A two-stage heat pump has a switchable compressor with two settings, allowing it to run at low power when temperatures are not extremely hot or cold. This increases the efficiency of the unit, since it can run longer at the low-power setting without cycling the compressor on and off.
In a heat pump, refrigerant liquid passes through one set of coils, absorbing heat from the air and evaporating into a gas. This gas is compressed and passed to the other end of the unit, where another set of coils expels heat and condenses the gas back into a liquid. Increasing the compression increases the amount of heat the refrigerant can transfer, but the higher pressures require periodic shut-down periods to allow frost to evaporate from the cooling coils and to give the compressor motor time to cool down.
A two-stage heat pump runs at a lower power setting for most of the year, when temperatures are relatively mild. This allows the unit to run longer without recycling, and the longer cooling and heating cycle can also help dehumidify the air. When temperatures become more extreme, the unit switches into high-power mode, providing more heating or cooling only as long as needed.