Heat pump rebates used to work like a layer cake: a federal tax credit, a state incentive, a utility rebate and a regional rebate, all on one job. In 2026 the layers are mostly gone. What is left is usually one local program, with its own rules, and those rules decide whether you get paid. This page explains how those programs work in practice. For the current amounts by city, see what is still available in 2026.
Who pays for heat pump rebates now
Most Bay Area homes buy electricity from a community choice provider or a city utility, with PG&E delivering it. Those providers fund most of the heat pump rebates still open: Silicon Valley Clean Energy, San José Clean Energy, WestLight Energy (formerly Peninsula Clean Energy), MCE, and the city utilities in Palo Alto and Santa Clara. Your provider is named on your PG&E bill.
The federal 25C credit ended for equipment placed in service after 31 December 2025 (IRS), TECH Clean California's single-family incentives are fully reserved (TECH), and PG&E's residential rebates page lists no HVAC rebates (PG&E).
The rules that decide whether you get paid
Replace gas, not just an old heat pump
Most programs are designed to move homes off gas heating, so the rebate is for a heat pump that replaces a gas furnace or other fossil-fuel heater. A heat pump replacing an old heat pump, or electric resistance heat, may get a smaller rebate or none.
Apply first
Silicon Valley Clean Energy tells customers to apply before the appliance is installed, and San José Clean Energy requires approval before installation. If a program needs pre-approval, installing first can disqualify you, even with a perfect installation.
Contractor requirements
Some programs, such as MCE's, require a participating contractor. Others accept any licensed contractor. Check before you pick one.
Permits and verification
Plan on a permit. Under the 2025 California Energy Code, which applies to permits filed from 1 January 2026, replacing HVAC equipment can trigger a duct leakage test and, for heat pumps, a refrigerant charge check by a certified rater. Our guide to Bay Area gas furnace rules and heat pumps covers what that involves.
Income tiers
Many programs pay more to income-qualified households, for example $3,000 instead of $2,000 at Silicon Valley Clean Energy, or up to $5,000 instead of $2,500 in Palo Alto. BayREN's EASE Home program also helps moderate-income households with insulation and duct sealing, covering 80 percent of those costs.
Paperwork to keep
- The written pre-approval, if the program issues one.
- The contractor's invoice showing equipment model numbers and the installation date.
- The permit number and the final inspection record.
- Any rater verification results.
- Photos of the removed gas equipment, if the program asks for them.
Mistakes that cost people the rebate
- Replacing a failed furnace in an emergency, then finding the program required pre-approval.
- Choosing equipment before reading the program's requirements.
- Skipping the permit.
- Missing the claim deadline after installation.
- Relying on a figure from an older article. Several programs have changed amounts or names in 2026.
If you want to understand how a heat pump behaves in a Bay Area winter before committing, read heat pumps in winter in our Winter Heating Help Center.
Program details checked 24 September 2026. Funding, amounts and rules change, sometimes mid-year. Confirm the current terms on the program's own page, and get any pre-approval in writing, before you sign a contract.
Frequently Asked Questions
Who gives heat pump rebates in the Bay Area now?
Mostly local electricity providers and city utilities: Silicon Valley Clean Energy, San José Clean Energy, WestLight Energy, MCE, City of Palo Alto Utilities and Silicon Valley Power. See what is still available for amounts.
Do I have to apply before the heat pump is installed?
For many programs, yes. Silicon Valley Clean Energy and San José Clean Energy both require it. Read your program's rules before any work starts.
Will I get a rebate for replacing an old heat pump with a new one?
Usually less, or nothing. Most programs focus on replacing gas heating. Some pay a smaller amount for replacing electric resistance heat.
Does a heat pump installation need a permit?
Yes, plan on one. Rebate programs expect it, and the 2025 Energy Code can require duct and refrigerant verification when HVAC equipment is replaced.
Are there rebates for renters?
Rebates generally go to the property owner, who has to authorize the installation. Renters can ask their landlord to apply.
Talk to a technician
Cool Aid Air Conditioning & Refrigeration has installed and repaired heating systems across the Bay Area since 1966. We will tell you which incentives apply at your address and quote the job against the programs that are actually open, with a 1-year parts and labor warranty on every job.
📞 Call 1-800-266-5243.
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