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The ITC expiration changes the math. Here's the right order for your home.
For most Northeast homeowners in 2026, installing a heat pump first is the smarter move. Heat pumps qualify for generous state rebates ($450–$11,500) and while residential solar gets $0 in federal incentives. Install the heat pump, then size solar to your new electric load.
State programs and remaining federal rebates heavily favor heat pumps over solar for homeowners. Here's the side-by-side.
MassSave, NHSaves, Energize CT, Efficiency Vermont, Efficiency Maine, and more.
MassSave, NHSaves, Energize CT, and others.
Stack state rebates and utility programs together.
Expired December 31, 2025 under OBBBA.
NJ SuSI, RI REF, CT RSIP, NY -- depends on your state.
Performance-based incentive for Massachusetts solar.
Sell excess power back to the grid. Available in most states.
State rebate programs provide $450 to $11,500 for heat pump installations. Programs like MassSave (75-100% of cost), Efficiency Maine, NHSaves, and Energize CT make heat pumps dramatically more affordable. Solar gets $0 in federal credits for homeowner purchases in 2026.
Switching from oil or gas to a cold-climate heat pump cuts heating costs by 40-60% from day one. A household spending $4,800/year on oil heating can drop to $1,800 - $2,800/year in electric heating costs. That savings starts immediately, not after a multi-year payback.
A heat pump increases your electric consumption by 3,000 - 6,000 kWh/year. If you install solar first without accounting for this, your system will be undersized. Installing the heat pump first lets you know your actual electric load, so your solar system is sized right from the start.
State heat pump rebate programs have fixed funding pools. Once the money runs out, programs close or reduce amounts. Several states are already seeing high demand. Waiting too long means you could miss out on thousands in rebates that won't come back.
If your heating system is less than 10 years old and running efficiently, there's no urgency to replace it. Installing solar now locks in electricity savings while your existing system still has life left. You can add a heat pump when the furnace eventually needs replacing.
States like New Jersey (SuSI at $0.90/W, up to $15,000) and Massachusetts (SMART program) still offer strong solar incentives that partially compensate for the lost federal credit. If your state's solar incentives are robust, the ROI math can favor solar first.
Solar leases and PPAs still benefit from the 30% ITC because the financing company (who owns the system) claims it under Section 48/48E. They pass the savings to you through lower monthly payments. With $0 down and a payment lower than your electric bill, the economics work today.
If you're paying $300+ per month in electricity and your heating costs are already low (natural gas in a mild climate), solar panels directly attack your biggest expense. The higher your electric rate, the faster solar pays for itself -- even without federal incentives.
The right order depends on your state's incentive programs. Here's our recommendation for each state we serve.
| State | Recommendation | Why |
|---|---|---|
| Massachusetts | Heat pump first | MassSave covers 75-100% of heat pump cost. Limited solar state incentives. |
| New Hampshire | Heat pump first | NHSaves rebates available. Minimal state solar incentives. |
| Connecticut | Heat pump first | Energize CT covers significant heat pump costs. Solar incentives are modest compared to HP rebates. |
| Rhode Island | Heat pump first | Strong HP rebates plus ConnectedSolutions revenue for battery storage later. |
| New Jersey | Solar first | SuSI incentive ($0.90/W) plus high solar production make solar ROI strong even without federal credit. |
| New York | Depends | NYC: heat pump first (high gas prices). Upstate: could go either way based on heating fuel and utility rates. |
| Vermont | Heat pump first | Efficiency Vermont covers HP costs significantly. |
| Pennsylvania | Heat pump first | Limited solar state incentives. State HP rebates make heat pump the clear winner. |
| Maine | Heat pump first | Efficiency Maine HP rebates are among the best in the country. Strong case for HP first. |
MassSave covers 75-100% of heat pump cost. Limited solar state incentives.
NHSaves rebates available. Minimal state solar incentives.
Energize CT covers significant heat pump costs. Solar incentives are modest compared to HP rebates.
Strong HP rebates plus ConnectedSolutions revenue for battery storage later.
SuSI incentive ($0.90/W) plus high solar production make solar ROI strong even without federal credit.
NYC: heat pump first (high gas prices). Upstate: could go either way based on heating fuel and utility rates.
Efficiency Vermont covers HP costs significantly.
Limited solar state incentives. State HP rebates make heat pump the clear winner.
Efficiency Maine HP rebates are among the best in the country. Strong case for HP first.
When sequenced correctly, electrifying your home can reduce annual energy costs by over $6,700. Here's a typical Northeast homeowner scenario.
Starting Point
Heating: $4,800/yr (oil) + Electric: $3,000/yr
$7,800
per year
Step 1: Install Heat Pump
Heating drops to $1,800/yr (electric). Electric rises to $4,200/yr total.
$6,000
Save $1,800/yr
Step 2: Add Solar (Sized for HP Load)
Electric drops to $600/yr. Total energy cost: $2,400/yr.
$2,400
Save $5,400/yr
Step 3: Add Battery Storage
ConnectedSolutions revenue: $1,300/yr. Net energy cost: $1,100/yr.
$1,100
Save $6,700/yr
Total Annual Savings vs. Original
$6,700/yr
From $7,800/yr down to $1,100/yr in total energy costs
This approach lets you benefit from state heat pump rebates and the solar ITC indirectly, even though homeowners can't directly claim the solar credit.
Saves ~$150/mo on heating immediately
Lease: $80-120/mo, but saves $200-300/mo in electricity
You benefit from heat pump state rebates directly, and the solar ITC indirectly (through the financing company's lower lease payment). Monthly net savings after lease payment: $170 - $330/month. State rebates plus the lease ITC savings working together to maximize your 2026 savings.
Answer these five questions to determine the right installation order for your home.
Yes
Heat pump first. Replace an aging system with efficient technology while state rebate funding lasts.
No
Continue to Question 2. No urgent need to replace.
Yes
Heat pump first. Oil and propane are the most expensive fuels. Biggest savings potential.
No (Natural Gas)
Savings from switching are smaller. Continue to Question 3.
Yes (NJ, MA SMART)
Consider solar first. Strong state incentives can compensate for the lost federal credit.
No / Minimal
Heat pump first. Without strong solar incentives, the HP rebate advantage is clear.
Yes
Heat pump first, immediately. Enhanced state rebates can cover most or all of your heat pump cost.
No
You still get standard state rebates. Continue to Question 5.
Yes (Budget Allows)
Install both simultaneously. Buy the heat pump (claim state rebates) and lease/PPA the solar.
No (One at a Time)
Heat pump first in most cases. Solar later, sized for your new electric load.
The information on this page is based on current federal and state programs as of 2026.
Database of state incentives for renewables and efficiency, including heat pump rebate programs by state.
Massachusetts heat pump rebates covering 75-100% of installation costs for eligible homeowners.
New Hampshire utility heat pump rebate program details and eligibility requirements.
Connecticut heat pump incentives and rebates through the Energize CT program.
Maine heat pump rebates, among the most generous in the country for residential installations.
Our energy advisors will analyze your heating system, electricity usage, and available incentives to recommend the right installation order for your home. Free, no obligation.