Install a heat pump for heating & cooling
One of the most cost-effective scenarios for upgrading your HVAC system with a heat pump is when your central AC system is near the end of its life. For example, if your AC system is more than 12 years old, you could replace your AC system with a heat pump, taking advantage of all the rebates and tax credits available. Or, if you are interested in adding cooling to an area (or several rooms) of your home, then a new mini-split heat pump system could be a great solution. When your furnace needs to be replaced is also a good time to consider installing a new heat pump system.
Many homeowners ask whether installing a new heat pump will require an electrical panel upgrade. If replacing an AC system with a HP, there is probably no need for an electrical upgrade. However, if you are adding a new HP as part of a heating system replacement or upgrade, then you might need to run a new circuit and/or add more panel capacity. We suggest you ask your heat pump contractors to help answer this question.
Heat pumps are not cheap; a new system to heat your 2,000 ft2 home (assuming you are keeping your backup furnace) may cost $10,000 – $15,000. A mini-split heat pump system to serve one or two rooms may cost $8,000 – $10,000.
Go here to search for your utility or local government rebates.
In addition, if your household income is below 150% of the area median income (AMI) (which you can check here),the Colorado Energy Office will offer additional rebates for heat pumps through its Inflation Reduction Act funded Home Energy Rebate program.
The example in the table below summarizes how these rebates and tax incentives add up in 2024, not including the state Home Energy Rebates which will be available later this fall.
| 4-ton, efficient, non-cold climate (Tier 1) heat pump – $16,000 total | 4-ton, cold-climate heat pump on CEE and NEEP lists – $20,000 total | |
|---|---|---|
| Federal Tax Credit (30% up to $2,000) | 0* | $2,000 |
| State Tax Credit ($500 to customer) | $500 | $500 |
| Utility Rebate – Tri-State member co-op ($250/ton for Tier 1; $500/ton for cold-climate) | $1,000 | $2,000 |
| Total Amount of Rebates and Tax Credits | $1,500 | $4,500 |
| Final Cost of Heat Pump System with Rebates | $14,500 | $15,500 |
*Assuming the Tier 1 heat pump does not meet CEE requirements.
*CEE HP requirements for the federal tax credits are explained here. Note that a normal, non-cold-climate HP will not qualify for the federal tax credit.
Note that all these rebates and tax credits can be combined to help you pay for your heat pump project.
