Energy Efficiency Incentives & Rebates For Heat Pump Heating & Cooling
December 28, 2021
December 28, 2021
Energy Efficiency Incentives & Rebates For Heat Pump Heating & Cooling
Heat Pump Incentives Make it Affordable to Convert from Oil or Gas
***Incentives described in this post are active as of posting date but subject to change. Contact BlocPower to understand current incentives available for your project.***
Can you afford to upgrade your building with an energy-efficient heating system?
Even if you’re on a budget, energy-efficient upgrades are worth your consideration. Air source heat pumps (ASHPs) provide both heating and cooling without combustion of heating oil or natural gas, and they’re also an outstanding investment. A state-of-the-art heating and cooling system can save you thousands of dollars over your system’s operating lifespan.
On average, BlocPower customers reduce their utility bills by 20–40% by retrofitting their buildings with heat pumps. On top of that, heat pumps boost tenant satisfaction, increase building value, and improve air quality, so the benefits become more substantial over time.
However, green energy retrofits have a reputation for carrying expensive up-front costs. Air source heat pumps do provide a quick return on investment, but for some building owners, the size of the initial investment can be intimidating.
Energy efficiency incentives can make heat pump systems affordable for every type of property. Federal, state, and local energy programs can cut costs by tens of thousands of dollars, enabling building owners to enjoy the benefits of green technology while staying within their budgets.
BlocPower’s services are structured to take full advantage of available energy efficiency programs—our goal is to make green retrofits affordable—and in many scenarios, we’re able to install heat pump systems with no money down. It is not uncommon for the monthly energy savings generated by our work to offset project costs, so building owners actually pay less out of pocket each month. Further, the paperwork and administrative tasks to obtain incentives can be significant, but read to the end to see how BlocPower can completely take on the burden.
How do energy efficiency incentives work?
Energy programs reduce the cost of green technologies by providing rebates, tax credits, or tax deductions. Tax credits provide an immediate reduction of your annual tax bill, while tax deductions reduce your taxable income. Rebates immediately reduce the price of the installation.
Available incentives depend on a variety of factors including:
- The building’s electrical supplier
- The percentage of the building’s total design heating load satisfied by the heat pump
- The number of indoor and outdoor heating pump units
- The type of building (residential, multi-family, or commercial)
In most cases, the most significant energy efficiency incentives are available at the state and municipal level. Most of these programs dispense funds through utility providers and contractors (such as design and installation teams that specialize in air source heat pumps). These rebate incentives are typically available on a first-come, first-served basis, and total incentive funding is limited.
Incentives differ for residential and commercial buildings, but nearly every building is eligible for some form of energy incentive program. Below, we’ll briefly explain a few energy programs we’ve used in New York to help our customers reduce their installation costs. However, it’s important to remember that within the programs, qualification criteria can change frequently—and so can the dollar value of the incentives. By working with an experienced energy partner, you can take full advantage of available incentives and avoid leaving money on the table.
The New York State Clean Heating and Cooling Campaign (NYS Clean Heat)
NYS Clean Heat offers substantial rebates for new cold-climate heat pumps. Cold-climate heat pumps are designed to function at 100% efficiency at temperatures as low as 5°F, and provide improved efficiency over boilers and furnaces at lower temperatures.
Funding for the NYS Clean Heat Program is designated by the New York State Public Service Commission through the Joint Efficiency Providers. To apply for incentives, ASHP installers and designers must apply for approval as participating contractors. Incentives are paid directly to participating contractors, but the incentive must be passed along to the customer.
To get the largest benefits from the program, the heat pump must output at least 90% of the building’s design heating load. In other words, an apartment building can’t take full advantage of incentives by installing a single mini-split heat pump for a single apartment.
The NYSERDA Multifamily Performance Program (MPP)
Funded through the New York State Energy Research and Development Authority (NYSERDA), the Multifamily Performance Program provides incentives from $700 to $1,500 per unit for improvements that reduce energy consumption.
To qualify, buildings must be Affordable Buildings (at least 25% of the units are occupied by households that earn no more than 80% of the area or state median income) and must have five or more residential units. Participants must also pay into the NYSERDA Clean Energy Fund on their electric bills.
Example Project: How Energy Efficiency Incentives Cut Installation Costs By 67%
838 Park Place in Brooklyn, New York worked with BlocPower to supplement an existing boiler system with six indoor heat pumps and two outdoor units. As part of the retrofit, the building also received an installation of 84 solar panels.
Results: The total cost for the project was about $139,000. With $94,000 in energy incentives, the cost fell by two thirds, and the owners completed the project with $0 down.
Federal Tax Incentives And Rebates
The U.S. Department of Energy and Environmental Protection Agency operate the ENERGY STAR program, which certifies technologies that meet federal energy efficiency standards. ENERGY STAR heat pumps may be eligible for utility rebates and incentives, which are administered directly through utility providers. The value of rebates varies by zip code and by utility provider. (ENERGY STAR offers a rebate finder tool to help consumers find programs.)
The federal government also provides tax incentives for energy efficient upgrades, and ENERGY STAR certified heat pumps typically qualify. This wasn’t always the case: For the last few years, federal energy incentives were limited to solar panels and electric/hybrid vehicles.
The Consolidated Appropriations Act of 2021 extended deductions for energy efficient commercial buildings, and tax credits for residential energy efficiency have been retroactively extended to the end of 2021. When those programs expire, new incentives might become available—that’s another reason to work with an experienced provider that can keep track of how federal programs change.
Under current tax law, commercial building owners may receive deductions of up to $0.60 per square foot, provided that they demonstrate a 50% reduction in energy usage solely through building improvements. Residential property owners may be eligible for tax credits of up to $300 for each installed air source heat pump unit.
Example Project: How A Multi-Family Home Saved Nearly $39,000
The owners of a New York low-rise with six apartment units needed to replace an old, inefficient heating system. BlocPower converted the heating system to an air-source heat pump and improved the building’s insulation, which delivered immediate utility savings.
Results: BlocPower took advantage of $38,800 in incentives, which reduced the project cost by 53%. By financing through an Energy Service Agreement, the building owner avoided upfront installation costs.
Energy incentives can be complex, but BlocPower is here to help building owners maximize their value.
Because the availability of energy incentives can change frequently, you’ll need to work with an experienced finance team to maximize your savings. BlocPower installs many heat pump systems with Energy Service Agreements (ESAs), a type of financing agreement with fixed regular payments.
Under an ESA, many building owners can enjoy the benefits of energy-efficiency heat pumps with no money down for installation. Maintenance costs are bundled into the agreement, and our 15-year performance guarantee gives you total peace of mind. Read more about ESAs and other financing options here.
Whether you pay for your heat pump system through an ESA, a capital lease agreement, or another arrangement, BlocPower’s finance experts will monitor available energy incentives to keep costs low. As leaders in green energy projects, we’ve helped more than 1,000 property owners optimize their energy efficiency at the best possible price.
Ready to find energy incentives to pay for upgrades to your building? We’re ready to help. Find out if your building is eligible.