This report is based on data as of March 2024.

Estimating the upfront cost of home electrification is complicated. All homes and projects are unique, there is limited public data on prices paid in the market for heat pump installation and related projects, and prices can vary by thousands of dollars for similar jobs. Reputable sources ranging from regulatory bodies to home improvement websites cite highly varied upfront costs. Finally, the comparison to the alternative cost of replacing existing appliances is often missing from estimates of the upfront costs of electrification—for example, if a heat pump is installed near the end of life of the existing HVAC system, a household can avoid the costs of a new air conditioner and fossil fuel furnace or boiler.

To estimate upfront costs of electrification, we analyze cost data sets obtained from Massachusetts and California, two states leading the way on heat pump installations. We validate our model against smaller data sets from New York and Maine. The full methodology is described below, and we welcome feedback on how to improve the utility of this report in the future. You can send suggestions and recommendations for additional data sources to us at upfrontcosts@rewiringamerica.org.

Terminology

Single-zone heat pump: A single “mini-split” heat pump installation consisting of one outdoor unit and one indoor unit. Can heat a large room, a couple of connected rooms, or an open-floor-plan apartment up to about 1,000 square feet.

Hybrid heat pump: A heat pump installation that provides some but not all of the heating for a home, used in conjunction with a fossil or electric resistance backup system. This can be a centrally ducted heat pump, a single mini split, or a mini split with multiple indoor units.

Whole-home heat pump: A heat pump installation that provides all of the heating and cooling for a home. This can be a centrally ducted heat pump or a ductless system (mini split typically with multiple indoor units, and sometimes multiple outdoor units).

Data sources

Massachusetts

Massachusetts has a relatively cold climate. The Massachusetts Clean Energy Center (MassCEC) ran a Residential Air-Source Heat Pump Program from November 2014 through March 2019, which provided incentives ranging from about $500 to $3,000 depending on heat pump size. They have provided a detailed dataset of around 21,000 projects, which we have disaggregated into single-zone (8,000 projects), hybrid (8,500 projects), and whole-home heat pumps (3,500 projects) for use in our model. The median total project cost across all installation types was around $8,300 before incentives. 

MassCEC also ran a Whole-Home Heat Pump Pilot from May 2019 through June 2021, and that detailed dataset has 158 projects. For these projects, Mass Save, the state’s energy efficiency program, offers a whole-home rebate of $10,000. The median total project cost was around $18,300 before incentives, and ranged from $5,000 to $58,000. At the beginning of the pilot program, backup heat was encouraged, but by the end they removed that recommendation, “reflecting growing acceptance of the ability of cold-climate heat pumps to serve as a stand-alone heating solution.”

California

The TECH Clean California program has provided rebates on heat pumps and heat pump water heaters (HPWHs) since 2021. The TECH Clean incentive is given to contractors, and depends on the size of the system. These incentives were usually $3,000, and the funding ran out in a few months. With new funding for 2023, they have reduced the incentive to $1,000. They collect data about every install and release public updates each month. As of March 2024, the median total project cost for the 21,000 heat pump projects was around $19,000 before incentives, and ranged from $2,000 to $70,000. All of these installs were whole-home, as they all either decommissioned previous infrastructure (86% of projects), or left it in place to run for emergency use only. 

Maine

Maine is one of the coldest states in the country, but air source heat pumps are being adopted by households at twice the rate of the rest of the US. The statewide rebate program, run by Efficiency Maine, offers rebates up to $2,000 for Low and Moderate Income (LMI) residents, and up to $1,200 for everyone else. Efficiency Maine states that the installed cost of a heat pump is $4,600. While they don’t specify what this covers, we assume it is for a single-zone heat pump. Efficiency Maine also pays for heat pump water heaters to be installed in low-income households at a fixed price of $2,500 for electric resistance replacement, and $2,900 for fossil replacement (equipment plus installation). 

Despite the great uptake of heat pumps, Efficiency Maine has not been publishing data on the equipment or installations themselves. One small dataset from South Portland, ME, includes 36 projects completed in fall of 2022. The total project cost ranged from $3,000 to $33,000 before incentives, with the lower end for a single-zone heat pump, and the upper end for 4 to 5 indoor units and sometimes a second outdoor unit. The average cost per zone (total cost divided by total number of indoor units) from this dataset is around $5,200. 

New York

New York is also in a cold climate. As part of a 2017 to 2019 Air-Source Heat Pump Program, the New York State Energy Research and Development Authority (NYSERDA) offered rebates of $1,500 - $4,500 to households who installed heat pumps, depending on heat pump size. NYSERDA published an analysis of their program including pricing data for 386 projects. The total project cost ranged from $10,000 to $30,000 before incentives, with an average cost of $16,300. 

Cost estimates

Heat pump HVAC: whole-home

The data plotted below represent total project costs (equipment plus installation costs) for a whole-home heat pump installation, derived from the TECH Clean California dataset and the two Massachusetts datasets. These costs have been adjusted to represent present-day national averages by correcting for inflation (since installations took place over the past decade) and location-specific materials and labor costs (since Massachusetts and California are relatively expensive markets). 

Our modeled cost estimates for the 20th to 80th percentile of whole-home air source heat pumps are as follows:

Whole-home heat pump

• <1,000 square foot home: see single-zone estimates below

• 1,500 to 2,500 square foot home: $17,000 - $23,000 (median $19,500)

• 2,500 to 5,500  square foot home: $22,500 - $28,000 (median $25,000)

• 5,500+ square foot home: $26,000 - $30,000 (median $29,000)

Note: Range represents the 20th to 80th percentile.

These are national estimates, and costs will vary significantly from market to market. Homes in moderate climates or with better insulation require less heating/cooling capacity and are likely to fall at the lower end of these ranges. Homes in colder climates or in regions with high labor costs are likely to fall at the higher end of these ranges. Hybrid heat pump installations with continued fossil-fuel backup in any size home and region will cost less than whole-home installations. Other factors, such as supply chain constraints, the familiarity of local HVAC contractors with heat pump technology, and the degree of price competition within local markets will also affect pricing, but are not possible to model with the available data. 

To quantify some of the variability in costs based on climate, location, and home characteristics, we have developed a model that takes into account more information about a home in addition to its square footage, including whether the home needs new ductwork, heat pump size/capacity, and heat pump efficiency. We’ve used the model to estimate median costs for a variety of home types in locations around the country. The results are as follows:

Heat Pump HVAC: single-zone

The data plotted below are total project costs (equipment plus installation costs) for a single-zone heat pump installation, derived from the Massachusetts Air-Source Heat Pump dataset. These costs have been adjusted to represent present-day national averages by correcting for inflation and location-specific materials & labor costs.

In the data plotted to the left, the boxed area represents the 20th to the 80th percentile of project costs. The yellow line in the middle represents the median, or 50th percentile, cost. 

Based on this, we would expect the middle range (20th to 80th percentile) for an installed single-zone air source heat pump to be:

Single-zone heat pump

• $5,400 - $8,500 (median $6,600)

NOTE: Range represents the 20th–80th percentile.

Heat pump water heaters

The data plotted below are total project costs (equipment plus installation costs) for a heat pump water heater installation, derived from the TECH Clean California dataset. These costs have been adjusted to represent present-day national averages by correcting for inflation and location-specific materials & labor costs.

In the data plotted to the left, the boxed area represents the 20th to the 80th percentile of project costs. The yellow line in the middle represents the median, or 50th percentile, cost. Costs are disaggregated between households replacing gas water heaters and households replacing electric resistance water heaters.

For heat pump water heaters, we did not identify a strong correlation between cost and any of the input features (e.g., square footage, water heater size in gallons, or water heater efficiency). However, if the household was replacing a gas water heater, the additional wiring required for a gas-to-electric swap made it more expensive than just replacing an existing electric resistance water heater.

Based on this, we would expect the middle range (20th to 80th percentile) for an installed heat pump water heater to be:

Heat pump water heater

• Replacing electric resistance: $3,500 - $5,000 (median $4,200)

• Replacing gas: $4,100 - $6,800 (median $5,400)

NOTE: Range represents the 20th to 80th percentile.

To translate heat pump water heater costs from national averages to location-specific cost estimates, we multiply by location-specific cost factors.

Electric stoves and dryers

To calculate the average cost of efficient electric appliances, we examine Google Shopping results. Unlike the upfront cost of heat pumps or heat pump water heaters, we do not expect the cost of installing an electric appliance to vary significantly across the country. This does not include costs related to wiring when switching from gas to electric (most large electric appliances like stoves and dryers require a 240 V circuit, while gas appliances require a 120 V circuit). The difference in cost between replacing a gas and an electric resistance water heater is approximately the cost of installing a new 240 V circuit ($1,200), although this can vary widely depending on location and the distance from the electrical panel to the appliance.

Stoves

• Induction range: $1,000+

• Portable induction cooktop: $65+

• Electric resistance range: $600+

Dryers

• Heat pump dryer: $1,300+

• Electric resistance dryer: $400+

Note: Prices are for base models and do not include the cost of wiring.

Methodology

Heat pump HVAC

We use three large datasets of heat pump installations to estimate heat pump installation cost:

• Massachusetts Residential Air-Source Heat Pump Program | 21,000 projects, including 3,500 whole-home heat pumps and 8,000 single-zone heat pumps | 2014-2019

• Massachusetts Whole Home Pilot | 158 projects, all whole-home heat pumps | 2019-2021

• TECH Clean California | 21,000 projects, all whole-home heat pumps | 2021-2024 (more updated data is available, but our model currently only incorporates data through March 2024)

We train a gradient boosting decision tree model on the datasets, using as inputs a Producer Price Index (since installations took place over the past decade) and scaling factors to represent location-specific material and labor costs using RS Means. Additional characteristics that are used to train the model include:

1. Square footage

2. Heat pump efficiency (as measured by HSPF and SEER)

3. Heat pump size in tons

4. Whether the ductwork needed to be replaced or upgraded

5. Whether a panel upgrade was required

6. Whether the install was in a home with or without ducts

We use the trained model to predict air source heat pump total installed costs for every building model in the National Renewable Energy Laboratory (NREL)’s publicly available ResStock dataset. This dataset consists of approximately 550,000 simulated residential building models that statistically represent every residential housing unit in the contiguous United States. Each simulated building includes the characteristics used to train the model and reflect the distributions of these characteristics in the real world. From these predicted costs, we calculate the median, 20th, and 80th percentiles according to specific bins of home sizes.  

For single-zone heat pumps, we simply calculate the median and the 20th and 80th percentile costs, since there is not a strong correlation with any of the input features. 

Since this methodology is based only on California and Massachusetts data, we validate this methodology using datasets from other states. We will continue to add to this table as more validation data becomes available.

Heat pump water heaters

We use the TECH Clean California dataset, which has data from over 1,200 heat pump water heater installations, to estimate heat pump water heater costs. For heat pump water heaters, we adjust the cost of each project to represent a present-day national average by correcting for inflation and location-specific materials & labor costs. The main predictor of heat pump water heater cost is whether the household switches from a fossil fuel water heater, which likely requires electrical work, or from an electric resistance water heater. We therefore separately calculate the median and quartile costs for households switching from fossil and for households switching from electric resistance. 

Stoves and dryers

The upfront costs of stoves, dryers, and electric vehicles do not differ by location, so we do not adjust these costs by RSMeans factors. We use a Google Shopping web scraper to collect the costs of the most common models of stoves and dryers, screening for most common models by the presence of ratings. We then sort by price from lowest to highest, and determine the lowest price (to the nearest hundred dollars) at which there are at least two or three models from reputed brands. For these appliance upfront costs, we report an approximate lower bound on price, since the consumer has more power over how much they spend on an appliance purchase relative to a home upgrade like a heat pump installation. The base model of an appliance will be sufficient for most households, while some households may choose to spend more for a higher-end appliance or vehicle.

Peer Reviewers: Andy Frank and Scott DeAngelo, Sealed; Brian Lamorte, Lamorte Electric; Joe Wachunas, AWHI