A house is considered a multi-component system, where all of the components are interactive. The operation of one system can affect many others and when all systems work together properly, a home is comfortable, safe, efficient, and durable. Conversely, it can lead to issues when systems don't work together properly. If a change is made in one part of the system, other changes will occur in other parts of the system. For example, adding insulation and improving the air tightness of a home reduces its heating and cooling load, which ultimately reduces the required size of any replacement heating and cooling systems.

A building system has two main components: (1) outer layer or envelope; and (2) inner parts or systems. The building envelope, which is comprised of the roof, walls, windows, and foundation, are the outer layer or skin of a building system and act as a barrier between the inside of the home and the outdoors. The heating and cooling equipment, ventilation and exhaust systems, electrical systems, and humidifiers/dehumidifiers are the inner components of a building system. These components operate and control the three main processes inside a house that keep it comfortable, safe, and efficient: (1) heat flow; (2) airflow; and (3) moisture flow.

In addition to the inner components, the way a house is laid out and the way that residents live in it impacts the overall system. A house also interacts with the outside environment. Therefore, renovating an existing house to be energy-efficient requires careful planning and attention to detail. A house as a system approach helps homeowners, architects, builders, contractors, and equipment installers develop successful strategies for optimizing home energy efficiency.

Some benefits of using house as a system approach include:

• Increased comfort
• Reduced operation and maintenance costs
• Healthier and safer indoor environment
• Improved building and equipment durability
• Higher home resale value

HVAC system performance is dependent on several interlinked factors. For instance, the building envelope is particularly important. At any given moment, heat is flowing through the building envelope and being generated within it. Exhibit 10 depicts some of the typical heat flows in a home. Any change in the building system that affects any one of these heat flows can influence a home's heating and cooling demand and hence the selection of HVAC equipment such as an ASHP.