If cost was not an object, everyone would have the latest in HVAC technology to both save money and have the most comfortable homes. Unfortunately, in the real world, people have to run the numbers when considering upgrading from window AC units to heat pumps and other cooling options. We researched and put together the following guide for monthly costs across the U.S., in Michigan where we are based, and some ways to make more efficient systems an affordable option.
When creating the table for average monthly costs, we made the following assumptions:
- Peak cooling season is generally June to August (although some cities start or end earlier or later)
- Energy efficiency ratings (EER) were based on online research of various retailers
- SEER ratings and costs were estimated through several methods
- The average BTU need per square foot was calculated using an industry-standard formula
Average Monthly Costs During Cooling Season (Peak Months: June-August)
| Month | Window AC (High EER) |
Heat Pump (18 SEER) |
Heat Pump (20 SEER) |
|---|---|---|---|
| May | $22 | $16 | $14 |
| June | $55 | $39 | $35 |
| July | $55 | $39 | $35 |
| August | $55 | $39 | $35 |
| September | $33 | $23 | $21 |
| Annual | $220 | $156 | $140 |
Monthly Payments When Including Shoulder Season
Now, since we are based in the Detroit suburbs in St. Clair Shores, we also wanted to outline what things look like for shoulder season. This is the time in the spring and the fall when there are still days that are warmer than 72-74 degrees and require AC, but not nearly every day like the summer months. Again, we focused on a Detroit area home and compared the window ac units to using higher efficiency heat pumps.
Monthly Payment Breakdown – Detroit Example (2BR Home)
As one can tell from the chart above, shoulder season in most places with moderate summers looks to add roughly an additional month of bills (i.e. May and September added together are roughly equal to that of June, July, or August). While both heat pump options seem to save nearly $70 to $80 per season, it’s also important to consider what the original cost looks like.
Monthly Equipment Cost Analysis (Including Installation)
| Month | Window AC (High EER) |
Heat Pump (18 SEER) |
Heat Pump (20 SEER) |
|---|---|---|---|
| May | $22 | $16 | $14 |
| June | $55 | $39 | $35 |
| July | $55 | $39 | $35 |
| August | $55 | $39 | $35 |
| September | $33 | $23 | $21 |
| Annual | $220 | $156 | $140 |
*Monthly payments calculated based on 5-year financing at 7% APR
One thing that other coverage of cooling costs tends to leave off is the initial cost of the necessary equipment. When we add in the cost of a highly efficient heat pump, we can see that it does add a significant outlay over the course of a five-year payback period, common to many HVAC systems.
Since that is the case, the true cost of cooling a home from the period of replacing a system with either a set of window AC units or an efficient heat pump must include both costs, and we have shown the results below.
Total Monthly Cost During Peak Season (Detroit Example)
| Home Size | System Type | Equipment Payment | Peak Month Operating | Total Monthly |
|---|---|---|---|---|
| 2BR Home | Window AC | $77 | $55 | $132 |
| Heat Pump 18 | $156 | $39 | $195 | |
| Heat Pump 20 | $198 | $35 | $233 | |
| 3BR Home | Window AC | $102 | $70 | $172 |
| Heat Pump 18 | $177 | $49 | $226 | |
| Heat Pump 20 | $219 | $44 | $263 | |
| 4BR Home | Window AC | $128 | $95 | $223 |
| Heat Pump 18 | $198 | $67 | $265 | |
| Heat Pump 20 | $240 | $60 | $300 |
So if that’s the case, it would appear that over the first five years, it would appear that the window AC units run away with both the lower upfront costs as well as the better average monthly payment, but that’s not quite the case in reality, where heat pumps really do make sense. Here’s how:
Rebates, Heating, and More Ways to Maximize Heat Pumps’ Value
The first thing to note is that window AC units will never really provide the proper heating during shoulder seasons as well as during the colder winter months. This is not the case for heat pumps, which can be used to replace not just window AC units but also boilers, some furnaces or simply act as an augmentation for existing heating systems.
There, the ability for heat pumps to be up to 300 percent efficient truly speaks to the value they provide homeowners since they can work all the way down to below-freezing in some cases. For homeowners in most of the cities on the initial list, that is a huge benefit.
Rebates and Tax Credits for Efficient Systems
Both the federal government and many state governments want homeowners to have the most efficient heating and cooling systems possible for several reasons: it reduces energy demand and reduces the possibility of brownouts during winter as more people use these systems.
While the credits vary from location to location, our home state of Michigan offers up to $8,000 in tax credits for highly efficient heat pumps. If you looked at the table of monthly costs above, it would in fact allow a homeowner to effectively only pay for electricity costs each month and make the unit almost or completely free.
Closing Thoughts on Window AC and Heat Pump System Costs
With those two factors in mind, the real cost of choosing between window AC units and heat pump systems comes down to location, location and location. For homes that have existing heating systems that are modern and work well, gentle summers may be handled by window units with relative ease.
However, for full coverage over all seasons and with incentives available in many places, heat pumps do tend to win out for many homeowners.
For a copy of this report or to learn more about HVAC systems’ installation and service in Southeast Michigan, contact us today.
