Colorado Heat Pump Leasing & Installation Guide
In this guide
Colorado’s diverse climate—from mountain winters to Front Range temperature swings—makes heat pumps an increasingly smart choice for year-round home comfort and energy efficiency. Whether you’re in Denver, Boulder, or Colorado Springs, modern heat pump technology adapts to your heating and cooling needs while reducing energy costs. Palmetto helps Colorado homeowners navigate heat pump installation with expert guidance every step of the way.
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
Colorado 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 Colorado homeowners.
Colorado HEAR Program
Up to $8,000Home Electrification and Appliance Rebates (HEAR) support high-efficiency electric appliances and other upgrades and are now available to single-family households through registered contractors. Heat pumps installed through the program can qualify for up to $8,000 for cold-climate heat pumps and up to $3,000 for standard heat pump systems toward the total rebate cap of $14,000 per household.
Colorado Heat Pump Tax Credit
Up to $1,000In 2026 and after, the credit has been reduced to $1,000 for heat pumps. All Colorado residents, businesses, and other organizations who install an eligible heat pump through a registered contractor may receive a portion of the tax credit (at least 33.33%) as a discount at the time of installation.
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.
Colorado offers multiple active heat pump incentive programs in 2026. The Colorado HEAR program provides up to $8,000 in rebates for income-qualified households (up to 150% of area median income), while the state’s Heat Pump Tax Credit offers up to $1,000 in upfront discounts through registered contractors. Combined with the federal IRA tax credit of up to $2,000, homeowners can access substantial savings. Palmetto can help Colorado homeowners navigate these programs, verify eligibility, and connect with registered contractors to maximize available rebates and incentives.
Incentive information is based on publicly available data as of 2026 and may change. Contact program administrators to verify current availability and eligibility requirements.
Colorado Electricity Prices
Understanding electricity costs in Colorado helps you make smarter decisions about home heating and cooling—especially as rates continue to climb.
Colorado electricity rates have risen from 13.1 cents per kWh in 2021 to 15.1 cents in 2024—a 15% increase in just three years that directly impacts your monthly energy bills.
Heat pumps offer a practical response 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 their upward trend, that efficiency gap becomes increasingly valuable. A heat pump’s lower energy consumption means your monthly bills stay manageable even as rates rise over time.
Price of Energy: Colorado vs National Average
Colorado Utility Providers
Colorado’s major utility providers—Public Service Co of Colorado, City of Colorado Springs, and CORE Electric Cooperative—all offered rates below the 2023 national average of 16.0¢ per kWh, hovering around the state average of 14.30¢ per kWh.
Colorado’s competitive electricity rates stem from its diverse energy mix, including natural gas, wind, and solar resources. The state’s ongoing transition to renewable energy and favorable geography help utilities maintain costs below national levels while investing in cleaner infrastructure.
These relatively affordable rates make heat pumps particularly attractive for Colorado homeowners. Heat pumps use electricity three times more efficiently than traditional heating systems, meaning even with electricity as your energy source, you’ll likely spend less on heating and cooling year-round.
Colorado Utilities Electricity Rates
05
Colorado Heat Pump City Guides
Explore detailed heat pump installation guides for cities across Colorado. Each guide includes local utility rates, incentives, and climate-specific recommendations.
Frequently Asked Questions
Yes, heat pumps work well in Colorado, including in colder mountain regions. Modern cold-climate heat pumps efficiently heat homes even when temperatures drop below zero, while also providing air conditioning during warm summers. They can reduce heating costs compared to traditional systems, especially with Colorado’s electricity rate of 15.1¢ per kWh.
Colorado homeowners have flexible options for heat pump installation. Palmetto’s Comfort Plan offers $0 upfront with maintenance included, while direct purchase may qualify for up to $2,000 in federal tax credits under the Inflation Reduction Act plus local rebates. Both paths provide year-round comfort suited to Colorado’s variable climate.
Heat pump costs in Colorado typically range from $5,000 to $20,000 for a complete installation, depending on your home’s size, existing ductwork, and the system’s efficiency rating. This upfront investment can be offset by federal tax credits of up to $2,000 under the Inflation Reduction Act, plus potential local utility rebates available to Colorado homeowners.
Palmetto offers two ways to get a heat pump that fit different budgets and preferences. You can purchase your system outright and take advantage of available tax credits and rebates, or choose our Comfort Plan with $0 upfront cost and a predictable monthly payment that includes all maintenance, repairs, and warranty coverage for the life of the plan.
Top heat pump brands for Colorado homes include Mitsubishi, Daikin, Carrier, Lennox, and Trane. These manufacturers offer cold-climate models rated to perform efficiently in subzero temperatures, which is essential for Colorado’s variable winter conditions. Look for units with a Heating Seasonal Performance Factor (HSPF) of 10 or higher and low-temperature ratings down to -13°F or lower.
When selecting a brand, consider both equipment quality and installation expertise. Palmetto offers professionally installed heat pumps through a Comfort Plan with $0 upfront cost and all maintenance included, or through direct purchase where you may qualify for up to $2,000 in federal tax credits. The right brand paired with proper installation ensures your system operates efficiently even during Colorado’s coldest months.
Yes, Colorado homeowners can access heat pump rebates through multiple programs. The federal Inflation Reduction Act provides tax credits up to $2,000 for qualifying heat pump installations. Additionally, many Colorado utility companies offer local rebates and incentives that can further reduce installation costs, though availability varies by service area.
When you purchase a heat pump directly through Palmetto, you own the equipment outright and may qualify for these federal tax credits and local utility rebates. Alternatively, Palmetto’s Comfort Plan offers a $0 upfront option with predictable monthly payments and included maintenance, making heat pump installation accessible regardless of your financial preference.
The choice between leasing and buying a heat pump in Colorado 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. Leasing through a Comfort Plan requires $0 upfront and includes all maintenance and repairs with a predictable monthly payment.
Consider leasing if you want to avoid maintenance responsibilities and large upfront costs, which is especially helpful given Colorado’s temperature extremes that can stress HVAC systems. Buying makes sense if you can leverage the tax credits and prefer long-term ownership. With Colorado’s electricity rate at 15.1¢ per kWh, either option will help you save on heating costs compared to traditional systems.
Yes, heat pumps are typically worth it financially in Colorado. They can reduce heating and cooling costs by up to 50% compared to traditional systems, and with Colorado’s electricity rate at 15.1¢ per kWh, the operational savings add up significantly over time. Heat pumps also provide both heating and cooling in one efficient system.
Palmetto makes heat pumps accessible through two options: a Comfort Plan with $0 upfront and maintenance included, or direct purchase with eligibility for up to $2,000 in federal tax credits under the Inflation Reduction Act. Both paths offer long-term savings, with the right choice depending on your budget and preference for ownership versus convenience.
Heat pump size depends on your home’s square footage, insulation quality, ceiling height, and Colorado’s climate conditions. Most Colorado homes need a system between 2 to 5 tons. A professional energy assessment measures your specific heating and cooling loads to determine the right capacity—undersized units struggle during cold snaps, while oversized systems cycle inefficiently and waste energy.
Proper sizing directly impacts your comfort and operating costs, especially with Colorado’s 15.1¢ per kWh electricity rate. Palmetto includes a thorough home assessment with both our Comfort Plan and direct purchase options to ensure you get the correctly sized system. Our experts account for Colorado’s temperature swings and altitude variations to recommend equipment that performs efficiently year-round.