Arizona Heat Pump Leasing & Installation Guide
Benefits of Palmetto Heat Pumps
Say goodbye to clunky old systems and surprise repairs. Palmetto Comfort Plan gives you a brand-new heat pump, installation, and full support, all wrapped into one subscription.
Year Round Comfort
A high-efficiency heat pump keeps your home cool in summer, warm in winter, and your energy use in check all year long.
Forget the maintenance
With a Comfort Plan subscription, installation and maintenance are fully covered, no surprise bills, no weekend DIY.
Rewards for renewing
Stick with us and earn credits toward your next system upgrade. It’s our way of saying thanks for building a cleaner, comfier future with us.
Buy it or finance it. Your comfort, your call
There’s no wrong way to get cozy. Here’s how the options stack up, so you can choose what works best for you.
| Comfort Plan | Cash | Loan | |
|---|---|---|---|
| Payment schedule | $0 upfront, then monthly subscription | Full price upfront | $0 upfront, then monthly payment |
| Term length | 10 or 12 years | None | Variable |
| End of term options | Flexible with 25% renewal term credits to new system | No credits to new system | No credits to new system |
| Maintenance included | Yes | No | No |
| Eligible for incentives | Yes | No | No |
Get a quote See how Comfort Plan works
Arizona Heat Pump Rebates & Incentives
State and federal incentive programs can significantly reduce the cost of a new heat pump system. Here are the programs available to Arizona homeowners.
Efficiency Arizona HEAR
Up to $14,000
Efficiency Arizona is a rebate program for qualified households to install highly efficient appliances and HVAC equipment to improve energy efficiency, home comfort, and help Arizonans save on their energy bills. The HEAR rebate program runs through September 30, 2031 for qualified projects including Energy Star certified electric heat pumps, with 100% of electrification project costs up to $14,000 for low-income households, and 50% of costs up to $14,000 for moderate-income households.
Eligibility: Low-income households are defined as households making less than 80% of the area median income, and moderate-income households are defined as households making between 80% and 150% of the area median income. Homes with existing heat pumps are not eligible for the heat pump rebate.
SRP Cool Cash Rebate
Up to $225 per ton
SRP offers the Cool Cash™ Rebate for customers who install high-efficiency air conditioners, heat pumps, or mini-split systems, with rebates paid on a per-ton basis and up to $225 per ton for the highest efficiency variable-capacity units, with equipment installation required by April 30, 2026.
Eligibility: The qualified system must be installed by a contractor licensed in Arizona to install residential air-conditioning systems before April 30, 2026. Applicants must be SRP customers.
Federal IRA Tax Credit
Up to $2,000
The Inflation Reduction Act provides a federal tax credit of up to $2,000 for qualifying heat pump installations through 2032.
Eligibility: Available to homeowners who purchase and install a qualifying heat pump system. Claimed on your annual federal tax return.
Arizona homeowners have access to multiple heat pump incentive programs in 2026. The Efficiency Arizona HEAR program offers substantial point-of-sale rebates up to $14,000 for low- and moderate-income households installing Energy Star certified heat pumps through September 30, 2031. Additionally, SRP customers can access the Cool Cash Rebate for high-efficiency heat pump installations (equipment must be installed by April 30, 2026). All homeowners can also claim the federal IRA tax credit of up to $2,000. Palmetto can help homeowners navigate these programs, verify eligibility, and maximize available rebates to reduce upfront costs for heat pump installations.
Arizona Electricity Prices
Understanding Arizona’s electricity costs helps you make smarter decisions about home heating and cooling—especially as rates continue to climb.
Arizona electricity rates have risen nearly 20% since 2021, climbing from 12.5 to 14.9 cents per kWh by 2024. While still below the national average, these increases impact your monthly energy bills significantly.
Heat pumps offer a practical response to rising rates. Because they’re 2-3 times more efficient than traditional HVAC systems, they use less electricity to deliver the same heating and cooling—reducing your consumption even as prices increase.
Over the lifespan of your system, this efficiency advantage compounds. As electricity costs continue their upward trend, heat pumps help insulate your budget from rate increases while maintaining year-round comfort in Arizona’s climate.
Price of Energy: Arizona vs National Average
| Year | Arizona | US Average |
|---|---|---|
| 2021 | 12.5¢ | 13.7¢ |
| 2022 | 14.0¢ | 13.0¢ |
| 2023 | 14.9¢ | 16.0¢ |
| 2024 | -- | -- |
Source: US Bureau of Labor Statistics, Energy Information Administration, Form 861
Arizona Utility Providers
Arizona’s three major utilities—Arizona Public Service, Salt River Project, and Tucson Electric Power—averaged below the 2023 national rate of 16.0¢ per kWh, with rates ranging from 12.5¢ to 15.3¢ per kilowatt-hour.
Salt River Project offers the lowest rates at 12.5¢ per kWh, while Arizona Public Service and Tucson Electric Power run slightly higher but still below the national average. Arizona’s abundant solar resources and diverse energy mix help keep electricity costs competitive statewide.
Heat pumps shine in Arizona’s electricity landscape. Their exceptional efficiency means lower energy consumption regardless of your utility provider—often cutting heating and cooling costs significantly compared to traditional HVAC systems, even where electricity rates run higher.
Arizona Utilities Electricity Rates
| Utility Provider | Rate | Difference |
|---|---|---|
| Arizona Public Service Co | 15.31¢ | -4% |
| Salt River Project | 12.47¢ | -22% |
| Tucson Electric Power Co | 14.97¢ | -6% |
| AZ Average | 14.00¢ | -12% |
| US Average | 16.0¢ | -- |
Source: US Energy Information Administration, 2023, Form 861, Table 6
Arizona Heat Pump City Guides
Explore detailed heat pump installation guides for cities across Arizona. Each guide includes local utility rates, incentives, and climate-specific recommendations.
Chandler Gilbert Glendale Goodyear Mesa Phoenix Prescott Scottsdale Tempe Tucson
Palmetto Reviews
The overall process was very easy. The specific payment plan offered was a tremendous help when I needed to resolve my AC problem. I would recommend for convenience and service.
Palmetto Customer, VA
Everything about my experience was excellent. My new HVAC system was installed the next day; the process took less time than expected; the technicians were friendly, polite, and professional; and my home has been a comfortable temperature since with zero issues.
Palmetto Customer, MD
We have already told friends about how well we were treated during our new HVAC purchase and installation. Your service met our needs and everything was done easily and promptly.
Palmetto Customer, SC
Frequently Asked Questions
Do heat pumps work well in Arizona?
Yes, heat pumps work exceptionally well in Arizona’s climate. Modern heat pumps efficiently cool homes during the state’s hot summers and provide heating during cooler winter months. Arizona’s mild winters mean heat pumps don’t struggle with extreme cold temperatures, allowing them to operate at peak efficiency year-round while helping you manage electricity costs at Arizona’s current rate of 14.9¢ per kWh.
How much does a heat pump cost in Arizona?
Heat pump costs in Arizona typically range from $5,000 to $15,000 for a complete installation, depending on your home’s size, existing ductwork, and the system’s efficiency rating. Arizona homeowners who purchase a heat pump outright may qualify for federal tax credits up to $2,000 under the Inflation Reduction Act, plus potential local utility rebates that can significantly reduce the total investment.
What are the best heat pump brands for Arizona homeowners?
Top heat pump brands for Arizona homeowners include Carrier, Trane, Lennox, and Rheem, all known for reliable performance in hot, dry climates. These manufacturers offer models with high SEER2 ratings (efficiency in cooling mode) and strong warranties, which matter in a state where cooling dominates energy bills at 14.9¢ per kWh.
Are there heat pump rebates available in Arizona?
Yes, Arizona homeowners can access heat pump rebates through federal programs and may find additional incentives through local utilities. The federal Inflation Reduction Act offers tax credits up to $2,000 for qualifying heat pump installations when you purchase your system outright, making upgrades more affordable for Arizona residents.
Should I lease or buy a heat pump in Arizona?
The choice between leasing and buying a heat pump in Arizona depends on your financial situation and preferences. Buying outright means you own the equipment and may qualify for federal tax credits up to $2,000 under the Inflation Reduction Act, plus potential local rebates. Leasing through a plan like Palmetto’s Comfort Plan requires $0 upfront and includes all maintenance, repairs, and warranty coverage with a predictable monthly payment.
Is a heat pump worth it financially in Arizona?
Yes, heat pumps can be worth it financially in Arizona. Heat pumps typically use 50% less electricity than traditional heating and cooling systems, which translates to meaningful savings on your energy bills—especially important with Arizona’s electricity rate of 14.9¢ per kWh. Over time, these monthly savings can offset your initial investment.
What size heat pump do I need for my Arizona home?
The right heat pump size for your Arizona home depends on square footage, insulation quality, ceiling height, and cooling demands. Most Arizona homes between 1,500-2,500 square feet need a 2-5 ton unit, but a professional load calculation using Manual J methodology ensures you get the correct capacity for efficient operation and comfort.