How Denver Heat Pump Rebates Work (2025 Rebates Paused)

*CRITICAL UPDATE: As of March 17, 2025, the City of Denver has sent out notification that all current 2025 funding under the program has been allocated, and there are no more funds available for heat pump rebates or other energy efficient upgrades from the city.

*We will update this article as soon as things change and if they provide more information on restarting the program.

Direct from their latest email to the approved heat pump contractors:

“As of March 10, Denver’s residential heat pump rebate program is fully subscribed for 2025. We have seen unprecedented number of applications for rebate approvals in the last two months which has used the funding allocated for 2025. We are working through processing and approving any applications submitted prior to March 10 on a first come, first served basis.”

ORIGINAL ARTICLE STARTS HERE:

You may have been hearing about all these rebates out there for Denver homeowners related to new heat pump installations lately. If so, you’d be right!

There are actually many different rebates throughout Colorado from many organizations, but one of the best singular ones is offered by the City and County of Denver, if you own a home within the city.

In this article, my goal is to outline what the Denver heat pump rebates are, who can get them, and what the process looks like from a homeowner’s perspective. Without delay, let’s get into it!

What Are The Denver Heat Pump Rebates?

Denver is often considered one of the most climate-forward (I might have made up that word), sustainable cities in the country. The city’s aggressive plan to go green and also to electrify the city (move away from burning gas and fossil fuels) means that they are incentivizing homeowners to help speed up this electrification process.

Through Denver’s Climate Action, Sustainability, and Resiliency Agency, also known as Denver CARes, you can qualify for a number of different rebates, adding up to thousands of dollars to help upgrade.

One of the best ones out there is their heat pump rebate program. In short, and for qualified heat pump installs and equipment, you can get $3,500 as an up-front discount from a CARes-approved contractor to help with the cost of a heat pump install. Not only that, you can qualify for another $2,000 if you need accompanying electrical work to install the new heat pump.

This is great if you’re looking to replace an old A/C, furnace, boiler, or other HVAC system and want to save on your energy bills while upgrading to new technology. While heat pumps cost a little bit more than the older systems, these rebates can really help equalize the pricing.

New (Lower) Rebate Amounts Starting March 15, 2025

The Denver CARes office just released a new memo as of February 14th, 2025, outlining new (lower) rebates that start March 15, 2025. Due to Xcel Energy recently tripling their heat pump rebates, Denver has now lowered their per-project amounts across the board.

While the rebates are reduced a bit, you can still earn thousands of dollars from Denver if you plan your heat pump project(s) correctly. In short, Denver is also only providing rebates for the highest efficiency equipment across the board. We love this, because it allows homeowners to truly electrify their homes without sacrifices in our particular climate, among other benefits.

Here is a list of their new heat pump rebates starting March 15, 2025. I also included all other electrification project rebates as well. Oftentimes it makes sense to do many of these at once, and we can help you with that if you like.

Updates to Denver CARes Heat Pump Incentives:

• Cold Climate Air source Heat Pumps new rebate amount: $1,200, not to exceed 40% of project cost
• Ground Source Heat Pups new rebate amount: $1,200, not to exceed 80% of project cost
• Cold Climate Minisplit Heat Pump: $1,200, not to exceed 40% of project cost
• Smart Heat Pump Hot Water Heater: $500 not to exceed 60% of project cost

EV Charger Wiring Incentives:

• EV charger – 80% of the project cost, up to $200
• Bi-Directional EV charger – 80% of the project cost, up to $2,000
  • Please note: before you apply for a bi-directional charger rebate, please reach out to Denver CARes with the charger type and corresponding vehicle
• EV charger wiring rebates are not available for New Construction or Gut/Rehab projects

Updates to Solar Incentives

• Solar incentives – $1 per watt up to $2,000 or 80% of the project cost, whichever is lower
• Solar rebates are not available for New Construction or Gut/Rehab projects
• Solar rebates are only available to residents who have already installed a heat pump, heat pump water heater, or bidirectional EV charge

Updates to Battery Storage Incentives

• 80% of the project cost, up to $500 (available to all residents)
• 80% of the project cost, up to $2,750 (only available if you have a heat pump, heat pump water heater, or bidirectional EV charger installed)

Updates to Electrical Service Upgrade Incentives

• Electric Service Upgrade Up to 80% of project cost capped at $1,000
• Electric service upgrades are only available when paired with a rebate for a heat pump (any type), heat pump water heater, solar, or battery storage
• Electric service upgrades are not available for New Construction or Gut/Rehab projects

What Kind Of Building Are You Working On?

Denver has created a guide that helps you see what type/designation of building type you’re working on. While we work on and are writing about mainly residential homes, there are different rebates for duplexes, townhomes, multifamily, commercial, and more.

You can view/download their handy PDF guide here for more information on this.

What Heat Pump Equipment Qualifies For The Rebate?

All the technicals, heat pump options, and specifications for this kind of equipment can be mind boggling. Even for those of us in the industry.

But to sum it up: only very efficient rated heat pumps will qualify for the rebates. Many of the similar incentive programs all follow similar specification and performance requirements in order to qualify for rebates. But what is a good heat pump anyway? Straight from Denver’s Heat Pumps 101 page:

Standard heat pumps lose efficiency and capacity at temperatures below 40 degrees. This can mean you need a supplementary system. Cold climate heat pumps are designed to maintain a higher efficiency and capacity at lower temperatures. Cold climate heat pumps can maintain more than 70% of their capacity at temperatures as low as 5°F, and some operate as low as -15°F.

In the real world, this means that your new heat pump will actually be much more efficient than older gas heating equipment in our specific climate zone.

It means that when designed right, and when you use the correct and most efficient equipment, your energy bills will in actuality be lower, you’ll be more sustainable, and you’ll be comfortable (sometimes our customers are more comfortable than before), among other benefits.

Specifically though, here are the equipment specifications needed to qualify for any heat pump rebates from the city. There are basically two tiers:

Ducted Heat Pump Specification Requirements:

Ducted systems are heat pumps that will be using ductwork to move the air throughout your home. This means either reusing your existing ductwork, or creating new ductwork.

Air Source Cold-Climate Rated Heat Pump Rebates:

• Efficiency minimums: 15.2 SEER2, 10.0 EER2, 8.1 HSPF2
• Maximum rebate for this tier: $3,500 until March 14, 2025 (until existing funds run out). After March 15, 2025: $1,200
• Rebates cannot exceed 40% of the total cost.
• Quality install by approved contractor required.
• Must be listed on ashp.neep.org with a specific AHRI number.
• Must have a MAX COP at 5F > 1.75 (Rated or Max)
• Must have a minimum 70%, ratio of Capacity at 5F (Max or Rated) / Capacity at 47F (Rated Only)

Ductless / Mini Split Heat Pump Specification Requirements:

Ductless systems are heat pumps that do not use any ductwork. The most common one you’ve seen is the wall unit mounted inside a room. Now the ceiling cassettes and lower floor-mounted ones are getting more popular too.

Air Source Ductless Cold-Climate Rated Heat Pump Rebates:

• Efficiency minimums: 16.0 SEER2, 9.0 EER2, 9.5 HSPF2
• Maximum rebate for this tier: $3,500 until March 14, 2025 (until existing funds run out). After March 15, 2025: $1,200
• Rebates cannot exceed 40% of the total cost.
• Quality install by approved contractor required.
• Must be listed on ashp.neep.org with a specific AHRI number.
• Must have a MAX COP at 5F > 1.75 (Rated or Max)
• Must have a minimum 70%, ratio of Capacity at 5F (Max or Rated) / Capacity at 47F (Rated Only)

You’ll notice the slightly long list of requirements for these cold-climate heat pumps. To try to sum this up in real-world terms:

• Cold-climate heat pumps will operate more efficiently, even as the outside temperature gets down to 0 or even below. These numbers you see above represent how efficiently the heat pump will work when the temperature gets way down there.
• COP = Coefficient of Performance. This is a ratio to help us see how efficiently a heat pump moves (they move heat, they don’t create heat) heat when the temperatures get extremely low, among other things.
• Denver, Xcel Energy, and the State of Colorado, and other rebate programs all require these systems to operate efficiently enough when it’s 5 degrees outside vs. when it’s warmer, like at 17 or 47 degrees (industry-specific temps to set benchmarks). This is that 70% minimum ratio of capacity they mention.

As a sidenote – we only like to install the best cold-climate systems out there. As a heat pump installer, this means the homeowner will get the most efficient and comfortable system, but also guarantees that they qualify for the rebates, which in reality add up to thousands of dollars per install when done correctly (see example below for a Denver install).

How Do You Get The Denver Heat Pump Rebate?

The Denver CARes website has some great information on it, but you might find yourself clicking around a lot. But here is the general process that needs to be followed in order to get the Denver rebates. We must do these as registered contractors ourselves, but this list is from your perspective:

1. Reach out to approved/registered contractors within the City of Denver CARes program and do some due diligence on which companies may fit you best.
   
2. Start getting quotes for great heat pump systems that will fit your specific home. As a sidenote – heat pump design can be very complicated and really needs engineering to do correctly.
   • We have a lot of resources about correct heat pump design on our blog, and one on 5 Questions To Ask Your Heat Pump Contractor, but Denver also has some good resources to start looking through –
     • Heat Pumps 101
     • Heat Pump Buying Guide
       
3. Choose the right contractor, proposal, and system for you and your home.
   
4. The chosen heat pump contractor/installer then needs to get pre-qualification from the CARes office in order to reserve your funds. The preapproval process is long and stringent, but the good news is that your contractor is going to do this for you. This preapproval process part can take up to 10 days.
   
5. The contractor will do the install.
   
6. Permit inspections are done, and now the contractor can apply for the Denver rebate. The rebate goes to the contractor and the check arrives many weeks after the final submission is made. The good news for you as the homeowner again is that this is required to be an up-front discount from the City of Denver. You’ll get the discount straight off the top of the invoice, so you don’t have to worry about receiving any rebate checks yourself. This also means the risk and responsibility to receive this is on the contractor, not you.
   • There are a number of things the installer has to do in terms of picture verification, paperwork, model numbers, serial numbers, and much more. Please help them by giving them access to your heat pump system before and after install, because it can be a lot of documentation.
     
7. Enjoy your new heat pump!

Who Can Get The Denver Heat Pump Rebates?

If you’re a homeowner in the City and County of Denver, you qualify!

Be sure to check out Denver’s Incentives for Income Qualified Homes page here as well. This is a program that helps homeowners receive extra electrification incentives if you meet their income qualification requirements.

But Wait, There’s More (Rebates)!

In addition to the heat pump rebates, Denver also offers supplemental electrification rebates. Wait, what do you mean?

When you’re installing a new heat pump, there’s often a chance that you need to run new wiring for these new electric heat pump systems. Sometimes two or three new electrical circuits, and to meet new code at that.

Many homes around town here were built over 100 years ago or more. Even homes that are 30-50 years old might not have enough power (amperage available) to run all this new electrified equipment. Or maybe your electrical panel is already full of breakers and there’s no room.

The great news is that Denver offers another electrification upgrade rebate up to $2,000, but it must be accompanied by or used to power a new electrified system, like a heat pump or a heat pump water heater.

What does this look like in the real world?

Just last week we finished a mini split install for one of our customers in Park Hill. It was a new Bosch Cold-Climate 5000 Max mini split system that met all the efficiency requirements from all rebate programs throughout the state.

He was able to get $3,500 for the cold-climate mini split system, and another $1,400 in electrical wiring upgrade rebates, totaling $4,900 in total rebates just from Denver alone. Had there been more electrical work (or a higher cost), the electrical rebate would have capped out at $2,000 instead (the program maximum).

There’s also the Xcel Energy rebates, the Colorado State heat pump tax credit, and the Federal IRA tax credit as well, which adds about another $4,000 in incentives to the program.

You can see how this really starts to add up! But there will no doubt be a bit of a land rush to get this elevated rebate amount up to March 14, 2025, because the existing fund pool is limited. Projects need preapproval through a registered contractor. If you want help with your own home or project, we can help get you in the queue if you like.

Wrapping it Up

There’s a lot more to the program but I hope you feel more empowered with this initial info on the rebates. A lot of it happens on the back end between the heat pump installer and the program managers during the preapproval process and the final submittals.

The key is really going to back to:

1. Doing a bit of research on heat pumps to empower yourself.
2. Find a heat pump installer who knows what they are doing, and who is qualified under CARes program.
3. Ensure that the right equipment is selected, designed right for your home, and is one that qualifies per the above specifications.

That should ideally set you up for a successful install and a good experience with it all.

I hope this article was helpful, and if you have any more questions about heat pumps, Denver CARes, rebates, incentives, or if you’re interested in getting a consultation or quote for your own home, please reach out!

Here are a few more key resources that may help you as well –

Additional Heat Pump Resources

Are you looking into an affordable loan to use for your heat pump upgrade? The Colorado Clean Energy Fund’s RENU program is a wonderful loan program that offers up to 15 years at affordable loan rates for sustainability and electrification upgrades. They go through local credit unions, and we’ve written up an article with more detail on that here if you like.

Denver has a great Heat Pumps 101 page that you can browse here.

Check out our Xcel Energy Heat Pump Rebates Info page here, which again stack on local ones, like in the City of Denver.

Learn what questions to ask your heat pump contractor in this article here.

Get a 25% rebate bonus through Xcel if you’re doing other efficiency projects.

Be sure to get the $2,000 heat pump 25C Federal IRA tax credit – read about it here.