Tennessee Heat Pump Rebates

What's available in Tennessee

Tennessee's heat pump incentive landscape is dominated by the Tennessee Valley Authority's EnergyRight program, delivered through more than 150 Local Power Companies including NES, EPB Chattanooga, KUB, MLGW, and Middle Tennessee Electric. EnergyRight offers tiered air-source heat pump rebates of roughly $500–$1,500 plus a heat pump water heater rebate (around $900/unit in early 2026); these rebates require replacement of existing electric heating, leaving most Nashville and Memphis homes on natural gas waiting for HEAR. Several LPCs (KUB, Clarksville Department of Electricity, Middle Tennessee Electric, and others) also operate on-bill heat pump loan programs of up to $7,500–$10,000 over 10 years. Tennessee's IRA-funded HEAR program (about $83.4M total allocation, up to $8,000 per heat pump for income-qualified households) is approved but had not launched statewide as of April 2026, with launch expected later in 2026. The federal §25C tax credit expired December 31, 2025.

HEEHRA in Tennessee

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. Tennessee is finalizing program rules.

How heat pump rebates work in Tennessee

Tennessee's heat pump incentive landscape is dominated by the Tennessee Valley Authority's EnergyRight program, delivered through more than 150 Local Power Companies including NES, EPB Chattanooga, KUB, MLGW, and Middle Tennessee Electric. EnergyRight offers tiered air-source heat pump rebates of roughly $500-$1,500: a $500 standard tier, an $800 tier for 17 SEER2+ equipment, and a $1,500 'preferred' tier for cold-climate heat pumps that deliver 100% heating capacity at 17°F. The Preferred Tier is mutually exclusive with the Standard Tier — a single install qualifies for one or the other. Heat pump water heaters earn around $900/unit in early 2026. These rebates require replacement of existing electric heating, leaving most Nashville and Memphis homes on natural gas waiting for HEAR. Several LPCs (KUB, Clarksville Department of Electricity, Middle Tennessee Electric, and others) also operate on-bill heat pump loan programs up to $7,500-$10,000 over 10 years. Tennessee's IRA-funded HEAR program (~$83.4M total, up to $8,000 per heat pump for income-qualified households) is approved but had not launched statewide as of April 2026.

Tennessee rebate programs

6 utility-specific programs not shown here. Enter your ZIP in the calculator to filter to just your utility.

A worked example: cold-climate heat pump in Knoxville

Wesley owns a 1,800 sq ft home in Knoxville served by KUB (Knoxville Utilities Board, a TVA Local Power Company). He currently heats with electric resistance baseboards (no central HVAC). He gets quotes for a 3-ton ducted cold-climate air-source heat pump (Mitsubishi Hyper Heat H2i, NEEP cold-climate certified, ≥100% capacity at 17°F) installed at $15,400 including new ductwork. Because the install replaces existing electric heating with a cold-climate-certified heat pump using a QCN (Quality Contractor Network) installer, he qualifies for the TVA EnergyRight Preferred Tier at $1,500. Tennessee HEAR hasn't launched. The federal §25C credit is gone. Combined stack: $1,500 against $15,400. Net out-of-pocket: $13,900. Wesley also takes a $7,500 KUB on-bill heat pump loan over 10 years to finance the post-rebate balance at low interest, paying it back through monthly bill add-on. The on-bill loan isn't a rebate — it's a cash-flow tool.

Choosing a contractor in Tennessee

Tennessee licenses HVAC contractors through the Tennessee Board for Licensing Contractors (Mechanical Contractor — Heating/Refrigeration). Verify at tn.gov/commerce before signing. TVA EnergyRight rebates require a Quality Contractor Network (QCN) member to install qualifying equipment; the QCN roster is searchable at energyright.com. A non-QCN contractor cannot file the EnergyRight rebate even with qualifying equipment. The contractor files on the customer's behalf. For the Preferred Tier specifically, the equipment must be cold-climate certified with documented capacity retention at 17°F — confirm with the AHRI certificate and NEEP listing.

Common pitfalls for Tennessee homeowners

• Confusing the EnergyRight tiers. TVA EnergyRight has three air-source heat pump tiers: $500 standard, $800 for 17 SEER2+, $1,500 Preferred (cold-climate, 100% capacity at 17°F). The Preferred Tier is mutually exclusive with the Standard Tier — a single install qualifies for one. Confirm which tier your equipment qualifies for at the AHRI/NEEP review stage.
• Skipping the QCN contractor requirement. TVA EnergyRight rebates require a Quality Contractor Network (QCN) member. A non-QCN contractor cannot file the rebate even with qualifying equipment. The QCN designation is separate from standard HVAC licensure — confirm both at the quote stage. QCN status is on energyright.com.

Estimate your net cost

How to claim each rebate

1. Get pre-approved (where required). Some utility programs require approval before install. Check program details before signing a contract.
2. 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.
3. Save documentation. AHRI certificate, model numbers, and itemized invoice are required for most utility rebates.
4. 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.

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