Heat pumps have an indoor and outdoor unit. Each unit has a coil that circulates refrigerant to absorb heat from the air. In heating mode, the heat pump captures warm outdoor air and pumps it indoors. In air conditioning mode, it captures warm indoor air and pumps it outdoors. A heat pump is one of the most energy efficient systems because it does not generate heat itself. It is simply transferring the heat from one place to another. Many install heat pumps as a main and as a supplemental heating system in their homes.