Residential Multi-function Heat Pump Market Study

Residential buildings account for a substantial share of California’s greenhouse gas emissions, underscoring the urgent need for efficient and scalable electrification solutions for space heating, cooling, and water heating. Residential air-to-air multifunction heat pumps (MFHPs) offer a potential pathway by integrating these services into a single system. The research applies a mixed-methods approach to identify key market barriers and opportunities for residential MFHPs, combining: (1) a landscape analysis of technical, policy, and market conditions; (2) interviews with 49 stakeholders representing 41 organizations; and (3) a representative survey of 961 California homeowners. Synthesizing insights across these efforts, the study characterizes MFHP technology attributes, technical performance, cost-effectiveness, market readiness, and perceptions among both trade allies and household decision-makers. Findings indicate that MFHPs can provide space conditioning and domestic hot water using a single compressor at substantially lower amperage than conventional configurations with separate heat pump systems, improving retrofit feasibility and reducing the likelihood of electrical panel upgrades. Stakeholders and customers identify long-term energy savings, lower utility bills, environmental benefits, and the convenience of integrated service as core value propositions. At the same time, high upfront costs, uncertain performance, perceived reliability concerns, and limited contractor familiarity remain significant barriers to adoption. To address these challenges, the study recommends establishing a dedicated product classification and performance standard for MFHPs, aligning U.S. testing procedures with international protocols, improving controls and interoperability, and expanding field demonstrations to build evidence on real-world performance and reliability. Additional priorities include targeted incentives that account for avoided panel upgrades and grid benefits, cross-trade workforce development, and support for ultra–low-GWP refrigerants. Taken together, these findings position MFHPs as a promising but early-stage technology that will require coordinated action by manufacturers, utilities, program administrators, and policymakers to validate performance, reduce cost and risk, and define the highest-value applications—particularly in underserved and electrically constrained households