California heat pump incentives: 2023 guide
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Heat pumps—the energy-efficient, all-electric, extra-comfortable home heating and cooling technology—are a great fit for the mostly warm, not-so-humid climate in most of California.
KEY TAKEAWAYS
Thanks to the Inflation Reduction Act, most heat pumps and mini splits are eligible for a federal tax credit of $2,000 or 30% of the cost of installation (whichever is less).
Income-dependent rebates of up to $8,000 (earmarked in the Inflation Reduction Act) are slated to become available in California beginning in summer 2024.
Many utility companies in California offer rebates for heat pumps, ranging from $100 to $3,000. Use the incentive finder tool at The Switch Is On to figure out what’s available in your zip code.
Heat pump installers can also apply for a $1,000 rebate per heat pump installed, and might pass those savings along to customers—but homeowners aren’t eligible to receive it directly.
As of May 2023, here are the programs that Californians might be able to tap for savings on a new heat pump system.
Federal incentives from the Inflation Reduction Act
We’ve covered all the ways you can get free money for clean heating and cooling upgrades through the Inflation Reduction Act of 2022 (IRA) here. The quick version:
Any household can claim a $2,000 federal tax credit (or 30% of the price, whichever is less) against the cost to install an air-source heat pump that meets modest efficiency requirements. Since it’s a tax credit, rather than a direct rebate, you’re only eligible for as much free money as you’re on the hook to pay the IRS per year.
Larger, income-dependent rebates of up to $8,000 are not currently available, but look like they’ll kick in sometime during 2024, according to the California Energy Commission. If you’re counting on those rebates, you should wait until the programs are actually in place, because they’re highly unlikely to apply retroactively to a system that you’ve already installed.
Utility rebates
According to the DSIRE database, 22 utility companies around the state have rebate programs for customers who install heat pumps. The savings can range from $100 up to $3,000, depending on the utility company, and sometimes the size of the system. (Notably, PG&E does not offer heat pump rebates as of May 2023.)
The easiest way to figure out what’s available in your area is the incentive finder tool at The Switch Is On (essentially a partner site of the California Public Utilities Commission).
Anything else?
As of May 2023, the Tech Clean California program has a statewide incentive for people switching to a heat pump, away from a different type of heating system. Only qualified contractors can apply for this $1,000 rebate, customers aren’t eligible to apply for it directly.
It’s possible that installers will pass the savings along to their customer—and if you’re a homeowner, you could consider bringing up this rebate when you speak to potential contractors, as a signal that you know what you’re talking about and that you expect the savings to be passed along.
When you sign up for the EnergySage Heat Pump Marketplace, you’ll get an instant estimate of how much it might cost to install a heat pump in your home, based on real-world quotes for similar homes from vetted installers. You can schedule consultations with seasoned pros. If you want some independent guidance, one of our Energy Advisors can help you through the process. We’re already the country’s largest marketplace for solar energy, and now we’ve brought that clean-energy experience to heat pump shopping. Learn more here.
