Michigan 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
Michigan 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 Michigan homeowners.
Michigan Home Energy Rebates
Up to $14,000
Michigan’s MiHER program provides rebates for heat pump installations and other energy efficiency upgrades through two components: HOMES (whole-home efficiency) and HEAR (appliance electrification). Funded by the federal Inflation Reduction Act.
Eligibility: Homeowners and renters in single-family and multifamily buildings. Priority given to low- and middle-income households (80-150% of Area Median Income). Requires home energy assessment by approved contractor.
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.
Michigan homeowners have access to substantial heat pump rebates through the state’s Michigan Home Energy Rebates (MiHER) program, which offers up to $14,000 in rebates for qualifying installations. The program prioritizes low- and middle-income households and is administered by the Michigan Department of Environment, Great Lakes, and Energy. Combined with the federal IRA tax credit of up to $2,000, homeowners can significantly reduce their heat pump installation costs. Palmetto can help you navigate these programs, verify your eligibility, and maximize your available rebates.
Incentive information is based on publicly available data as of 2026 and may change. Contact program administrators to verify current availability and eligibility requirements.
Michigan Electricity Prices
Understanding Michigan’s electricity costs is essential when choosing your home heating and cooling system—especially as rates continue climbing year after year.
Michigan residents pay 19.3 cents per kWh as of 2024, up from 17.5 cents in 2021. That’s a 10% increase in just three years, and notably higher than the national average of 16.5 cents per kWh.
Heat pumps offer a smart response to rising electricity costs. Because they’re 2-3 times more efficient than traditional HVAC systems, they use significantly less electricity to deliver the same amount of heating and cooling to your home.
As electricity rates continue their upward trend, efficiency becomes increasingly valuable. A heat pump’s lower energy consumption means your monthly bills stay more manageable, protecting your budget against future rate increases for years to come.
Price of Energy: Michigan vs National Average
0¢
10¢
20¢
30¢
13.7¢
17.5¢
15.0¢
17.9¢
16.0¢
18.8¢
16.5¢
19.3¢
2021
2022
2023
2024
US Average
Michigan
Source: US Bureau of Labor Statistics, Energy Information Administration, Form 861
Michigan Utility Providers
Michigan’s electricity costs vary by provider. Based on 2023 data, DTE Electric Company averaged 19.7¢ per kWh, Consumers Energy 18.8¢, Great Lakes Energy Coop 17.7¢, and Indiana Michigan Power 15.7¢—compared to the national average of 16.0¢.
Most Michigan utilities charge above the national average due to aging infrastructure upgrades, coal plant retirements, and renewable energy investments. DTE and Consumers serve densely populated areas with higher maintenance costs, while Indiana Michigan Power’s lower rates reflect different fuel sources and regional factors.
Heat pumps can help offset higher electricity costs through exceptional efficiency. They move heat rather than generate it, using significantly less energy than traditional heating systems—meaning lower bills even in areas with above-average rates.
Michigan Utilities Electricity Rates
| Utility Provider | Rate (per kWh) |
|---|---|
| DTE Electric Company | 19.70¢ |
| Consumers Energy Co (MI) | 18.82¢ |
| Great Lakes Energy Coop | 17.71¢ |
| Indiana Michigan Power Co | 15.74¢ |
| MI Average | 18.80¢ |
| US Average | 16.0¢ |
Source: US Energy Information Administration, 2023, Form 861, Table 6
Michigan Heat Pump City Guides
Explore detailed heat pump installation guides for cities across Michigan. Each guide includes local utility rates, incentives, and climate-specific recommendations.
Ann Arbor Detroit Flint Grand Rapids Kalamazoo Lansing Saginaw
Palmetto Reviews
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
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
Ready to start saving with a heat pump?
Speak with a Palmetto heating & cooling expert to find out exactly how much you can save.
Frequently Asked Questions
Do heat pumps work well in Michigan?
Yes, heat pumps work well in Michigan, even during cold winters. Modern cold-climate heat pumps are designed to operate efficiently in temperatures well below freezing, providing reliable heating throughout Michigan’s winter months. They can heat your home effectively while using less energy than traditional furnaces, helping you manage costs despite Michigan’s 19.3¢ per kWh electricity rate.
How much does a heat pump cost in Michigan?
Heat pump costs in Michigan typically range from $5,000 to $20,000 for a complete installation, depending on your home’s size, the system type (ducted or ductless), and equipment efficiency ratings. This upfront investment can be offset by federal tax credits up to $2,000 under the Inflation Reduction Act, plus potential local utility rebates available to Michigan homeowners.
What are the best heat pump brands for Michigan homeowners?
Top heat pump brands for Michigan’s cold climate include Mitsubishi Electric, Carrier, Lennox, Trane, and Bosch. These manufacturers offer cold-climate models that maintain efficiency even when temperatures drop well below freezing, which is essential for Michigan winters. Look for units with a Heating Seasonal Performance Factor (HSPF) of 10 or higher and reliable performance down to -13°F or lower.
Are there heat pump rebates available in Michigan?
Yes, Michigan homeowners can access heat pump rebates through federal and local programs. The federal Inflation Reduction Act offers tax credits up to $2,000 for qualifying heat pump installations when you purchase your system outright. Some Michigan utility companies and local programs may also offer additional rebates or incentives to help reduce upfront costs.
Should I lease or buy a heat pump in Michigan?
The choice between leasing and buying a heat pump in Michigan depends on your financial situation and priorities. Buying means paying upfront but owning the equipment outright, with potential access to federal tax credits up to $2,000 under the Inflation Reduction Act plus local rebates. Leasing through a plan like Palmetto’s Comfort Plan requires $0 upfront, includes all maintenance and repairs, and offers predictable monthly payments.
Is a heat pump worth it financially in Michigan?
Yes, heat pumps can be financially worthwhile in Michigan. Modern heat pumps operate efficiently even in cold climates, and with electricity at 19.3¢ per kWh, they typically cost less to run than traditional heating systems. You may also qualify for federal tax credits up to $2,000 and local rebates, which significantly reduce your investment.
What size heat pump do I need for my Michigan home?
The right heat pump size for your Michigan home depends on several factors: square footage, insulation quality, ceiling height, window efficiency, and Michigan’s cold climate demands. Most homes need between 2 to 5 tons of heating capacity, but an accurate Manual J load calculation performed by a qualified technician is essential to determine your specific needs.