Arizona Heat Pump Leasing & Installation Guide
In this guide
From the hot, dry deserts of Phoenix and Tucson to cooler high-country communities, Arizona’s varied climate calls for heating and cooling that can adapt. Heat pumps provide both in one efficient system, moving heat rather than generating it—an appealing fit for many homes and a practical way to manage year-round comfort. Palmetto helps Arizona homeowners explore installation options and find a trusted path to the right system.
01
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.
02
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.
|
|
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 | |||
| Eligible for incentives |
Cash
Loan
03
Arizona 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 Arizona homeowners.
Efficiency Arizona
Up to $8,000This statewide rebate program offers up to $8,000 for a qualifying heat pump and up to $1,750 for a heat pump water heater. Applications are being accepted under guidelines effective September 1, 2026; funding is limited.
SRP Cool Cash
Up to $225/tonSRP offers per-ton rebates for qualifying high-efficiency heat pumps and mini-splits. The rebate depends on the system type and compressor capacity.
TEP Efficient Home Program
Up to $720Tucson Electric Power offers an instant rebate for qualifying high-efficiency heat pump installations through participating contractors.
UniSource Efficient Home Program
Up to $450UniSource offers instant rebates for qualifying ENERGY STAR-certified heat pumps installed by participating contractors.
Mohave Electric Heat Pump Rebate
Up to $2,000Mohave Electric Cooperative offers tiered rebates for high-efficiency heat pumps, with higher amounts for higher-SEER systems.
Flagstaff Home Energy Rebate
Up to $2,000The City of Flagstaff’s 2026–27 program offers rebates for qualifying heat pumps, with limited funding distributed first-come, first-served.
TEP Heat Pump Water Heater
$400TEP offers a rebate for a qualifying ENERGY STAR heat pump water heater with a wireless programmable timer or controller.
Arizona homeowners may qualify for the statewide Efficiency Arizona rebate, utility rebates from SRP, TEP, UniSource, or Mohave Electric, and a limited Flagstaff rebate for eligible residents. Palmetto can help homeowners check eligibility, coordinate applications, and maximize available incentives; federal homeowner heat pump tax credits ended for systems installed after December 31, 2025.
Incentive information is based on publicly available data as of 2026 and may change. Contact program administrators to verify current availability and eligibility requirements.
Arizona Electricity Prices
Electricity prices have climbed in Arizona, making the efficiency of your home’s heating and cooling worth a closer look.
Arizona’s average electricity price rose from 12.5 cents per kilowatt-hour in 2021 to 14.9 cents in 2024, a nearly 20% increase. The 2024 price remained below the U.S. average of 16.5 cents.
Heat pumps move heat rather than generate it, so they can use less electricity per unit of heating or cooling. For heating, they can be 2–3 times as efficient as electric resistance systems.
Using less electricity for home comfort can help offset higher rates over time. Your actual savings depend on your home, equipment, and utility plan.
Price of Energy: Arizona vs National Average
Arizona Utility Providers
In 2023—the latest utility data available—Arizona Public Service (APS) charged 15.31¢/kWh, Salt River Project (SRP) 12.47¢, and Tucson Electric Power (TEP) 14.97¢. The state average was 14.00¢; the national average was 16.0¢.
APS and TEP were above Arizona’s average but below the national figure; SRP was below both. Differences can reflect each utility’s pricing and service costs, though these figures alone don’t identify specific causes.
Electricity prices matter, but so does how much energy a system uses. Because heat pumps move heat efficiently, they may lower total energy spending compared with traditional HVAC, even where electricity costs are higher.
Arizona Utilities Electricity Rates
Frequently Asked Questions
Yes—heat pumps can work well across Arizona because they provide efficient air conditioning during hot summers and heating during generally mild winters. In hotter areas, choosing a properly sized model rated for high-ambient temperatures and ensuring ducts are in good condition can help maintain comfort and performance when outdoor temperatures climb.
At Arizona’s current electricity price of 14.9¢ per kWh, operating costs vary with equipment efficiency, insulation, and usage. No federal heat pump tax credit is available for systems installed in 2026. Palmetto’s Comfort Plan has no upfront cost, predictable payments, and maintenance and repairs for the plan’s term; direct purchase provides ownership and may qualify for state or utility rebates.
Heat pump installation costs in Arizona vary by home size, equipment type, installation complexity, and whether ductwork needs changes. There is no single statewide price; a contractor must assess the home to provide an accurate quote. Arizona’s average electricity price is 14.9¢ per kilowatt-hour, so operating costs also depend on system efficiency and household use.
Palmetto offers two ways to get a heat pump: the Comfort Plan has no upfront cost, predictable monthly payments, and maintenance, repairs, and warranty coverage for the plan’s life. Direct purchase requires a one-time payment and gives you ownership; state or utility rebates may be available. For systems installed in 2026, no federal heat pump tax credit is available.
For Arizona homeowners, reputable heat pump lines from Mitsubishi Electric, Daikin, Carrier, Trane, and Bosch are worth comparing. The best choice depends less on the logo than on a model’s cooling performance in extreme heat, efficiency ratings, noise, warranty, and whether a qualified installer properly sizes the system for your home.
Because electricity in Arizona is about 14.9¢ per kWh, ask for a home-specific estimate of energy use and operating cost, not just the unit price. Palmetto offers a Comfort Plan with $0 upfront and maintenance and repairs included, or direct purchase, which gives you ownership and may qualify for available state or utility rebates.
Arizona homeowners may find heat pump rebates through local utilities or state-administered programs, but availability can vary by service area, equipment, household eligibility, and remaining funds. Check with your utility and the Arizona energy office before committing to an installation, and confirm whether the specific heat pump and project qualify.
For heat pumps installed in 2026, the federal 25C and 25D tax credits are no longer available. A direct purchase may qualify for state or utility rebates when active and program rules allow. Palmetto’s Comfort Plan has no upfront cost and includes maintenance and repairs, but incentive eligibility may differ for leased equipment.
In Arizona, leasing may suit homeowners who want to avoid a large upfront payment and ongoing service costs, while buying can make sense if you prefer to own the equipment and may qualify for available rebates. With electricity averaging 14.9¢ per kWh, compare estimated energy use, monthly plan costs, and ownership terms.
Palmetto’s Comfort Plan has $0 upfront cost, predictable monthly payments, maintenance and repairs for the plan’s life, warranty coverage, and less hands-on upkeep. Direct purchase requires a one-time payment and gives you ownership; state or utility rebates may be available. No federal heat pump tax credit applies to systems installed in 2026.
A heat pump can be financially worthwhile in Arizona, but savings depend on your home, existing system, and electricity use. At Arizona’s average electricity price of 14.9¢ per kWh, compare estimated annual heating and cooling costs with your current equipment, plus installation cost and expected service life, before deciding.
For 2026 installations, federal heat pump tax credits are no longer available; state or utility rebates may still apply, so verify current eligibility. Palmetto’s Comfort Plan has $0 upfront cost and predictable monthly payments, with maintenance and repairs for the plan’s life plus warranty coverage. Direct purchase means one-time payment and ownership, with possible state or utility rebates.
There’s no single heat pump size for every Arizona home. A licensed HVAC professional should calculate your home’s heating and cooling needs using a room-by-room load assessment (Manual J), accounting for floor area, insulation, windows, ceiling height, ductwork, local summer temperatures, and elevation. This helps avoid oversized or undersized equipment.
Correct sizing can support comfort and avoid unnecessary energy use; with Arizona’s electricity price at 14.9¢ per kWh, efficiency also matters for operating costs. Palmetto offers a $0-upfront Comfort Plan with predictable monthly payments, maintenance, repairs, and warranty coverage, or direct purchase. State or utility rebates may be available.