Ann Arbor, MI Heat Pump Leasing & Installation
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.
Ann Arbor, MI Heat Pump Load Calculator
Use this calculator to estimate your home’s heating and cooling needs based on square footage. It uses ACCA-standard design conditions for Ann Arbor, MI: 72°F indoor, 91°F outdoor cooling, and -5°F heating temperatures. For a precise Manual J load calculation and personalized quote, connect with Palmetto’s team. Get in touch with our team for an official quote.
Home location & size
Your home’s location and size directly impact heating needs.
- ZIP Code
- Number of residents
- Home Square Footage (sq ft)
- Home Ceiling Height (ft)
Home attributes
- Amount of sunlight: Low, Moderate, High
- Insulation: Poor Insulation, Standard Insulation, Good Insulation, Excellent Insulation
- Number of Windows
- Window and Door Seals: Poor fit & Seal, Typical fit & Seal, Good fit & Seal
Additional details
- Do you have a kitchen? Yes, No
- Do you have any glassed-in rooms? Yes, No
- Extra Device Wattage (W)
Estimated Heating Needs
Your home’s location falls within a climate zone with the average extreme winter falling between 10° – 15° F.
Home Details
Recommended equipment capacity
- 60,000 BTU
- 5 Tons
Calculated Cooling Mode
- 102,000 BTU
- 8.5 Tons
Buy it or finance it. Your comfort, your call
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 |
Ann Arbor, MI Heat Pump Rebates & Incentives
Local and federal incentive programs can significantly reduce the cost of a new heat pump system. Here are the programs available to Ann Arbor homeowners.
A2ZERO Home Energy Rebate
Up to $8,000
City of Ann Arbor program offering rebates for heat pump installations and other energy efficiency upgrades. Provides up to $8,000 for heat pump retrofits with higher amounts for income-qualified residents.
Eligibility: Must own or rent residential property within City of Ann Arbor. Income-qualified households (at or below 120% of Area Median Income) receive enhanced rebates. Funds available through June 30, 2026 on first-come, first-served basis.
Michigan Home Energy Rebates
Up to $8,000
State program (MiHER) offering rebates for heat pump installations and whole-home energy efficiency upgrades. Includes HEAR program with up to $8,000 for heat pump for heating or cooling.
Eligibility: Michigan residents in eligible areas. Enhanced rebates available for households earning 80% or below Area Median Income. Standard rebates for households earning 81-150% of AMI. Applications accepted statewide.
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.
Climate Zones
Ann Arbor sits in IECC Climate Zone 6, which means cold winters that can dip to -5°F and warm summers reaching 91°F. These temperature swings matter—your heat pump needs to handle both extremes efficiently. At Palmetto, we understand Ann Arbor's climate and help homeowners choose systems sized for year-round comfort.
Climate Zone 6
Cool climate zone with cold winters and warm summers.
Climate Zone 6A
Avg. extreme winters: -10° to -5° F
Climate Zone 6B
Avg. extreme winters: -5° to 0° F
Ann Arbor Electricity Prices
Understanding electricity costs in Ann Arbor helps you make smarter decisions about home heating and cooling for the years ahead.
Michigan's electricity rates have climbed steadily from 17.5 cents per kWh in 2021 to 19.3 cents in 2024—consistently higher than the national average and showing no signs of slowing down.
Heat pumps use 2-3 times less electricity than traditional HVAC systems to deliver the same heating or cooling. That efficiency advantage means lower monthly bills even as rates continue to rise.
Price of Energy: Michigan vs National Average
Ann Arbor Area Utility Providers
Ann Arbor residents receive electricity primarily from two providers: Consumers Energy at 18.8¢ per kWh and DTE Energy at 19.7¢ per kWh (2023 data). Both rates sit above the national average of 16.0¢ per kWh.
Ann Arbor Utilities Electricity Rates
| Provider | Rate (¢/kWh) | Increase (%) |
|---|---|---|
| Consumers Energy | 18.80 | +18% |
| DTE Energy | 19.70 | +23% |
| MI Average | 18.80 | +18% |
| US Average | 16.0 | — |
Palmetto Reviews
Long term lease plans aren’t for everyone! But for my specific situation it made sense. For some it may not! But my experience has been great overall 🙂
Palmetto Customer, IL
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
Repair versus replace
When a heat pump is in need of repair it is worth considering whether a replacement would be a better investment. While each case is unique, we generally recommend investing in a new unit when repairs exceed $5,000.
| Potential repair | Cost range | Description |
|---|---|---|
| Capacitor Replacement | $150 - $400 | Common issue when unit struggles to start or makes a humming noise. Capacitors store the electrical energy needed to start the compressor and fan motors. |
| Refrigerant Recharge | $250 - $750 | Needed when the system loses cooling or heating efficiency due to low refrigerant levels. Includes leak detection, repair of minor leaks, and recharging the system to the manufacturer-specified level. |
| Reversing Valve Replacement | $450 - $900 | Required when the unit cannot switch between heating and cooling modes. The reversing valve directs refrigerant flow and is unique to heat pump systems. |
| Compressor Replacement | $1,500 - $3,000 | Major repair needed when the unit fails to heat or cool entirely. The compressor is the heart of the system, circulating refrigerant between the indoor and outdoor coils. |
| Evaporator/Condenser Coil Replacement | $1,200 - $2,800 | Replacement needed when coils develop leaks or corrosion that cannot be economically repaired. Coil damage reduces heat transfer efficiency and can cause refrigerant loss. |
| Control Board Replacement | $500 - $1,200 | Required when the system has electrical failures or erratic behavior. The control board manages all system operations including defrost cycles, fan speeds, and compressor staging. |
| Full System Replacement | $4,500 - $8,000+ | When repairs exceed the value of the unit or multiple major components fail simultaneously. Includes removal of the old system and installation of a new heat pump with updated refrigerant lines and electrical connections. |
Frequently Asked Questions
Do heat pumps make sense in Ann Arbor?
Yes, heat pumps make excellent sense in Ann Arbor. Modern cold-climate heat pumps work efficiently even at Ann Arbor's design heating temperature of -5°F, while providing efficient cooling during summer highs around 91°F. With Michigan's electricity rate of 19.3¢ per kWh, heat pumps typically cost less to operate than traditional heating systems year-round.
How efficient are heat pumps in Ann Arbor's climate?
Heat pumps perform very effectively in Ann Arbor's Climate Zone 6, even during cold winters. Modern cold-climate heat pumps maintain efficiency down to -5°F and below, making them well-suited for Ann Arbor's design heating temperature. They typically deliver 2-3 times more heating energy than the electricity they consume, which translates to significant savings compared to traditional heating systems at Michigan's current rate of 19.3¢ per kWh.
Should I lease or buy a heat pump in Ann Arbor?
The choice between leasing and buying a heat pump in Ann Arbor depends on your financial situation and preferences. Palmetto's Comfort Plan offers $0 upfront with predictable monthly payments and all maintenance included, while direct purchase means you own the system outright and may qualify for up to $2,000 in federal tax credits under the Inflation Reduction Act plus local rebates.