Ann Arbor, MI Heat Pump Leasing & Installation
In this guide
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
Ann Arbor, MI Heat Pump Load Calculator
Use this calculator to estimate your home’s heating and cooling needs based on square footage. It uses ACCA-standard design conditions for Ann Arbor, MI: 72°F indoor, 91°F outdoor cooling, and -5°F heating temperatures. For a precise Manual J load calculation and personalized quote, connect with Palmetto’s team. Get in touch with our team for an official quote.
Step 1 of 3
Home location & size
Your home’s location and size directly impact heating needs.
Step 2 of 3
Home attributes
Step 3 of 3
Additional details
Description of what this means for context.
Estimated Heating Needs
Your home’s location falls within the a climate zone with the average extreme winter falling between 10° – 15° F.
Home Details
Recommended equipment capacity
60,000 BTU
5 Tons
Calculated Cooling Mode
102,000 BTU
8.5 Tons
03
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
Local Incentives
Ann Arbor, MI Heat Pump Rebates & Incentives
Local and federal incentive programs can significantly reduce the cost of a new heat pump system. Here are the programs available to Ann Arbor homeowners.
A2ZERO Home Energy Rebate
Up to $8,000City of Ann Arbor program offering rebates for heat pump installations and other energy efficiency upgrades. Provides up to $8,000 for heat pump retrofits with higher amounts for income-qualified residents.
Michigan Home Energy Rebates
Up to $8,000State program (MiHER) offering rebates for heat pump installations and whole-home energy efficiency upgrades. Includes HEAR program with up to $8,000 for heat pump for heating or cooling.
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.
Ann Arbor homeowners have access to multiple heat pump rebate programs in 2026. The City of Ann Arbor's A2ZERO Home Energy Rebate program offers up to $8,000 for heat pump installations, with enhanced rebates for income-qualified residents. Additionally, Michigan's statewide Home Energy Rebates (MiHER) program provides up to $8,000 for qualifying heat pump systems. Combined with the federal IRA tax credit of up to $2,000, homeowners can access significant incentives to reduce upfront costs. Palmetto can help you navigate these programs, verify eligibility, and maximize your total rebate and incentive benefits.
Incentive information is based on publicly available data as of 2026 and may change. Contact program administrators to verify current availability and eligibility requirements.
04
Climate Zones
Ann Arbor sits in IECC Climate Zone 6, which means cold winters that can dip to -5°F and warm summers reaching 91°F. These temperature swings matter—your heat pump needs to handle both extremes efficiently. At Palmetto, we understand Ann Arbor's climate and help homeowners choose systems sized for year-round comfort. Explore other climate zones below or enter your ZIP code to confirm yours.
Climate Zone 1
Climate zone 1 is not typically seen within the United States outside of Alaska. It represents the coldest climates on the planet.
Climate Zone 1A
Avg. extreme winters: -60° to -55° F
Climate Zone 1B
Avg. extreme winters: -55° to -50° F
Ann Arbor Electricity Prices
Understanding electricity costs in Ann Arbor helps you make smarter decisions about home heating and cooling for the years ahead.
Michigan's electricity rates have climbed steadily from 17.5 cents per kWh in 2021 to 19.3 cents in 2024—consistently higher than the national average and showing no signs of slowing down.
Heat pumps use 2-3 times less electricity than traditional HVAC systems to deliver the same heating or cooling. That efficiency advantage means lower monthly bills even as rates continue to rise.
As electricity costs increase over the next decade, a heat pump's efficiency becomes more valuable each year. What saves you money today will save you even more tomorrow.
Price of Energy: Michigan vs National Average
Ann Arbor Area Utility Providers
Ann Arbor residents receive electricity primarily from two providers: Consumers Energy at 18.8¢ per kWh and DTE Energy at 19.7¢ per kWh (2023 data). Both rates sit above the national average of 16.0¢ per kWh.
Michigan's electricity costs reflect the state's aging energy infrastructure and reliance on traditional power generation. Ann Arbor's rates align closely with Michigan's state average of 18.80¢ per kWh, representing the typical costs across the region.
While electricity rates here run higher than the national average, heat pumps' exceptional efficiency helps offset these costs. Because they move heat rather than generate it, heat pumps can reduce your total energy spending compared to traditional heating and cooling systems.
Ann Arbor Utilities Electricity Rates
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Repair versus replace
When a heat pump is in need of repair it is worth considering whether a replacement would be a better investment. While each case is unique, we generally recommend investing in a new unit when repairs exceed $5,000.
A heat pump's lifetime is impacted by a number of factors including environment, use and the quality of the unit. It's important to choose the right unit for your climate zone and home's unique attributes.
When you are in need of repair, we recommend choosing a service provider that is an expert in the heat pump brand you have installed, and checking online reviews to ensure you are investing in the right level of service.
| Potential repair | Cost range | Description |
|---|---|---|
| Capacitor Replacement | $150 - $400 | Common issue when unit struggles to start or makes a humming noise. Capacitors store the electrical energy needed to start the compressor and fan motors. |
| Refrigerant Recharge | $250 - $750 | Needed when the system loses cooling or heating efficiency due to low refrigerant levels. Includes leak detection, repair of minor leaks, and recharging the system to the manufacturer-specified level. |
| Reversing Valve Replacement | $450 - $900 | Required when the unit cannot switch between heating and cooling modes. The reversing valve directs refrigerant flow and is unique to heat pump systems. |
| Compressor Replacement | $1,500 - $3,000 | Major repair needed when the unit fails to heat or cool entirely. The compressor is the heart of the system, circulating refrigerant between the indoor and outdoor coils. |
| Evaporator/Condenser Coil Replacement | $1,200 - $2,800 | Replacement needed when coils develop leaks or corrosion that cannot be economically repaired. Coil damage reduces heat transfer efficiency and can cause refrigerant loss. |
| Control Board Replacement | $500 - $1,200 | Required when the system has electrical failures or erratic behavior. The control board manages all system operations including defrost cycles, fan speeds, and compressor staging. |
| Full System Replacement | $4,500 - $8,000+ | When repairs exceed the value of the unit or multiple major components fail simultaneously. Includes removal of the old system and installation of a new heat pump with updated refrigerant lines and electrical connections. |
Frequently Asked Questions
Yes, heat pumps make excellent sense in Ann Arbor. Modern cold-climate heat pumps work efficiently even at Ann Arbor's design heating temperature of -5°F, while providing efficient cooling during summer highs around 91°F. With Michigan's electricity rate of 19.3¢ per kWh, heat pumps typically cost less to operate than traditional heating systems year-round.
Ann Arbor homeowners can access heat pumps through Palmetto's Comfort Plan with $0 upfront and maintenance included, or purchase directly to qualify for up to $2,000 in federal tax credits under the Inflation Reduction Act. Both options deliver reliable heating and cooling suited to Climate Zone 6, making heat pumps a practical choice for Michigan's variable weather.
Heat pumps perform very effectively in Ann Arbor's Climate Zone 6, even during cold winters. Modern cold-climate heat pumps maintain efficiency down to -5°F and below, making them well-suited for Ann Arbor's design heating temperature. They typically deliver 2-3 times more heating energy than the electricity they consume, which translates to significant savings compared to traditional heating systems at Michigan's current rate of 19.3¢ per kWh.
During Ann Arbor's milder spring and fall months, heat pumps operate at peak efficiency, and they provide excellent cooling during summer when temperatures reach around 91°F. This year-round versatility means one system handles both heating and cooling needs. Palmetto makes accessing this efficiency simple through our Comfort Plan with $0 upfront cost and included maintenance, or through direct purchase where you may qualify for up to $2,000 in federal tax credits.
The choice between leasing and buying a heat pump in Ann Arbor depends on your financial situation and preferences. Palmetto's Comfort Plan offers $0 upfront with predictable monthly payments and all maintenance included, while direct purchase means you own the system outright and may qualify for up to $2,000 in federal tax credits under the Inflation Reduction Act plus local rebates.
In Ann Arbor's Climate Zone 6, where winter temperatures drop to -5°F, maintenance matters for system reliability. Leasing removes the worry of repair costs and service scheduling, while buying gives you full ownership and potential tax savings. Consider whether you prefer lower upfront costs with included maintenance or maximizing long-term savings through incentives and ownership.
Heat pump installation costs in Ann Arbor typically range from $8,000 to $20,000 for a complete system, depending on your home's size, existing infrastructure, and equipment specifications. Ann Arbor's Climate Zone 6 conditions require systems rated for efficient heating at temperatures down to -5°F, which influences equipment selection and pricing.
Palmetto offers two payment options to fit your budget: a Comfort Plan with $0 upfront cost and predictable monthly payments that include all maintenance and repairs, or direct purchase where you own the system outright and may qualify for up to $2,000 in federal tax credits under the Inflation Reduction Act plus local Michigan rebates.
Yes, heat pumps are typically worth it financially in Ann Arbor. Modern heat pumps can reduce heating and cooling costs by 30-50% compared to traditional systems, even in Michigan's cold climate (Zone 6). With electricity at 19.3¢ per kWh, most homeowners see meaningful savings on their energy bills within the first few years.
The financial case becomes even stronger when you consider available incentives and flexible options. Direct purchase qualifies for up to $2,000 in federal tax credits under the Inflation Reduction Act, plus potential local rebates. Alternatively, Palmetto's Comfort Plan offers $0 upfront cost with predictable monthly payments and included maintenance, making heat pumps accessible without a large initial investment.
In Ann Arbor, licensed HVAC contractors install heat pumps, including companies like Palmetto that specialize in home energy solutions. These professionals ensure your system is properly sized for Climate Zone 6 conditions, where winter temperatures can drop to -5°F and summer peaks reach 91°F, making correct installation critical for year-round comfort and efficiency.
Palmetto offers Ann Arbor homeowners two installation options: a Comfort Plan with $0 upfront cost and included maintenance, or direct purchase where you own the equipment and may qualify for up to $2,000 in federal tax credits. Both options include professional installation by certified technicians who understand Michigan's climate demands and local building requirements.
HVAC stands for Heating, Ventilation, and Air Conditioning—it's an umbrella term for all climate control systems in your home. A heat pump is actually a specific type of HVAC system that both heats and cools by transferring heat rather than generating it through combustion, making it highly efficient even in Ann Arbor's Climate Zone 6 conditions.
Unlike traditional HVAC systems that use separate furnaces and air conditioners, a heat pump handles both functions in one unit. This matters for Ann Arbor homeowners paying 19.3¢ per kWh—heat pumps typically use less electricity than conventional systems. Palmetto makes installation straightforward with either our Comfort Plan lease starting at $0 upfront or direct purchase options that may qualify for up to $2,000 in federal tax credits.