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Save Money and Energy with a Dual-fuel System

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Save a lot of Green While Going Green with a Dual-fuel System

When we say “dual-fuel system,” what are we talking about? Specifically, we are referring to a dual-fuel heat pump. It’s a hybrid heating and cooling system that combines a traditional heat pump with a furnace to create an energy-efficient HVAC unit that is usable year-round. Bonus: it saves energy, which not only helps the environment, but lowers your utility bills. (Read to the end to learn more about current tax credits and rebates!)

Trane X15 Heat Pump
Trane X15 Heat Pump

What is a dual fuel heating system and how does it work?

As aforementioned, a dual fuel heating system is a hybrid system made-up of both an electric heat pump and a gas furnace. Depending on factors such as:

  • the season
  • the temperature
  • the function needed

the system alternates between using the heat pump and the furnace to maximize efficiency and effectively heat and cool your home year round. 

In the summer, the heat pump works like a central air conditioner by transferring hot air out of your home until your thermostat reads the desired temperature. In spring and fall, the heat pump provides cost-efficient heat during cooler, milder temperatures.

Yet, eventually winter and extremely cold temperatures set in, and the gas furnace becomes more efficient at heating than the heat pump. At this point, the thermostat senses the cold outdoor temperature and automatically switches on the gas furnace and switches off the heat pump, maximizing the efficiency of your heating system.

Which is best? Furnace, Heat Pump or Dual-Fuel?

Which is “best” really means which is the right choice for your dwelling based on the conditions you experience. Those that live in the South don’t experience cold temperatures exactly the same as those in the North do, and that has to be taken into account. Read on to determine which system is right for your situation.

Trane XC95m Gas Furnace
Trane XC95m Gas Furnace


A furnace creates heat by burning a fuel source, like propane or natural gas. That heat is pushed into the surrounding air to both warm the air and distribute it throughout the home. Because furnaces only produce heat, homeowners usually need a separate air conditioning system to cool their home in the warmer months.

Furnaces have around 95% energy efficiency and lengthy lifespans (more than 20 years) compared to other heating devices because they’re used for only a few months out of the year. While they aren’t too expensive to install, your home does need to have access to natural gas or propane for a furnace to function. If it doesn’t, the process to access a natural gas source will drive up the installation cost.

Heat Pumps

Heat pumps perform both heating and cooling functions, so this one HVAC device covers your home year round. Heat pumps are flexible systems, so they’re able to adapt to changes in the weather. For example, when it’s cold out, heat pumps extract whatever heat is in the outside air and transfer it into the home. When the temperatures are warmer, they switch to a cooling function by removing hot air from the home. Because they work year round, heat pumps have a shorter lifespan than furnaces (around 15 years).

When outdoor temperatures are close to or are freezing, heat pumps have to work for more time to bring heat into your home, which increases utility bills. Yet, according to the Department of Energy, heat pumps are still considered to be an energy efficient HVAC device since they can reduce electricity use for heating by about 50% compared to furnaces. So, for homeowners in milder climates, a heat pump is a logical choice.

XL15c EarthWise® Hybrid Dual Fuel Packaged System
Trane XL15c EarthWise® Hybrid Dual Fuel Packaged System

Dual-fuel Systems

As we mentioned earlier, dual fuel systems are a combination HVAC system with both a heat pump and a furnace. The dual fuel system uses the heat pump in hot or mild temperatures (about 40°F and higher) and the furnace in colder temperatures (about 39°F and below). It switches between the two depending on which is more efficient for the circumstances, which saves time and energy in getting your home to the desired temperature. Dual fuel systems are great for any type of climate and function year-round. Plus, because each piece only works when it’s optimal, dual fuel systems have a life expectancy between 20 and 25 years!

A Dual-fuel Heat Pump a Good Idea When...

The temperature is always changing

Dual-fuel heat pumps are best for places that experience all four seasons and variable temperatures. If you live in a place that’s cold the majority of the time, a furnace can provide a lot of heat quickly to meet your needs. For those who live in warmer or milder climates, heat pumps make more sense because they function best in warm to hot temperatures.

Dual fuel systems are for people who experience both ends of the temperature spectrum. Because a furnace only provides heat, if you live in a variable weather environment, you’ll need an air conditioner as well if you desire cooler indoor temperatures.

And though heat pumps both heat and cool the surrounding air, they have to work overtime at extremely low temperatures, which means higher energy consumption and utility bills. Dual-fuel heat pumps take the best qualities of both systems to tackle whatever climate you may wake up to.

Local Laws Encourage Energy Efficiency

In addition to federal tax credits, a slew of states across the country are passing laws and incentives that encourage and reward HVAC energy efficiency. For example, in California’s 2022 Energy Code, the energy efficiency rates of heat pumps are used as the performance standard baseline for heating and cooling in all residential and some commercial spaces.

Because they transfer heat instead of initiating processes to physically change the temperature, heat pumps are often considered the gold standard in terms of energy efficiency. If your state’s energy efficiency laws are headed in the same direction as California, it might be financially worthwhile to upgrade your HVAC system to dual fuel.

If dry, hot heat in the winter impacts your personal comfort

During winter, do you experience dry, chapped skin while in your home? Does your home use a furnace for heat? If so, it could be causing your skin problem. The heat created by furnaces is hotter than the heat produced from electrical sources (because furnaces burn gas). This hot, dry heat can dry out and chap sensitive skin. If this sounds like a problem you face, consider installing a dual-fuel system with “cooler” heat for a more comfortable living experience, while still getting that hot heat when necessary.

How does a dual fuel heat pump save you money and energy?

Because the dual-fuel heat pump automatically switches between its furnace and heat pump function at the optimal time and temperature, the system spends less time generating heat, consumes less energy and thus saves you money on your energy bill.

All of that is true, but there’s more…

Uncle Sam really wants you to update and upgrade your HVAC system. So much so that homeowners can get up to a $2,000 tax credit for upgrading to a dual-fuel system. There are a variety of additional tax credits, rebates and other incentives to take advantage of depending on where you live. 

For example, in Austin, TX, those served by Austin Energy can take advantage of an $800 rebate for upgrading their HVAC system. This isn’t a tax credit. Austin Energy will cut a check for $800 to any of their customers who upgrade their system.

Don’t let easy money slip through your fingers! Contact us at 512-585-5344 or today to learn how to collect your tax credits and rebates!

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