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A heat pump heats your home in winter and cools it in summer with a single electric system, and in Palo Alto the city's own utility is actively helping homeowners make the switch. Cool Aid designs and installs ducted heat pumps and ductless mini-splits for Palo Alto homes from our Santa Clara shop, and we help you line up the paperwork so a rebate is not lost to a timing mistake.
Why heat pumps make particular sense in Palo Alto
Palo Alto's climate suits heat pumps well: winters are mild and summers bring warm spells rather than long heat waves, so a properly sized unit can cover both seasons comfortably. The housing stock adds a second reason. Many older homes here were never built with air conditioning, and a heat pump that replaces an aging gas furnace also adds cooling in the same project. Eichler homes, most of which were built with in-slab radiant heat and no attic ductwork, are often good candidates for ductless mini-splits that deliver both heating and cooling room by room. Our heat pump vs mini-split comparison explains how to choose between the two.
The third reason is the utility. City of Palo Alto Utilities (CPAU) is a city-owned utility that supplies both electricity and natural gas to Palo Alto homes, and it runs its own electrification incentives rather than following PG&E programs (source).
The CPAU heat pump rebate
- Amount: up to $2,500 for a heat pump HVAC system, or $5,000 for income-eligible residents (source).
- Eligibility: the heat pump must replace a gas or other fossil-fuel heater.
- Timing: you must reserve the funds with a rebate reservation application before the installation begins.
CPAU also offers a per-circuit rebate for electrical upgrades that support appliance electrification, which can help if your home needs a new circuit for the outdoor unit. For homeowners who want the city to coordinate a whole-home project, CPAU runs a full-service Electrify My Home program. Program terms change, so always confirm current details with CPAU. For a wider view of incentives, see our Bay Area heat pump rebates page. Note that the federal 25C tax credit ended for equipment placed in service after 31 December 2025, so it does not apply to a new installation today.
How we install a heat pump in a Palo Alto home
1. Assessment and sizing
We look at the existing furnace, ductwork, electrical panel and the rooms you want to condition, then size the system with a load calculation instead of matching the old furnace's label. Oversized heat pumps short cycle and waste energy.
2. Ducted or ductless
Homes with sound ductwork usually suit a ducted heat pump with an indoor air handler. Eichlers, additions and homes with poor ducts often do better with ductless heads. Our Bay Area heat pumps page covers system types in more depth.
3. Electrical and permits
We check whether your panel and circuits can carry the new load, pull the required permit, and plan for any HERS verification that California may require on the changeout (source).
4. Installation, gas capping and commissioning
We remove the old furnace, cap the gas line to the appliance safely, set and charge the new equipment, and test heating and cooling modes before we leave. Our technicians are trained on low-GWP refrigerants, including R-32, R-454B and R-290, which newer heat pumps use.
Why Cool Aid for your heat pump
- California C-20 and C-38 licensed, with EPA Universal certified technicians.
- Family-owned since 1966 and led by second-generation owner Jim McKinny, with more than 37 years in the trade.
- We install Daikin, Amana, Goodman, York, Trane and Carrier equipment.
- Every job is backed by our 1-year parts and labor warranty.
Related Palo Alto pages
If you only want central air and plan to keep your furnace, our guide to AC installation in Palo Alto covers that path. If your current system just needs fixing, see Palo Alto AC repair or Palo Alto furnace repair. For every service we offer locally, visit Palo Alto HVAC and refrigeration services, and if you are still comparing installers, our list of HVAC companies in Palo Alto includes other firms. Once your system is in, yearly maintenance keeps it running efficiently.
Plan a heat pump installation in Palo Alto
Frequently asked questions
How much is the Palo Alto heat pump rebate?
CPAU offers up to $2,500 for a heat pump HVAC system that replaces a gas or fossil-fuel heater, or $5,000 for income-eligible residents (source).
Do I need to apply before installation?
Yes. CPAU requires a rebate reservation application to reserve funds before the heat pump is installed. Installing first can make you ineligible.
Is a heat pump a good fit for an Eichler?
Often, yes. Most Eichlers have in-slab radiant heat and no attic ducts, so ductless mini-splits can add efficient heating and cooling without major construction. We assess each home before recommending a system.
Will I need electrical work?
Sometimes. We check your panel and circuits during the assessment. CPAU offers a per-circuit rebate for electrical upgrades tied to appliance electrification.
Can I still claim the federal heat pump tax credit?
No. The federal 25C credit ended for equipment placed in service after 31 December 2025. Local utility rebates such as CPAU's still apply.
More in Palo Alto
Or start from our Palo Alto HVAC & refrigeration overview.
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