While both air conditioners and heat pumps provide cooling, they differ in how they generate heat. An AC unit cools your home by extracting heat and transferring it outside. It uses a separate furnace or heating system for heating in colder months. A heat pump, however, can both cool and heat. In cooling mode, it functions like an AC, extracting heat from indoor air and releasing it outdoors. In heating mode, it reverses this process, extracting heat from the outside air (even in cold temperatures) and transferring it inside. This makes heat pumps more energy-efficient for heating than traditional electric resistance heating, especially in mild to moderately cold climates.