Many utilities offer reduced price dual fuel electric rates that lower the cost to operate a heat pump. To qualify for these rates, a home must have a dual fuel system. These systems include a heat pump serving as the primary heating system with natural gas, propane, or electric thermal storage serving as the backup system. Check with your electric utility to determine whether they offer dual fuel electric rates.

Our cost of heat comparison resource compares the annual energy costs of different applications such as a dual fuel or all-electric heat pump against a conventional furnace and air conditioner. The tool compares standard, all electric, and dual fuel electric rates with options to select propane or natural gas as the pre-existing or dual fuel heat source.

Heat pumps installed between 1/1/2023 and 12/31/2032 may qualify for the Energy Efficient Home Improvement Credit (also known as the 25C tax credit). The amount of credit that can be claimed for a heat pump is equal to 30% of total project costs, up to $2,000. A dual fuel system where a heat pump and furnace are both installed could qualify for $2,600 (qualifying furnaces are eligible for an additional $600 tax credit). Additional information and FAQ from the IRS can be found here.

For contractors:

To qualify, equipment needs to meet the Consortium for Energy Efficiency (CEE)’s highest efficiency tier (not including any advanced tier). Models that have not yet tested to Appendix M1 (i.e., have a SEER2 rating) but have equivalent or higher tested Appendix M values (i.e., have a SEER rating) still qualify as meeting CEE Tiers.

Additional Resources:

CEE Directory: Lists of products that qualify for the 25C tax credit

NEEP ccASHP Product List: This list of cold climate heat pumps can be filtered by tax credit eligibility

Specification Summary: The highest CEE efficiency tiers are listed in this summary of the main heat pump specifications for ducted and ductless systems.

Utility rebates range from $50 to $2,200, depending on system type and size. Connect with your utility to learn what they offer or view the ASHP Collaborative interactive map to see rebates available in your area.

The federal Inflation Reduction Act (IRA) established two home energy rebate programs focused on energy efficiency and electrification projects. The State of Minnesota intends to apply for and implement these programs.

Up to $8,000 in rebates through these programs will be available for heat pump installations. The Minnesota State Energy Office will manage the funding distribution. Rebate eligibility and value will be based on annual income. The federal guidance is for households earning less than 150% of their area median income to qualify for rebates. However, the Minnesota State Energy Office will ultimately decide what the eligibility metrics are.

These programs are still under development by the Minnesota State Energy Office. The exact date rebates will be available, and what the qualifications will be, are currently unknown.

Additional Resources:

MN Department of Commerce: Heat pump rebate program details. This page will be updated as more information becomes available.

Home Energy Rebates FAQs: Questions and answers on the home energy rebate programs from the Department of Energy.

Home Energy Rebate Programs Guidance: Guidance from the Department of Energy for states on how to apply for IRA programs.

Additional Minnesota state rebates will be available for heat pumps. To qualify, customers must:

• Apply for and/or receive the related federal rebate,

• Have an energy audit within the last 18 months,

• Perform necessary insulation upgrades, and

• Purchase and install heat pump of contractor-recommended capacity.

This program is still under development. The timeline for availability is undetermined. We expect funds to be available alongside federal heat pump rebates.

Additional Resources:

MN Department of Commerce: Heat pump rebate program details. This page will be updated as more information becomes available.

Several local governments are offering additional funding for heat pump installation to complement utility rebates and funding from the Inflation Reduction Act.

City of Edina

The City of Edina’s Community Climate Action Fund matches an awarded utility rebate for a cold climate heat pump.

• 50% utility rebate match available to all Edina residents

• 100% utility rebate match available to residents who qualify for the environmental justice bonus 

Requirements and notes:

• Within 36 months before installation, applicant must have completed a Home Energy Squad “Planner” visit. Home Energy Squad is typically scheduled a few weeks out. If a visit is needed, applicants are encouraged to schedule one as soon as possible.

• Applicant must have been awarded a utility rebate for a qualifying cold climate ASHP.

• Applicant must apply for the cost share match for approval, prior to project completion. View the application under Step 3 of the Community Climate Action Fund page.

• Visit the City of Edina’s Community Climate Action Fund page for full details.

City of St Louis Park

The City of St. Louis Park’s Climate Champions for Homes cost-share program matches an awarded utility rebate for a cold climate heat pump.

• 50% utility rebate match available to all residents

• 100% utility rebate match available to residents who qualify for the environmental justice rate

Requirements and notes: 

• At least 36 months before installation, applicant must have completed a Home Energy Squad “Planner” visit.  

• Applicant must have been awarded a utility rebate for a qualifying cold climate ASHP. 

• Applicant must complete the Climate Champions online application for approval, prior to project completion.  

• Visit the City of St. Louis Park’s Climate Champions page for how to apply to the cost share application and full details. 

City of Northfield

The City of Northfield will match 50% of dollar amount of Xcel Energy heat pump rebates, up to $2,500 for households who earn up to 80% of the Dakota County annual median income ($89,400 for a family of four). Homeowners can learn more and apply here.

Center for Energy and Environment (CEE) offers ASHP financing through several loan programs:

• MHFA Fix Up Fund

• Secured or Unsecured Home Energy Loans

• Many city-specific programs with lower interest rates, including 0% APR financing and an additional grant up to $14,000 for Minneapolis residents

Approval is subject to program guidelines, please review all loan terms before applying.

To apply or for more information on the best financing program for your project, visit mncee.org/home-improvement. If you have questions, you can reach out to one of CEE’s loan officers at 612-335-5884. CEE’s loan officers will be available to assist throughout the entire process.

Midea
April 1 , 2024 - June 28, 2024

Receive rebates and special financing on qualifying Midea Ductless systems from participating Midea Midwest Ductless Dealers. Contact a Midea Midwest Ductless Expert to learn more!