Despite uncertainty regarding the disbursement of Inflation Reduction Act funds, do states continue to support efficient electrification through heat pump adoption? RAP and CLASP’s webinar series, “Federal Dollars, State Policies and Heat Pumps: The Future of Heat,” has been considering this question in regions around the country. At the end of last month, we heard from panelists in the Mountain West who showcased the ways that heat pumps are being adopted in their region.
Our Mountain West panelists were Devin Filicicchia, an electrification specialist with Missoula, Montana’s Community Development Division; Maren Mahoney, director of the Arizona Office of Resiliency; and Neil Kolwey, industrial program director and building electrification specialist at the Southwest Energy Efficiency Project (SWEEP).
Aligning Goals & Pooling Resources: Keys to a Successful Small Program
Filicicchia administers a relatively small residential heat pump water heater rebate program available to anyone within Missoula County limits. The program is funded by the state Department of Environmental Quality. The rebate provides $500 for a heat pump water heater and an additional $75 simply for completing a follow-up survey. This survey has proved to be instrumental in developing an understanding of heat pump water heater adoption trends and challenges.
Filicicchia administers Electrify Missoula, an “umbrella” program and collaboration between the city of Missoula, the county, and a local nonprofit, Climate Smart Missoula. All three share similar goals: improving public health and reducing energy use and air emissions. Filicicchia pointed out that this collaborative approach streamlines the process for residents interested in electrifying their homes. Resources for the county and the city are all hosted on the same platform, eliminating the need for consumers to visit multiple websites.
Filicicchia noted that pooling financial resources and shared personnel capacity among the partner organizations has been important to his program’s success. He observed that if the city took on a program like this alone, success would likely have been limited.
Arizona: Public Health and Cooling with Heat Pumps
Mahoney noted that the Phoenix metro area has a unique relationship with heat pumps in that they provide essential cooling, a necessity due to hotter and longer “heat seasons.” That’s the term now used in Arizona instead of summer; during 2023’s heat season, Maricopa County alone experienced over 600 heat-related fatalities, over a 50% increase from 2022. That 2023 season broke weather records — until 2024, when Arizona saw 113 days over 100 degrees F. Mahoney observed that extreme heat is a natural disaster — perhaps a bit slower moving than a hurricane or a flood, but a disaster nonetheless.
These conditions prompted the Arizona Office of Resiliency to develop an Extreme Heat Preparedness Plan, with various interventions calling for improvements in housing, energy, and emergency response. In 2024, Arizona received IRA funding, $76 million of which was directed by the governor to a Home Energy Appliance Rebate Program that Mahoney’s office has been putting into place. Mahoney noted that she had had previous discussions with experts at RAP and CLASP to discuss hybrid heat, the use of two-way heat pumps to replace air conditioning, and that she drew upon those conversations to conceptualize her current heat pump program. Central to the program is the replacement of inefficient central air conditioning with heat pumps, especially in homes occupied by low- and moderate-income Arizonans.
Mahoney also emphasized the need for collaboration on these programs — a lesson RAP and CLASP have heard in every jurisdiction we have engaged. Mahoney’s program coordinates state-wide with 22 federally recognized tribes, various electric cooperatives, municipalities, investor-owned utilities, and Efficiency Arizona. Mahoney noted that RMI’s Clean Energy Hub concept has been very helpful to Arizona businesses and individuals in coordinating information on rebates and other heat pump-related resources. The Clean Energy Hub resource allows an individual or business to enter a few data points such as location and utility service territory to help determine eligibility for rebates or other benefits.
Colorado: Heat Pumps, Fuel Switching, and Gas Company Clean Heat Plans
Kolwey discussed heat pump rollouts in Colorado, illustrating his points with utility programs from Xcel Energy, Black Hills Energy and Tri-State Coops. Kolwey explained that policy is a significant driver of heat pump adoption, noting for example that Xcel, over the last three to four years, has tripled the number of heat pump rebates awarded in its service area.
One driver of heat pump adoption is a legislative green light for fuel-switching. The Colorado legislature has clarified that Xcel and Black Hills can engage in fuel-switching, allowing the company to use heat pumps to replace natural gas home heating. Both utilities are also required to develop beneficial electrification plans as part of their overall energy efficiency planning.
Colorado’s Clean Heat Plan requirement, a significant driver of heat pump adoption, directs the state’s six investor-owned gas utilities (Xcel being the largest) to reduce their greenhouse gas emissions 4% by 2025 and 22% by 2030. In 2024 Xcel provided a $1,500 rebate for a basic Energy Star heat pump that one would expect to work along with a backup furnace. Today, their rebate is $1,200 per cooling ton, translating to roughly $3,600 for the same type of heat pump. For a cold-climate heat pump, the rebate is $2,150 per heating ton, translating into roughly $8,800 for a four-ton heat pump.
Kolwey explained that contractors have incentives to work with utilities, completing training so they can be included on lists of utility-approved installers and be allowed to offer rebates.
Utah: Heat Pumps, Revenue-Decoupled Gas Companies and Multi-Family Housing
Kolwey described a unique partnership in Utah between Rocky Mountain Power, an electric utility, and Dominion Energy, a gas utility. They both provide rebates for heat pumps, allowing customers in many cases to double their rebate. RMP is also now allowed by state law to fuel-switch and to provide heat pumps as part of its energy efficiency programs.
Dominion is able to promote electric heat pumps because it already has “revenue decoupling,” meaning that company earnings are not tied to the amount of gas the utility sells. In 2023, between Rocky Mountain Power and Dominion, roughly 3,000 heat pumps were installed, doubling the amount from 2022.
The heat pump adoption challenge is even greater in multifamily housing, but Kolwey shared an interesting story from Utah involving work done by ICAST for Rocky Mountain Power. The utility’s Custom Multifamily Program, implemented by ICAST, promotes deep energy retrofits in both market-rate and low-income multifamily properties, including through use of utility rebates. ICAST goes into buildings and does as much energy efficiency work as possible, including heat pump installations, producing significant energy and cost savings. More recently, ICAST has been able to improve multifamily housing by replacing outdated/legacy gas boiler systems.
Whether it is local government cooperating with nonprofits, a state program coordinating with dozens of municipalities and tribes, or utilities experimenting with fuel-switching and finding ways to improve multifamily housing, heat pump adoption is ramping up thanks to creative and highly effective programs in the Mountain West.
Watch or listen to Federal Dollars, State Policies and Heat Pumps: The Future of Heat in the Mountain West.
