels, water or wind turbines. Pairing a heat pump with solar panels or other renewable energy sources brings you much closer to self-sufficiency and a lower environmental impact.

Unlike gas or oil furnaces, heat pumps do not produce any on-site emissions or pollutants, contributing to better indoor and local air quality.

To achieve true self-sufficiency (green), a home typically needs green electricity sources solar panels, wind turbines, or similar to create electricity, batteries to store electricity to use when renewable sources aren’t generating enough power (like at night) and good insulation, smart appliances, and behavior changes to minimize overall energy consumption.

Why people choose Heat Pump vs Solar Panels?

Heat pumps have been gaining popularity in residential installations due to their efficiency and cost-effectiveness. According to a study by the National Renewable Energy Laboratory (NREL), a majority of Americans (62% to 95% of households, depending upon heat pump efficiency) would see a drop in their energy bills by using a heat pump. Improving the weatherization of a home, such as by installing better insulation, would increase the range to 82% to 97%.

One of the reasons for the popularity of heat pumps in residential installations is that they can be used for both heating and cooling, making them a versatile option. Additionally, air-source heat pumps (ASHPs) are easy to install and maintain, and they don’t require any fuel storage, which makes them a safer option than traditional heating systems.

Heat pumps are also being increasingly used in commercial applications. A comprehensive review of heat pumps by ScienceDirect found that they are a viable option for commercial buildings due to their high efficiency and low operating costs.

One example of a successful commercial application of heat pumps is the University of California, San Diego, which installed a 2.8 MW heat pump system in 2015. The system uses waste heat from the university’s cogeneration plant to provide heating and cooling to 4.5 million square feet of buildings on campus. The system has reduced the university’s carbon emissions by 32%, and it has saved the university over $800,000 in energy costs annually.

Another example is the Hotel at Oberlin in Ohio, which installed a ground-source heat pump system for heating and cooling. The system uses 90% less energy than traditional systems, and it has helped the hotel achieve LEED Platinum certification.

Heat Pump vs Solar Panels FUTURE

A 3d illustration of a modern, sustainable campus with orange buildings, heat pumps, electric cars, and autumn trees.
A 3d illustration of a modern, sustainable campus with orange buildings, heat pumps, electric cars, and autumn trees.

Heat pumps have been gaining popularity among consumers as an alternative to traditional heating and cooling systems. This section will explore the current market trends and adoption rates of heat pumps.

TALLBOX found out that heat pump water heater sales grew by 26% in 2023 and the trend is expected to continue in 2024. Consumers are increasingly interested in energy-efficient and cost-effective solutions for their homes, and heat pumps fit the bill. Heat pumps can save homeowners up to 50% on their heating and cooling bills, making them an attractive option.

The global heat pump market is expected to grow at a CAGR of 5% during the forecast period, according to a report by Future Market Insights. The market is estimated to reach a valuation of $58.7 billion by 2033, up from $34.3 billion in 2023. The growth is driven by various factors, including rising energy costs, increasing demand for energy-efficient solutions, and government incentives.

Governments around the world are offering incentives and policies to encourage the adoption of heat pumps. For example, the US Department of Energy has launched the Better Buildings Initiative to accelerate the manufacturing and adoption of heat pumps, with the aim of bringing more efficient and affordable next-generation heat pump rooftop units to market as soon as 2027.

The initiative could save American businesses and commercial entities $5 billion on utility bills every year, according to an article by the DOE on energy.gov.

Final Veredict

We think, it can be concluded that heat pumps are a better option than solar panels. Heat pumps are more efficient, require less maintenance, and have a longer lifespan compared to solar panels.

One of the biggest advantages of heat pumps is their ability to provide both heating and cooling, making them a year-round solution for temperature control. They are also much more reliable than solar panels, which can be affected by weather conditions and require regular cleaning to maintain their efficiency.

Can heat pumps make a house entirely self-sufficient and Eco-Friendly?

The fact that heat pumps emit no carbon dioxide, nitrogen dioxide, or particulates, making them a more environmentally friendly option. They are much more efficient than gas boilers and produce three or four times the energy they use and while heat pumps contribute significantly to energy efficiency and eco-friendliness, pumps usually cannot make a house entirely self-sufficient on their own. 

While solar panels may be a good option for those who want to generate their own electricity, they cannot match the efficiency and reliability of heat pumps when it comes to heating and cooling. When we include the initial cost of installing solar panels that can be quite high, and they require regular maintenance to ensure maximum efficiency.

When it comes to choosing between heat pumps and solar panels, it is clear that heat pumps are the better option for most homeowners. They are more efficient, reliable, and environmentally friendly, making them a smart investment for any home. If you have the budget, it’s even better if you can make heat pumps run on electricity generated by solar panels.