Colorado 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
Colorado 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 Colorado homeowners.
Colorado HEAR Program
Up to $8,000
Home Electrification and Appliance Rebates (HEAR) support high-efficiency electric appliances and other upgrades and are now available to single-family households through registered contractors. Heat pumps installed through the program can qualify for up to $8,000 for cold-climate heat pumps and up to $3,000 for standard heat pump systems toward the total rebate cap of $14,000 per household.
Eligibility: Households must have incomes at or below 150% of the Area Median Income (AMI) in their county. You must reside in an existing home (new construction is ineligible) in Colorado for at least half of the year. Coloradans must work with a registered program contractor in order to get a rebate.
Colorado Heat Pump Tax Credit
Up to $1,000
In 2026 and after, the credit has been reduced to $1,000 for heat pumps. All Colorado residents, businesses, and other organizations who install an eligible heat pump through a registered contractor may receive a portion of the tax credit (at least 33.33%) as a discount at the time of installation.
Eligibility: Heat pumps for space heating/cooling must cover at least 80% of annual heating needs. Installation must be done by a registered contractor, who provides the tax credit as a discount on installation costs. All heat pumps must be Energy Star certified.
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.
Colorado offers multiple active heat pump incentive programs in 2026. The Colorado HEAR program provides up to $8,000 in rebates for income-qualified households (up to 150% of area median income), while the state’s Heat Pump Tax Credit offers up to $1,000 in upfront discounts through registered contractors. Combined with the federal IRA tax credit of up to $2,000, homeowners can access substantial savings. Palmetto can help Colorado homeowners navigate these programs, verify eligibility, and connect with registered contractors to maximize available rebates and incentives.
Incentive information is based on publicly available data as of 2026 and may change. Contact program administrators to verify current availability and eligibility requirements.
Colorado Electricity Prices
Understanding electricity costs in Colorado helps you make smarter decisions about home heating and cooling—especially as rates continue to climb.
Colorado electricity rates have risen from 13.1 cents per kWh in 2021 to 15.1 cents in 2024—a 15% increase in just three years that directly impacts your monthly energy bills.
Heat pumps offer a practical response to rising rates. Because they’re 2-3x more efficient than traditional HVAC systems, they use significantly less electricity to deliver the same heating and cooling comfort.
As electricity costs continue their upward trend, that efficiency gap becomes increasingly valuable. A heat pump’s lower energy consumption means your monthly bills stay manageable even as rates rise over time.
Price of Energy: Colorado vs National Average
| Year | Colorado | US Average |
|---|---|---|
| 2021 | 13.7¢ | 16.0¢ |
| 2022 | 13.1¢ | 14.3¢ |
| 2023 | 15.0¢ | 15.1¢ |
| 2024 | 14.2¢ |
Source: US Bureau of Labor Statistics, Energy Information Administration, Form 861
Colorado Utility Providers
Colorado’s major utility providers—Public Service Co of Colorado, City of Colorado Springs, and CORE Electric Cooperative—all offered rates below the 2023 national average of 16.0¢ per kWh, hovering around the state average of 14.30¢ per kWh.
Colorado’s competitive electricity rates stem from its diverse energy mix, including natural gas, wind, and solar resources. The state’s ongoing transition to renewable energy and favorable geography help utilities maintain costs below national levels while investing in cleaner infrastructure.
These relatively affordable rates make heat pumps particularly attractive for Colorado homeowners. Heat pumps use electricity three times more efficiently than traditional heating systems, meaning even with electricity as your energy source, you’ll likely spend less on heating and cooling year-round.
Colorado Utilities Electricity Rates
| Provider | Rate |
|---|---|
| Public Service Co of Colorado | 14.34¢ |
| City of Colorado Springs | 13.80¢ |
| CORE Electric Cooperative | 14.53¢ |
| CO Average | 14.30¢ |
| US Average | 16.0¢ |
Source: US Energy Information Administration, 2023, Form 861, Table 6
Colorado Heat Pump City Guides
Explore detailed heat pump installation guides for cities across Colorado. Each guide includes local utility rates, incentives, and climate-specific recommendations.
Aurora Boulder Colorado Springs Denver Fort Collins Grand Junction Greeley Pueblo
Frequently Asked Questions
Do heat pumps work well in Colorado?
Yes, heat pumps work well in Colorado, including in colder mountain regions. Modern cold-climate heat pumps efficiently heat homes even when temperatures drop below zero, while also providing air conditioning during warm summers. They can reduce heating costs compared to traditional systems, especially with Colorado’s electricity rate of 15.1¢ per kWh.
How much does a heat pump cost in Colorado?
Heat pump costs in Colorado typically range from $5,000 to $20,000 for a complete installation, depending on your home’s size, existing ductwork, and the system’s efficiency rating. This upfront investment can be offset by federal tax credits of up to $2,000 under the Inflation Reduction Act, plus potential local utility rebates available to Colorado homeowners.
What are the best heat pump brands for Colorado homeowners?
Top heat pump brands for Colorado homes include Mitsubishi, Daikin, Carrier, Lennox, and Trane. These manufacturers offer cold-climate models rated to perform efficiently in subzero temperatures, which is essential for Colorado’s variable winter conditions. Look for units with a Heating Seasonal Performance Factor (HSPF) of 10 or higher and low-temperature ratings down to -13°F or lower.
Are there heat pump rebates available in Colorado?
Yes, Colorado homeowners can access heat pump rebates through multiple programs. The federal Inflation Reduction Act provides tax credits up to $2,000 for qualifying heat pump installations. Additionally, many Colorado utility companies offer local rebates and incentives that can further reduce installation costs, though availability varies by service area.
Should I lease or buy a heat pump in Colorado?
The choice between leasing and buying a heat pump in Colorado depends on your financial situation and preferences. Buying means paying upfront but owning the equipment outright, plus you may qualify for federal tax credits up to $2,000 under the Inflation Reduction Act. Leasing through a Comfort Plan requires $0 upfront and includes all maintenance and repairs with a predictable monthly payment.
Is a heat pump worth it financially in Colorado?
Yes, heat pumps are typically worth it financially in Colorado. They can reduce heating and cooling costs by up to 50% compared to traditional systems, and with Colorado’s electricity rate at 15.1¢ per kWh, the operational savings add up significantly over time. Heat pumps also provide both heating and cooling in one efficient system.
What size heat pump do I need for my Colorado home?
Heat pump size depends on your home’s square footage, insulation quality, ceiling height, and Colorado’s climate conditions. Most Colorado homes need a system between 2 to 5 tons. A professional energy assessment measures your specific heating and cooling loads to determine the right capacity—undersized units struggle during cold snaps, while oversized systems cycle inefficiently and waste energy.