How Do Heat Pumps Work? The Science Behind Canada’s Fastest-Growing HVAC System

How Does a Heat Pump Work?

A heat pump is an electrically powered HVAC system that provides both heating and cooling by transferring heat rather than burning fuel to create it.

In heating mode, the system extracts thermal energy from outdoor air and moves it indoors. In cooling mode, it reverses direction, pulling heat out of your home and releasing it outside, exactly like a conventional air conditioner.

The simplest way to think about it: a heat pump is an air conditioner that can run in reverse.

This is possible because even cold outdoor air contains thermal energy. A refrigerant with an extremely low boiling point (well below −25 °C) absorbs that energy, and the system’s compressor concentrates it to a temperature high enough to warm your home. The same physics are at work inside your refrigerator and your car’s air conditioning.

Wondering whether a heat pump or an air conditioner is right for your home? Read our full comparison: What’s the Difference Between a Heat Pump and an Air Conditioner?

The Refrigerant Cycle: 4 Steps That Power Every Heat Pump

Every heat pump, air conditioner, and refrigerator relies on the same four-step vapour-compression cycle. Understanding it helps explain why heat pumps are so efficient.

Step 1: Evaporation (Heat Absorption)

Low-pressure liquid refrigerant flows through the evaporator coil (the outdoor coil in heating mode). It absorbs heat from the surrounding air and evaporates into a low-pressure gas.

Step 2: Compression (Temperature Boost)

The compressor pressurises the gas. Just as pumping air into a bicycle tire makes the pump warm, compressing the refrigerant raises its temperature significantly, often above 50 °C, making it hot enough to heat your home.

Step 3: Condensation (Heat Release)

The hot, high-pressure gas flows through the condenser coil (the indoor coil in heating mode). It releases its stored heat into your home’s air supply and condenses back into a high-pressure liquid.

Step 4: Expansion (Pressure Drop and Reset)

The liquid refrigerant passes through an expansion valve, which rapidly drops its pressure and temperature. The now-cold refrigerant returns to the evaporator coil and the cycle starts again.

In cooling mode, a component called the reversing valve simply flips the direction of refrigerant flow. The indoor coil becomes the evaporator (absorbing indoor heat) and the outdoor coil becomes the condenser (dumping heat outside).

Figure 1. Breakdown of household energy expenditures by fuel type for each province. (Source: Statistics Canada) 

Yet, when you introduce heat pump technology into your HVAC system, you have the potential to use significantly less energy than ordinary electric heating. For households that heat with electricity this can lead to much lower energy consumption, which could also translate in significant cost savings on monthly energy bills.

The question is: Where does the energy savings come from in heat pump technology? To answer this, let’s look at the cool science behind heat pumps and how they work.

How Heat Pumps Work

Heat naturally moves from an area with a higher temperature to one with a lower one. A heat pump essentially captures this heat energy and pumps it in the opposite direction. So, on a hot summer day when the heat would naturally want to enter your cooler home, your heat pump will take that indoor heat and pump it out. Same goes for when it is cooler out – the warm air in your home naturally wants to escape into the cold outside but the heat pump will extract heat from outside and pump it back in².

Heat pumps capture and transfer heat (in the form of energy) from the surrounding environment in order to heat or cool your home.

There are two important components to this:

Energy is captured from the environment: In contrast to typical furnaces which consume fuel (e.g., natural gas) to create heat—heat pump technology captures energy from an existing source (e.g., the air or the ground) and pumps it inside a space (e.g., your home).

Heat pumps can both heat AND cool: Heat pumps function exactly the same as air conditioners with the added bonus that they can be reversed to bring heat inside. Heat pump technology works on two basic principles which also govern how most air conditioners, refrigerators, deep freezes and other cooling equipment works:

a. Make a region colder than another and heat energy will flow into the colder area .
b. Fluid absorbs heat when it evaporates into a gas and likewise gives off heat when it condenses back into a liquid.³

How Efficient Are Heat Pumps? COP Explained

Heat pump efficiency is measured by the Coefficient of Performance (COP): the ratio of heat energy delivered to electrical energy consumed.

A gas furnace, by comparison, has an effective efficiency of about 0.80 to 0.95 (AFUE), meaning it converts 80% to 95% of its fuel energy into heat. A heat pump with a COP of 3.0 is delivering roughly three times more heat energy per unit of energy input than electric baseboard, and significantly more than a gas furnace per unit of energy cost in many provinces.

Other Efficiency Ratings You May See

• SEER2 (Seasonal Energy Efficiency Ratio 2): Measures cooling efficiency over a full season. Higher is better. Look for 16+ for strong performance.
• HSPF2 (Heating Seasonal Performance Factor 2): Measures heating efficiency over a full season. Look for 10+ for cold-climate use.
• COP at a specific temperature: The most useful metric for Canadian homeowners because it shows exactly how the system performs in cold weather.

Cold-Climate Heat Pumps and Canadian Winters

One of the most common questions Canadian homeowners ask is whether a heat pump can handle a real winter. The short answer: modern cold-climate heat pumps are specifically engineered for it.

How COP Changes with Outdoor Temperature

Key Points for Canadian Homeowners

• Cold-climate heat pumps use variable-speed (inverter) compressors that adjust output continuously, maintaining higher COP at lower temperatures than single-speed units.
• At −25 °C, a cold-climate model still delivers roughly 50% to 65% of its rated capacity, which is still significantly more efficient than electric resistance heating.
• In most Canadian cities, temperatures below −25 °C occur for only about 2% to 10% of total winter hours. For the vast majority of the heating season, a heat pump operates at a COP of 2.5 or higher.
• Hybrid (dual-fuel) systems pair a heat pump with a gas furnace. The heat pump handles heating during milder weather (where it’s most efficient), and the furnace takes over during the coldest stretches. This is the most common setup in Ontario.
• The defrost cycle is normal. When frost builds up on the outdoor coil in cold, humid weather, the system briefly reverses to melt ice, then returns to heating mode automatically.

Types of Heat Pumps Available in Canada

Comparing costs for central air conditioners vs heat pumps? See our Central AC vs. Heat Pump pricing guide.

5 Tips for Getting the Most from Your Heat Pump

1. Keep thermostat adjustments small. Heat pumps work best when maintaining a steady temperature. Large jumps may trigger your backup furnace, which is typically less efficient for moderate heating loads.
2. Pair it with the right thermostat. Not all smart thermostats are configured for heat pump systems out of the box. Make sure yours is set up to manage the balance point between heat pump and backup heat.
3. Replace air filters every three months. A clogged filter restricts airflow, forces the system to work harder, and could shorten its lifespan. If you have pets or smokers in the home, check filters monthly.
4. Keep the outdoor unit clear. Ensure at least 60 cm (two feet) of clearance around the outdoor unit and remove snow, leaves, or debris that could block airflow.
5. Schedule annual maintenance. A professional tune-up helps catch refrigerant issues, electrical wear, and coil buildup before they become costly repairs. Reliance offers 24/7/365 live phone support and as-soon-as same-day service.

Heat Pump Rebates and Incentives in Canada

Federal and provincial rebate programs for heat pumps exist across Canada, but they change frequently. The availability, eligibility requirements, and dollar amounts vary by province and household income. Rather than listing specific programs that may expire, we recommend checking with your provincial utility provider or visiting https://natural-resources.canada.ca/energy-efficiency/homes for current options. You can also visit our Reliance rebates page or ask your knowledgeable Reliance Home Comfort Advisor about the latest incentives available in your area.

Frequently Asked Questions

What is a heat pump?

A heat pump is an electrically powered HVAC system that transfers heat rather than generating it. It provides both heating and cooling from a single outdoor unit paired with an indoor air handler or ductless head.

How does a heat pump heat a home in winter?

It uses a refrigerant with a very low boiling point to absorb thermal energy from outdoor air, compresses that refrigerant to raise its temperature, and then releases the heat indoors through a coil and fan system.

Do heat pumps work in Canadian winters?

Yes. Modern cold-climate heat pumps are engineered to operate at outdoor temperatures as low as −25 °C to −30 °C. At −25 °C, they typically retain 50% to 65% of rated heating capacity and still operate more efficiently than electric resistance heating. Most Canadian homes pair a heat pump with a gas furnace backup for the coldest days.

What is COP and what is a good COP for Canada?

COP (Coefficient of Performance) measures how much heat a system delivers per unit of electricity consumed. A COP of 3.0 means 3 units of heat for every 1 unit of electricity. For Canadian climates, look for a cold-climate model with a COP of 2.0 or higher at −15 °C and tested operation at −25 °C.

Is a heat pump the same as an air conditioner?

A heat pump and an air conditioner use the same refrigerant cycle for cooling. The difference is that a heat pump includes a reversing valve, allowing it to also heat your home by running the cycle in reverse. For a full comparison, see What’s the Difference Between a Heat Pump and an Air Conditioner?

Can I use a heat pump with my existing furnace?

Yes. A hybrid (dual-fuel) system pairs a heat pump with your existing gas furnace. The heat pump handles heating and cooling during mild to moderate temperatures, and the furnace takes over automatically when it gets very cold.

What types of heat pumps are available?

The main types are air-source ducted, air-source ductless (mini-split), geothermal (ground-source), and hybrid/dual-fuel systems. Air-source ducted systems are the most common in Canadian homes with existing ductwork.