Minnesota Heat Pump Rebates
Stackable incentives available to Minnesota homeowners installing a qualifying heat pump in 2026.
What's available in Minnesota
Minnesota has one of the most active utility heat pump rebate ecosystems in the Midwest, anchored by the Energy Conservation and Optimization (ECO) Act of 2021 which expanded the older CIP framework to credit utilities for efficient fuel-switching such as gas-to-heat-pump conversions. Xcel Energy (up to $2,000 cold-climate ASHP plus $600 insulation bonus) and CenterPoint Energy ($1,100 dual-fuel ducted ASHP) lead the investor-owned utility programs, while Minnesota Power, Otter Tail Power, and cooperatives like Connexus and Minnesota Valley Electric offer ASHP and ground source rebates with per-ton structures. The federal IRA-funded HEAR program (income-qualified, up to $8,000) and the companion state Residential Heat Pump Rebate Program (up to $4,000) are administered by the Minnesota Department of Commerce under the Save Energy Minnesota umbrella; as of April 2026 Minnesota is still awaiting US DOE approval and neither has launched, so retroactive rebates are not allowed.
HEEHRA in Minnesota
HEEHRA rebate: Point-of-sale rebate up to $8,000 for households at or below 80% of area median income. Funded by the IRA, administered by each state. Minnesota is finalizing program rules.
How heat pump rebates work in Minnesota
Minnesota has one of the most active utility heat pump rebate ecosystems in the Midwest, anchored by the Energy Conservation and Optimization (ECO) Act of 2021 which expanded the older CIP framework to credit utilities for efficient fuel-switching such as gas-to-heat-pump conversions. Xcel Energy (up to $2,000 cold-climate ASHP plus $600 insulation bonus) and CenterPoint Energy ($1,100 dual-fuel ducted ASHP) lead the investor-owned utility programs, while Minnesota Power, Otter Tail Power, and cooperatives like Connexus and Minnesota Valley Electric offer ASHP and ground source rebates with per-ton structures. Otter Tail Power's geothermal rebate stacks aggressively: $1,200/ton base + $200/ton desuperheater + $200/ton Quality Installation contractor + $40/ton dual-fuel/RDC rate = up to $1,640/ton (20-ton system limit). The federal HEAR (up to $8,000) and state Residential Heat Pump Rebate Program (up to $4,000) are administered by the Minnesota Department of Commerce; as of April 2026 the state is still awaiting US DOE approval and neither has launched, so retroactive rebates are not allowed.
Minnesota rebate programs
Xcel Energy Cold Climate Air Source Heat Pump Rebate
$2,000Up to $2,000 for qualifying cold-climate ASHPs (COP at 5°F ≥ 1.75, listed on ashp.neep.org), with an additional $600 insulation bonus. Part of the Xcel 2024–2026 MN residential rebate cycle for electric customers.
CenterPoint Energy Ducted Air Source Heat Pump Rebate
$1,100$1,100 rebate for a ducted ASHP installed alongside a high-efficiency natural gas furnace in a CenterPoint-served MN home. Switchover must be set to 40°F or lower; equipment installed Jan 1 – Dec 31, 2026.
Minnesota Power Air Source Heat Pump Rebate
$400$400 rebate for a new ENERGY STAR certified ducted or ductless ASHP installed by Dec 31, 2026. Participating contractor required; available to Minnesota Power residential customers in northeastern MN.
Minnesota Power Ground Source Heat Pump Rebate
$1,000Tiered rebate of $800–$1,000 per ton for an ENERGY STAR certified ground source (geothermal) heat pump system installed by Dec 31, 2026. Top tier requires desuperheater or open-loop configuration.
Otter Tail Power Air Source Heat Pump Rebate
$800Cold-climate ducted ASHP: $800/ton base (SEER2 ≥ 16, HSPF2 ≥ 8). Cold-climate ductless: $600/ton. Standard (non-ccHP): $300/ton (SEER2 ≥ 14.3, HSPF2 ≥ 7.5). Stackable $200/ton bonus for Quality Installation contractors and $40/ton on Dual Fuel/Demand Control rates. Western MN and eastern Dakotas service territory.
Otter Tail Power Ground Source Heat Pump Rebate
$1,200$1,200 per ton base rebate for residential ENERGY STAR certified or COP/EER-qualifying ground source heat pumps installed by Dec 31, 2026. Stackable: +$200/ton when a desuperheater is added for domestic hot water preheating; +$200/ton for a Quality installation contractor; +$40/ton on Dual Fuel, Deferred Load, or Residential Demand Control Rate. Total potential: $1,640/ton (20-ton system limit). Available to OTP residential electric customers in western MN and eastern Dakotas.
Connexus Energy Ductless Air Source Heat Pump Rebate
$500$500 rebate per qualifying ductless ASHP (SEER/SEER2 ≥ 11.7, HSPF2 ≥ 7.8, ENERGY STAR certified). Limit one per member account. Applications due by Dec 31, 2026. Connexus is MN's largest electric co-op, serving the northern Twin Cities metro (Ramsey, Coon Rapids, Andover, etc.).
8 utility-specific programs not shown here. Enter your ZIP in the calculator to filter to just your utility.
A worked example: cold-climate ASHP in Minneapolis
Anika owns a 1,900 sq ft home in Minneapolis served by Xcel Energy. Her 23-year-old gas furnace is end-of-life. She gets quotes for a 3-ton ducted cold-climate air-source heat pump (Mitsubishi Hyper Heat H2i, NEEP cold-climate certified with COP at 5°F ≥ 1.75) paired with the existing gas furnace as backup for the coldest 4-6 weeks. Installed cost: $16,200. Because the equipment is NEEP-listed cold-climate certified, she qualifies for Xcel's top cold-climate ASHP tier at $2,000. Her project also includes attic insulation upgrades that qualify for Xcel's $600 insulation bonus. Combined Xcel rebate: $2,600. Her household income is approximately 145% of Hennepin County AMI — Minnesota HEAR hasn't launched, so the federal income-qualified rebate isn't available. The federal §25C credit is gone. Combined stack: $2,600 against $16,200. Net out-of-pocket: $13,600. The Xcel cold-climate tier specifically requires the equipment to be listed on ashp.neep.org — Anika confirms this at the AHRI certificate review stage.
Choosing a contractor in Minnesota
Minnesota licenses HVAC contractors at the municipal level rather than statewide for residential work — verify at the city or county level where the install will happen (Minneapolis, St. Paul, Bloomington, Rochester, Duluth, etc.). Xcel Energy, CenterPoint Energy, Minnesota Power, and Otter Tail Power each have their own residential rebate programs and approved-contractor expectations. For Xcel's cold-climate tier specifically, the equipment must be on the NEEP cold-climate heat pump list at ashp.neep.org — ask your contractor for both the AHRI certificate and the NEEP listing screenshot. Otter Tail Power's geothermal rebate stack requires Quality Installation contractor certification for the $200/ton bonus tier.
Common pitfalls for Minnesota homeowners
- Missing NEEP cold-climate certification for Xcel's top tier. Xcel Minnesota's $2,000 cold-climate ASHP tier requires the equipment to be on the NEEP cold-climate heat pump list (ashp.neep.org) with COP at 5°F ≥ 1.75. Equipment that meets SEER2 thresholds but isn't NEEP-listed defaults to a smaller standard-tier rebate. The contractor's quote should explicitly confirm NEEP listing — ask for the screenshot if it's not on the AHRI documentation.
- Counting on Minnesota HEAR funds for 2026. As of April 2026, Minnesota is still awaiting US DOE approval for HEAR ($8,000 income-qualified) and the state Residential Heat Pump Rebate Program ($4,000). Neither has launched, and retroactive rebates are not allowed — meaning installs completed before HEAR launches cannot claim the rebate even if the household would have qualified. Monitor save-energy-mn.org for current status.
Estimate your net cost
Used to determine HEEHRA eligibility (under 80% area median income).
- Xcel Energy Cold Climate Air Source Heat Pump Rebate−$2,000
- CenterPoint Energy Ducted Air Source Heat Pump Rebate−$1,100
- Otter Tail Power Air Source Heat Pump Rebate−$800
- Minnesota Power Air Source Heat Pump Rebate−$400
Estimate only. Includes only programs accepting applications today — waitlisted or closed programs are excluded. Mutually exclusive programs (e.g. HEEHRA vs HOMES) and project-cost caps are applied per current program rules; confirm with your installer and utility before signing.
How to claim each rebate
- Get pre-approved (where required). Some utility programs require approval before install. Check program details before signing a contract.
- Use a participating contractor. Many programs require a licensed installer from an approved contractor list — especially HEEHRA, which routes through CEC-approved contractors who process the rebate at point of sale.
- Save documentation. AHRI certificate, model numbers, and itemized invoice are required for most utility rebates.
- Submit utility rebate within 60–90 days of install. Some programs are first-come first-served and close mid-year — funding can run out before the calendar year does.