Financing and incentives can allow heat pump installations to become a reality and more economical – lower upfront costs, shorter payback periods, and even the potential for an installation to be cash flow positive from the day your system is turned on.
Why finance a heat pump?
Paying out of pocket for a heat pump can be cost prohibitive for many households. Despite the investment often paying for itself in 3-5 years, the upfront costs prevent many from gaining access to a heat pump’s advantages. One answer to this is financing – by spreading out the cost of the upfront investment over the lifetime of the heat pump, the upfront cost issue is mitigated. In addition, because the interest and principal loan payments can be structured to be less than the cost savings, most financed heat pumps can be cash flow positive from the installation date.
These two graphs show these two situations. For the same house, one scenario is paying for a heat pump out of pocket and the other is financed. The high negative cost in year 0 on the first graph prevents many households from accessing the cost savings derived from heat pumps. On the left, households with attractive projected cost savings can finance the installation and save, on net, each year the heat pump operates. (Note: the positive upfront cost on the right graph represents the tax credit which may available to most households for 2022.)
Grants, Tax Credits and Other Incentives
| Name | Type | Terms | Guidance |
|---|---|---|---|
| True North FCU Heat Pump Loan | Loan | Up to $12,500 at 4% – 6% | Eligibility required AK Heat Smart home assessment and successful credit check. Available in Juneau. |
| Residential Energy-Efficient Property Credit | Tax Credits | 22% of cost | Applies towards the total project costs of ground source source heat pumps and other household energy technologies. |
| USDA Home Repair Grants | Grants | Up to $7500 | Available for income-qualifying households with a 62 or older resident. |
| Weatherization Assistance Program – Rural Cap | Grants | Up to $10,000 | Free low-income home improvements. Check with Rural Cap for current availability in Juneau. |
| Weatherization Assistance Program – Alaska CDC | Grants | Up to $10,000 | Free home improvements. Available in Gustavus, Haines, Hyder, Ketchikan, Pelican, Sitka, Skagway and Wrangell. |
| Weatherization Assistance Program – Tlingit-Haida RHA | Grants | Up to $10,000 | Free home improvements. Available in Angoon, Kake, Yakutat, Petersburg, Saxman, Craig, Klawock, Hydaburg, Kasaan, Coffman Cove, Dora Bay, Edna Bay, Hollis, Naukati, Point Baker, Port Protection, Thorne Bay and Whale Pass. |
| THRHA Heathly Homes Repair Program | Grants | N/A | Free Home Improvements. Available to tribal members in Angoon, Craig, Douglas, Juneau, Kake, Kasaan, Klawock, Petersburg, Saxman, Skagway, Wrangell, and Yakutat. |
Low Cost Financing Options
| Name | Type | Terms | Guidance |
|---|---|---|---|
| AHFC Energy Efficiency Interest Rate Reduction | Interest Rate Reduction | Up to -0.75% | Mortgage must be held by approved lender. Requires energy assessments before and after a home is renovated. Applies to the first $200k of mortgage balance. |
| USDA Home Repair Loans | Low Cost Loan | Up to $20,000 at 1% for up to 20 years | Available for low income-qualifying households, and can be used in combination with the grant program if a qualifying household. |
| USDA Small Business Grants and Loans | Low Cost Loans or Grnats | Terms are negotiated | Applications for grants of $20,000 or less and loan/grant of $20,000 or less combo |
Traditional Lenders
| Name | Website | Phone |
|---|---|---|
| Alaska USA FCU | alaskausa.org | (907) 563-4567 |
| Denali FCU | denalifcu.org | (907) 586-2370 |
| First Bank | firstbankak.com | (907) 586-8001 |
| First National Bank Alaska | fnbalaska.com | (907) 586-5400 |
| Northrim Bank | northrim.com | (907) 586-1010 |
| True North FCU | truenorthfcu.org | (907) 523-4700 |
| Wells Fargo | wellsfargo.com | (907) 586-2460 |