Should I buy a heat pump now or should I wait?
Deciding the best time to buy an air source heat pump can be challenging. Some incentives are already here, and larger incentives are coming. However, many details about the timing and qualifications for future incentives are unknown. This post covers what we know now (as of the last update to this post), why you may want to buy your heat pump sooner, and why you may want to wait.
What we know now
Available now through 2024 or longer
- Rebates from most utilities — some utilities will increase their rebates starting January 2024
- Tax credits from the federal government
- Rebates from the cities of Edina, Northfield, and St. Louis Park for their residents
Available later
- Rebates from the federal Inflation Reduction Act (IRA)
- Rebates from the State of Minnesota
Many of these incentives can be stacked. For example, someone who buys a heat pump could receive a utility rebate, city cost-share funding, and a federal tax credit. For dollar amounts, qualifications, and other details, please visit the MN ASHP Collaborative's Incentives and Financing page.
When you might want to buy a heat pump sooner
If you need to replace equipment soon. The IRA and state rebates are not yet available and the timeline for release is unknown. An emergency replacement of a furnace or central AC may be expensive, stressful, and inconvenient. You may have to settle for whatever equipment is available for an emergency replacement. It may not be prudent to hope your current equipment lasts until the rebates arrive.
Purchasing a heat pump sooner helps secure the heating and cooling system you want. Robust utility incentives and federal tax credits are already available. These incentives are available to everyone now and have no income restrictions.
If you have a higher household income. Most of the IRA and state rebates will be income qualified and will not apply to households earning more than 150% of their area median income (AMI). The Minnesota State Energy Office determines how income qualification will be measured. This work is still in progress. You can look online for AMI calculators, but none will guarantee future eligibility. If you are generally sure that your household would exceed 150% AMI, waiting for these rebates to land may not impact your upgrade’s cost.
That said, one of the IRA rebate programs, the Home Efficiency Rebates program, will likely have a pathway available to households with higher incomes. This program will award rebates for upgrades based on how much you improve your home’s energy efficiency. The State Energy Office is working on the details and incentive amounts. The Home Efficiency Rebates program has an unknown availability date, so it still may be better to act sooner with available incentives.
If you do not want to deal with market uncertainty. The heat pump rebates from the IRA and the state are unprecedented in the HVAC market. There may be a period of time when pricing, equipment availability, and contractor availability are disrupted as the market adjusts. There are many parties collaborating to prepare the market, but if you would rather make your decisions under current conditions, it may be better to act sooner.
Ready for the next step? Contact a member of the MN ASHP Collaborative's Preferred Contractor Network to get a quote for your home. Preferred Contractor Network members are experienced with heat pump technology and have completed our training, provided documentation, and demonstrated quality installation.
When you might want to buy a heat pump later
If you have a middle or lower household income. Most of the IRA and state rebates will be available for households earning 150% or less of their area median income (AMI). You can search online for AMI calculators to get a rough estimate of where your household stands, but none are a guarantee of eligibility. The Minnesota State Energy Office will eventually announce how they calculate AMI for the rebates. If you believe your household might qualify, it could be worth it to wait for more information to be released. We will post any updates we receive on the ASHP Collaborative's Incentives and Financing page.
If you have a newer central AC. A heat pump replaces a central air conditioner. An ideal time to upgrade to a heat pump is when your air conditioner is older or failing. In addition to cooling, a heat pump can also provide energy efficient heating. If your air conditioner is newer, it may not make sense to replace it right away. Waiting to see how the heat pump rebate programs develop may be more worthwhile.
If your home has comfort issues or challenges with ice dams. Ice dams and comfort issues may mean your home could use more weatherization. Quality insulation and air sealing make the biggest difference for a home's weatherization. These improvements can make your home more comfortable, save energy, and reduce the risk of ice dams. Pre-weatherizing your home carries big advantages when adding an heat pump. You may be able to buy a smaller sized unit, which saves money upfront, and have lower energy bills ongoing. Some heat pump incentives may even require your home to be weatherized for eligibility. For these reasons, we strongly recommend you make sure your home is weatherized before installing a heat pump. Schedule a low-cost energy audit if you want to learn more about your home’s weatherization.
Want to get ready for a heat pump in the meantime? Read the ASHP Collaborative blog post about home energy efficiency and other ways to maximize a heat pump's benefits.
Looking for more guidance?
To learn more about heat pumps, visit the ASHP Collaborative homeowner FAQ page and the homeowner resources page to view case studies, ASHP overviews, and buying guides. If you are interested in installing a heat pump, visit the Preferred Contractor Network for a list of trusted contractors in your area that can provide you with quotes. If you have further questions, you can contact the MN ASHP Collaborative at info@mnashp.org.