In the simplest terms, a heat pump uses electricity and refrigerant to move heat from one location to another. Heat pump consists of two major parts – a “air handler” that is mounted inside your home, and a condenser unit that stays on the outside of your home. The indoor air handler is thermostatically controlled to provide you with both heating and cooling. When there is a call for heat, the heat pump will turn on the fan in the outdoor unit to begin the process of extracting heat from the air outside.