Connecticut, Maine, Massachusetts, New Hampshire, and Rhode Island started up the New England Heat Pump Accelerator (NEHPA) last week to help decarbonize buildings in the region. The $450 million effort, funded by a Climate Pollution Reduction Grant approved in July 2024, aims to promote heat pump adoption in New England buildings. These five states have consistently cold winters and are among the top eight consumers of fuel oil for space heating. Unlike the myriad federal, state, and utility incentives that compensate the end user (or, in some cases, provide the money to the contractor to pass on savings to the customer), the NEHPA is targeting distributors and contractors with the hope that their savings will be ultimately passed down to the customer. The Market Hub will offer money to distributors, who will give a point-of-sale discount to contractors, who will pass on the savings to building owners. The accelerator will also include funding for workforce development and publicly available online training resources.
By providing incentives to the midstream, the NEHPA is attempting to target a key roadblock that is flummoxing many in building decarbonization: contractors are not incentivized to offer heat pumps to their customers, either due to lack of education or lack of confidence in the technology. Contractors are extremely influential in the decision-making process for HVAC upgrades or replacement because homeowners trust they have the experience and knowledge to know what’s right for them—82 percent of homeowners with heat pumps in a Mitsubishi-sponsored survey said their contractors were “somewhat” or “very” influential in their decision. Combining these incentives with workforce development ensures that contractors have the latest information on modern heat pumps and are able to save some costs that can benefit their customers as well.
Some states have already begun exploring programs under the banner of the NEHPA. The third piece of the accelerator, the Innovation Hub, will provide $83 million to state and community groups to lower barriers to heat pump adoption for low- and moderate-income residents. Connecticut is accepting public comments on the design of an $11-14.5 million pilot program to assist low- and moderate income building owners with replacing gas and oil HVAC systems the end of their useful lives (for more information on this and other open public requests, see the Requests tab on our Spotlight States dashboard or our Public Requests Reminder in your inbox every Thursday).
These programs will blend well with other programs being stood up across New England. The major utilities in Massachusetts have instituted a new program starting in winter 2025 that will reduce certain distribution costs for heat pump owners from November to April. An analysis by think tank Switchbox found that while 45 percent of homes would save money switching to heat pumps under the default rates, 64 percent would save with the new rates. The state has already proposed a “2.0” version of the rates, which would increase the percentage of homes saving with heat pumps by another 20 percentage points. Up in Maine, Versant Power has been offering a seasonal heat pump rate since late 2022 and Central Maine Power is running a pilot program offering a heat pump rate through the end of the year.
The outcome of the NEHPA states’ unique effort to direct heat pump incentives to distributors and contractors will provide a key lesson for other states in the future. We will keep an eye out for developments in this process and provide updates through the Spotlight States dashboard and public request digests.
