Heat pump HVAC installations are taking off in Colorado, where more homeowners are choosing all-electric systems for both heating and cooling as rebates, contractor training, and growing familiarity push the technology into the mainstream.

According to reporting from the Colorado Sun, installations across the service territories of five major utilities reached 14,225 in 2025. That was more than double the total from 2024.

Industry leaders told the outlet that 2025 represented a turning point for the market.

"That trajectory is happening right now, we are at that tipping point," Patricia Rothwell, executive director of the Energy Efficiency Business Coalition, told the Colorado Sun.

The shift from conventional electric resistance and gas units to modern heat pumps is happening across the globe. Compared to older units, heat pumps pull heat from the air rather than generating it. 

In turn, these high-tech units operate with extreme efficiency to deliver heating and cooling, and that efficiency can translate into meaningful savings. To see how much you can save by upgrading, check out EnergySage's heat pump marketplace to get competitive quotes from local installers.  

In Colorado, part of the late-year surge came from homeowners trying to secure savings before a $2,000 federal tax credit expired at the end of 2025. Utilities also ramped up their support. Xcel Energy alone issued 10,640 heat pump rebates worth $57 million in 2025, while Platte River Power Authority nearly quadrupled its rebates to 1,256 and $2.2 million.

Contractors also appear to be getting more comfortable selling and installing the systems. Utilities, including Xcel and Tri-State, have spent years training HVAC workers, and more companies are now specializing in heat pumps.

That growing adoption is important because heat pumps can replace both a furnace and an air conditioner with a single system, and modern cold-climate models can continue working even in subzero temperatures.

For households, that can mean lower energy use and access to cleaner heating and cooling. It can also make replacement decisions easier when older HVAC equipment reaches the end of its life.

The key challenge has long been cost. Heat pump systems can run from around $15,000 to $30,000, depending on the home and setup. However, Colorado's mix of rebates and tax credits is helping bring those prices down, in some cases dramatically.

Plus, as the technology improves, more manufacturers are offering lower-cost models and financing options to make heat pumps more accessible for any budget. 

The trend also reflects a broader market shift nationwide. The Colorado Sun noted data from the Air-Conditioning, Heating and Refrigeration Institute, which showed 3.642 million heat pumps were sold in the U.S. in 2025, compared with 3.28 million gas and oil furnaces.

Colorado utilities, state agencies, and regional programs are now trying to keep that momentum going even after the federal tax credit expired.

The Colorado Energy Office's Home Energy Rebate Program offers qualifying low- and moderate-income households up to $14,000 for heat pumps and efficiency upgrades. 

Plus, Colorado also still has a state tax credit worth $1,000 for a heat pump installation, with part of it available as an upfront discount. 

The Denver Council of Governments recently launched Power Ahead Colorado, which includes $40 million in heat pump and heat pump water heater rebates.

And as installers have become better at stacking incentives, some projects are ending up far more affordable than sticker prices suggest. Elephant Energy CEO DR Richardson told the Colorado Sun that his company's customers are often seeing around $10,000 in combined rebates and incentives.

"We installed a heat pump for a lower-income homeowner in Boulder a few weeks ago, and their net out of pocket cost was under $1,000," Richardson said.

Luckily, incentives like this are not limited to Colorado. Utilities and governments across the country offer similar programs to help homeowners make the switch. 

If you're interested in getting a heat pump, check out EnergySage's marketplace to better understand the different HVAC options for your home and budget. 

And if you're concerned about upfront costs, Palmetto offers $0-down HVAC leases that can lower your energy costs by up to 50%. 

Its plans start as low as $99 a month and include over a decade of free maintenance. 

Homeowners looking for more targeted heating and cooling should check out the Merino Mono. The high-tech unit costs a fraction of the cost of traditional whole-home systems and can be installed in under an hour. 

Also, homeowners looking to save even more should consider installing rooftop solar. 

EnergySage can help you here, too, with resources to find the best solar panels and installers for your home, saving you up to $10,000 on installation costs. 

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