With the White House making a hard shift away from the IRA on Trump’s first day back in office, one thing is clear: HVAC can’t count on the feds to be the only ones incentivizing heat pumps.
Not that electrification, decarbonization, or heat pumps are going anywhere — every manufacturer I spoke with at AHR Expo this year said the momentum will continue. It will just be less top-down.
“What we’ve been hearing from the market is, regardless of 25C credits, the majority of activity — what homeowners ask about and what contractors push — is local utility incentive rebates from your power and gas company, and those will survive,” said Charles Hurd, director of residential product management at Johnson Controls.
In other words, electrification is now going to be up to the states and utilities.
What does that look like? Well, we are finally getting a road map to large-scale adoption. No surprise, California is leading the way. Their California Heat Pump Partnership (CAHPP) launched last May: a massive collaboration spanning heat pump advocates, utilities, distributors, the state, and a 19-member advisory board including everyone from Home Depot to the LA mayor’s office to big-name manufacturers in HVAC.
Just under 200,000 heat pumps are installed each year in California. CAHPP’s goal is coordinated “barrier-busting” to quadruple the number of heat pumps installed — and make them accessible to all Californians, not just those with disposable income who have the luxury to purchase new ‘green’ appliances.
Ten months later, CAHPP has produced its first deliverable: a first-of-its-kind report developed by a private-public partnership to address major barriers to heat pump adoption.
The Blueprint is a straightforward read. It starts off by naming the challenges: high upfront cost, low awareness, complex incentives and permitting, shortage of trained installers. Most HVAC contractors have probably had this very conversation over dinner, in their shops, or with a customer at the kitchen table.
“For mass heat pump adoption, the following key factors must align,” the Blueprint states. “1. Customers must want and be able to afford them. 2. Contractors must be motivated and equipped to sell and install them.”
The rest of the Blueprint covers four near-term strategies to address these barriers and catalyze growth:
1/ Improve customer economics. This covers long-term incentives, electrification-friendly rates, low-cost financing, and retrofit opportunities
2/ Streamline the sales and installation process — modernize local permitting, simplify incentive programs so they’re easier to understand and use.
3/ Accelerate market adoption, with a focus on contractors and consumers alike.
And finally, 4/Collect heat pump adoption data to track progress and inform future strategy.
Supporters in the California legislature are already working on Pillar 2. SB 282, the Heat Pump Access Act, passed out of the Senate Energy, Utilities and Communications Committee in early April. Its goal is to streamline permitting for heat pump installations across the state, including standard fees, faster or instant permit issuance, and prohibitions against HOAs or other jurisdictions from imposing additional heat pump install requirements beyond state code.
Pillar 3 is another that HVAC contractors should pay attention to, because it acknowledges what the IRA’s naysayers feel the feds glossed over: Heat pumps won’t sell unless techs are out there fighting for them — and, if they’re poorly installed, customer complaints will make the whole thing backfire.
The Blueprint calls it “vital.”
“The only way to get to 6 million heat pumps by 2030 is with a skilled and prepared workforce,” said Terra Weeks, executive director at CAHPP. “On the contractor side, we’re seeing some reluctance and hesitation to really center heat pumps in business models, for understandable reasons, and then also on the installer side, we just need to ensure that there’s enough trained installers to do this work as the market grows in California.”
HVAC outfits strapped for employees will be glad to see there’s an entire section in the Blueprint devoted to developing a workforce engagement campaign, including support for technical training, positioning contractors as heat pump advocates, assembling an industry advisory council to provide recommendations for action, and creating a contractor resource hub.
Weeks wants the hub to be something HVAC professionals will really use.
“There’s a lot of innovation happening in digital streamline permitting, for example. So we’re having conversations with companies like Symbium and SolarAPP about potentially integrating some of that innovation into our platform,” she said.
They’re also looking at building out an incentive stacking tool to help contractors calculate the total incentive a specific customer could get.
“And actually be able to see which ones can be stacked together,” she said, “instead of just having, you know, one at a time, here are the incentives that you would be eligible for.”
I’ve heard from manufacturers that some contractors would rather skip the incentives altogether than take on the role of tax advisor, so I expect this tool will make pricing conversations a lot easier.
Meanwhile, on the consumer side, CAHPP plans to “supercharge” heat pump marketing efforts, creating “a positive feedback loop where informed consumers drive contractor interest in heat pumps, and knowledgeable contractors, in turn, boost consumer confidence.” One of the strategies is working with influencers — maybe later this year, we’ll see heat pump content pop up in Reels! They’re even planning a Heat Pump Week.
“States like California will find ways to help people make the right choice to buy heat pumps,” Weeks said — regardless of whether incentives at the federal level are absent or present.
CAHPP is, obviously, focusing its work on California.
“But there is growing interest in expanding this approach to other states and regions,” Weeks said. “We do hope this serves as a national model for how government and industry can work together to achieve a common goal.”
I’ll be keeping an eye on CAHPP. If execution goes as well as planning, I wouldn’t be surprised to see other states following suit in the not-too-distant future. The path is already being charted.