Out of the Cold

How ductless heat pump technology is addressing the electrification trend
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Sponsored by GE Appliances Air & Water Solutions
By Erika Fredrickson

Current legislation and incentives

The push for electrification has led to policy that encourages the expansion of the heat pump market. A bill introduced in early 2022 called the Installing Clean Efficient Energy Hastens Our Transition Act (ICEE HOT) would create a rebate program for distributors of heating, ventilation, air conditioning, water heating and other equipment for the electrification of buildings.

Another piece of legislation called the Heating Efficiency and Affordability Through Tax Relief Act (HEATR) would provide tax incentives for manufacturers to make heat pumps. This act is part of the plan to update section 45M of the tax code to accelerate market adoption of heat pump technology.

These kinds of “upstream” incentives given to manufacturers, distributors, and retailers help bring prices down for them at the point of sale, rather than during tax time. It especially opens up the heat pump market to more households who can now afford the lower sales costs but would not be able to afford the usual upfront costs of a new heat pump installation. That includes property managers who might choose these cheaper options, which would benefit their renters.

Renters often don’t have a say about the cost and quality of their cooling and heating systems, which makes these incentives an equity issue, among other things. The incentives can also encourage the creation of more heat pump manufacturing jobs that are considered high quality.

Other heat pump incentives are currently on the table, including the Energy Security and Independence Act of 2022, which would fund a heat pump deployment program at the Department of Energy (DOE).

On the consumer level, the Home Energy Savings Act, Clean Energy for America Act, and the Air Source Pump Act of 2021 offer rebates to homeowners who choose energy-efficient products, including heat pumps.

A 2022 Harvard University report proposed a low-barrier, least-cost policy package to deploy efficient heating and cooling solutions in the U.S. to Americans on a voluntary basis. Its goal is to “raise the floor” in the residential HVAC market by delivering 45 million new installations over 10 years. The 3H Hybrid Heat Homes program is a federal subsidy beginning in 2022 with a regulatory backstop in 2029.

According to CLASP, a non-governmental organization focused on appliance energy, the goal of the program is to increase the market share of heat pumps from a 10% increase per year to 44% by 2032. The projected savings over the 10-year period adds up to $27 billion on Americans’ energy bills and would provide $80 billion in additional society benefits. According to the research, reduced air pollution could save more than 800 lives each year. Greenhouse gas emissions could fall by 49 million metric tons annually.

These types of programs and legislation would help give companies the confidence to invest in these heat pumps. Wholesale and consumer prices would fall to the level of other cooling and heating systems. And the voluntary aspect means there would be no policy conflict — it would merely be speeding up a market transition already underway.

Rebates

Rebates are one of the best and easiest ways to save hundreds or even thousands of dollars on home and commercial property HVAC upgrades. Heat pump rebates are often made available to homeowners and building owners through:

  • Local, county, and federal governments
  • Municipal or county utility companies
  • Financial institutions
  • Energy organizations

These vary across the country, from county to county, and by region or city/municipality, and their availability can change at any time.

In states and provinces that are more aggressively pushing for efficient heat pump use, there is a multitude of rebate programs. In California, the widening use of heat pump-based HVAC systems is apparent by programs offered through utilities, governments and air quality districts encouraging the installation of zero gas systems that can both cool and heat homes. These rebates are usually based on heat pumps with energy efficiency rating systems like SEER, EER, and HSPF.

Examples include:

Anaheim Public Utility offers:

  • $100 per packaged terminal heat pump unit
  • $100-$400 per ton for package heat pump of 2 to 5 tons
  • $.10 per kWh annual savings for packaged heat pumps heavier than 5.4 tons

Azusa Light and Power offers:

  • $750 to switch from existing electric heat pump to heat pump electric space heating with a SEER rating of 16 and over
  • $2,000 to switch from gas HVAC to heat pump electric space heating with a SEER rating of 16 and over

 

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Originally published in August 2022

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