From time to time at Alpine Aire we receive a panicked phone call from a customer telling us that their heat pump (outdoor unit) is smoking and making odd noises. Of course this is concerning for them and us. Most often the unit has gone into the "defrost cycle" and the customer has just never noticed before.
When a heat pump is heating it is taking heat energy from the outside and moving that same heat inside. Basically we are air conditioning the yard. That means the dew point comes down and moisture can accumulate on the outside coil. If it is cold enough frost develops and it needs to be defrosted before it turns to a block of ice. During certain conditions that melting frost turns to steam (not smoke). Additionally, the fan on the outdoor unit stops running so the noise of the compressor is heard without the "white noise" of the fan. All in all, if you have not heard or seen the whole process in the right ambient conditions it can be unnerving.
It is worth a phone call to your service provider, but likely perfectly normal.
