California Heat Pump Leasing & Installation Guide
In this guide
California’s diverse climate—from coastal cool to inland heat—makes heat pumps an ideal year-round solution for efficient heating and cooling. As energy costs rise and the state advances its clean energy goals, heat pumps offer homeowners a smart, sustainable way to stay comfortable. Palmetto brings expert installation and trusted guidance to help California residents make the switch with confidence.
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.
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|
Cash |
Loan |
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|---|---|---|---|
| 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
California 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 California homeowners.
California Energy Smart Homes
Up to $15,000+The California Energy-Smart Homes Program is a residential new construction and alterations program that provides incentives to adopt advanced energy measures and transition to all-electric construction, offering an all-in-one solution for single family, duplex, townhome, multifamily low-rise, alterations, and accessory dwelling units.
Federal IRA Tax Credit
Up to $2,000The Inflation Reduction Act provides a federal tax credit of up to $2,000 for qualifying heat pump installations through 2032.
California homeowners have access to the California Energy Smart Homes Program, which provides substantial rebates for whole-home electrification projects including heat pump installations, with incentives up to $15,000 or more when combining base rebates and advanced technology bonuses. Additionally, all homeowners can claim the federal IRA tax credit of up to $2,000 for qualifying heat pump systems. Palmetto can help homeowners navigate these programs and maximize available rebates to reduce heat pump installation costs.
Incentive information is based on publicly available data as of 2026 and may change. Contact program administrators to verify current availability and eligibility requirements.
California Electricity Prices
California’s electricity rates have climbed significantly in recent years, making energy efficiency more important than ever for homeowners across the state.
Between 2021 and 2024, California’s electricity costs jumped 40%—from 22.8 to 31.9 cents per kWh. That’s nearly double the national average, which means every kilowatt-hour counts more here.
Heat pumps offer a practical solution to rising rates. Because they’re 2-3x more efficient than traditional HVAC systems, they use significantly less electricity to deliver the same heating and cooling comfort.
As electricity costs continue rising, that efficiency gap translates to real savings. A heat pump’s lower energy consumption means your monthly bills stay more manageable, even as rates climb year after year.
Price of Energy: California vs National Average
California Utility Providers
California’s electricity landscape includes major investor-owned utilities like Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric, alongside numerous Community Choice Aggregators and municipal providers. According to 2023 data, rates vary dramatically—from 10.5¢ to 45.5¢ per kilowatt-hour across providers.
California’s average electricity rate of 29.5¢ per kWh significantly exceeds the national average of 16.0¢. This premium reflects infrastructure investments, wildfire mitigation costs, renewable energy mandates, and the state’s ambitious climate goals. Community Choice Aggregators typically offer lower rates than traditional utilities.
Heat pumps shine in California’s high-cost electricity environment. Their superior efficiency—often moving three units of heating or cooling per unit of electricity consumed—means lower energy bills even when rates are elevated, making them a smart long-term investment regardless of your utility provider.
California Utilities Electricity Rates
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California Heat Pump City Guides
Explore detailed heat pump installation guides for cities across California. Each guide includes local utility rates, incentives, and climate-specific recommendations.
Frequently Asked Questions
Yes, heat pumps work exceptionally well in California. The state’s mild to moderate climate makes heat pumps highly efficient year-round, as they perform best when temperatures stay above freezing. California’s temperate conditions mean heat pumps can effectively heat and cool homes without the performance drops seen in extremely cold climates, making them an ideal choice for energy-conscious homeowners.
With California’s electricity costs at 31.9¢ per kWh, heat pumps offer significant energy savings compared to traditional heating systems since they move heat rather than generate it. Palmetto makes installation accessible through two options: a Comfort Plan with $0 upfront and maintenance included, or direct purchase with potential federal tax credits up to $2,000 under the Inflation Reduction Act, helping California homeowners reduce both energy use and costs.
Heat pump costs in California 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. Labor costs, necessary electrical upgrades, and whether you need ductwork modifications will also affect your total investment.
Palmetto offers two flexible ways to get a heat pump: our Comfort Plan with $0 upfront and a predictable monthly payment that includes all maintenance and repairs, or direct purchase where you own the equipment outright and may qualify for up to $2,000 in federal tax credits under the Inflation Reduction Act plus local California rebates.
Top heat pump brands for California homeowners include Mitsubishi, Daikin, Carrier, Lennox, and Trane. These manufacturers offer models with high SEER2 ratings and reliable performance in California’s varied climate zones, from coastal areas to inland valleys. Look for ENERGY STAR certified units that qualify for federal tax credits and local utility rebates.
When choosing a brand, consider efficiency ratings, warranty coverage, and professional installation quality. With California’s electricity costs at 31.9¢ per kWh, selecting an efficient heat pump can significantly reduce your energy bills. Palmetto works with quality equipment and offers flexible options—including a Comfort Plan with $0 upfront cost and included maintenance, or direct purchase to own your system outright.
Yes, California homeowners can access several heat pump rebates and incentives. If you purchase a heat pump system outright, you may qualify for a federal tax credit of up to $2,000 under the Inflation Reduction Act. Additionally, many California utilities and local programs offer rebates that can further reduce your upfront costs, though availability varies by location and income level.
These incentives make heat pump installation more affordable for California homeowners facing electricity rates of 31.9¢ per kWh. If you prefer to avoid navigating rebate applications, Palmetto’s Comfort Plan offers an alternative with $0 upfront cost and a predictable monthly payment that includes all maintenance and repairs, so you can start saving on energy costs without the paperwork.
The choice between leasing and buying a heat pump in California depends on your financial situation and preferences. Buying means paying upfront but owning the equipment outright, plus you may qualify for federal tax credits up to $2,000 under the Inflation Reduction Act and local rebates. Leasing through a plan like Palmetto’s Comfort Plan requires $0 upfront, offers predictable monthly payments, and includes all maintenance and repairs.
Consider leasing if you want to avoid large upfront costs and prefer hassle-free maintenance included for the life of the plan. Buying makes sense if you can afford the initial investment and want to maximize savings through tax credits and rebates. With California’s electricity costs at 31.9¢ per kWh, both options can help reduce your energy bills compared to traditional heating and cooling systems.
Yes, a heat pump is financially worth it in California. With electricity rates at 31.9¢ per kWh, heat pumps can significantly reduce your energy bills since they move heat rather than generate it, using up to 65% less energy than traditional heating and cooling systems. Most California homeowners see a return on investment within 5-10 years through lower utility costs.
Palmetto makes heat pumps accessible with two payment options: a Comfort Plan with $0 upfront and maintenance included, or direct purchase with potential federal tax credits up to $2,000 plus local rebates. Both options help you start saving on energy costs while enjoying year-round comfort, making the financial case even stronger for California’s climate.
The right heat pump size for your California home depends on several factors: your home’s square footage, insulation quality, ceiling height, climate zone, and how many rooms you need to heat and cool. Most California homes need between 2 to 5 tons of heating and cooling capacity, with one ton typically covering 400-600 square feet in mild climates.
A professional energy assessment is essential to determine the correct size—an oversized unit will cycle on and off inefficiently, while an undersized one will struggle to maintain comfort and drive up your electricity costs at California’s 31.9¢ per kWh rate. Palmetto’s heat pump experts provide free assessments and offer flexible options including our Comfort Plan with zero upfront costs or direct purchase to qualify for federal tax credits up to $2,000.