Heat pumps are units that provide both cooling and heating from the same equipment. In the summer, the unit removes heat from your home and sends it outside. In the winter, the process is reversed..
There are two types of heat pumps: geothermal systems and air-source heat pumps.
Geothermal systems are the most efficient comfort system available today. They utilize the fairly constant underground temperature to both heat and cool your home. They operate at about 450% efficiency! They are a bit more expensive to install, but normally you make up for that increased up-front cost with much lower operating costs every month.
Air-source heat pumps operate at about 250% efficiency on the heating side. They use the outside air to heat and cool. Since the outside air during the winter is cooler than it is underground, air-source heat pumps aren't quite as a efficient as a geothermal system.
Since air-source heat pumps require nominal backup heat, they are a great solution for retrofits – especially if you need to replace your existing air-conditioner.