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With both Section 25D and 25C expired, PA homeowners get zero federal tax credits on cash/loan solar and heat pump purchases. But utility rebates, net metering, SRECs, and fuel switching savings still make the bundle worthwhile, especially when replacing oil or propane.
Federal Tax Credits: Both DEAD
Section 25D (solar ITC) and Section 25C (heat pump credit) both expired December 31, 2025. $0 federal benefit for cash/loan purchases. Third-party PPA/lease can still access Section 48 (30%) for the solar component only.
$200-500
Utility HP Rebate
$1,700+
PECO + EAP Max
1:1
Net Metering
$440-1,540
Fuel Switch Savings/yr
Here is every incentive available for a PA solar + heat pump bundle, and which ones are actually accessible in 2026.
PECO: $300 | PPL: $350-450 | Duquesne: $200 | FirstEnergy: up to $500
Tier 1: $500 (SEER2 15.2+) | Tier 2: $1,000 (SEER2 16+) | Tier 3: $1,400 (SEER2 18+) | +$250 dual fuel
PA SRECs at $22-35/MWh. A 12-14 kW system generates 13-16 SRECs/year.
1:1 retail credit at $0.17-0.21/kWh. Covers both existing load and new HP electricity demand.
EXPIRED December 31, 2025. No federal tax credit for cash/loan solar or heat pump purchases.
EXPIRED December 31, 2025. No federal energy efficiency credit.
PENDING DOE approval. Up to $8,000 for income-qualified households. NOT currently available.
The largest bundle benefit comes from replacing expensive fossil fuels with an efficient heat pump powered by solar.
| Current Fuel | Annual Cost | HP Annual Cost (COP 2.8) | Annual Savings | 10-Year Savings |
|---|---|---|---|---|
| Natural Gas | $1,300/yr | $860/yr | $440/yr | $5,060 |
| Heating Oil | $2,300/yr | $860/yr | $1,440/yr | $16,560 |
| Propane | $2,100/yr | $860/yr | $1,240/yr | $14,260 |
Key insight: Oil and propane heating homes see the largest bundle benefit. Switching from oil to a heat pump saves approximately $1,440/year, and that savings grows with fuel price inflation. Gas-to-HP savings are narrower ($440/year) because PA gas prices are relatively low.
Real-world PA bundle scenarios showing total cost, rebates, and annual benefits. All assume 14 kW solar at $3.00/W + ducted HP.
Annual Benefits
Estimated Payback
12.6 years
Annual Benefits
Estimated Payback
11.2 years
Annual Benefits
Estimated Payback
12.8 years
A heat pump adds significant electricity demand. You need a larger solar system to offset it.
Winter design: 8–13°F
Winter design: -2 to 6°F
Winter design: -5 to -10°F
Without federal tax credits, financing strategy matters more than ever.
Best for: Homeowners avoiding large upfront investment
Best for: Homeowners who can afford upfront cost for maximum ROI
Best for: Homeowners wanting ownership with manageable payments
Best for: Eligible municipalities with credit challenges
No. Both Section 25D (residential solar ITC) and Section 25C (energy efficiency credit for heat pumps) expired December 31, 2025. PA homeowners who purchase a solar + heat pump bundle with cash or a loan receive $0 in federal tax credits. The only way to access federal benefits is through a third-party PPA/lease for the solar component, where the financing company claims Section 48 (30% ITC) and passes savings as a lower rate.
A heat pump typically adds 4,000-6,000 kWh/year to your electricity consumption in PA (varies by climate zone and fuel being replaced). This means you should size your solar system 3-5 kW larger than you would for electricity-only. For example, if a home needs 10 kW for existing electric use, adding a heat pump would push the recommendation to 13-15 kW.
PA heat pump rebates come from your electric utility under Act 129 Phase IV: PECO $300, PPL $350-450 (tiered), Duquesne Light $200, FirstEnergy utilities (Met-Ed, Penelec, Penn Power, West Penn) up to $500 each. PECO customers can also stack EAP (Electrical Association of Philadelphia) bonuses: $500-$1,400 based on SEER2 plus a $250 dual fuel adder. Combined PECO+EAP can reach $1,700+.
In most of PA (IECC Zone 5A), a hybrid system pairing a heat pump with your existing gas or oil furnace is strongly recommended. The heat pump handles 80-90% of heating hours efficiently, and the fossil fuel backup kicks in during extreme cold (below 15-25 degrees F). This provides peace of mind during PA winters and qualifies for the $250 EAP dual fuel adder in PECO territory.
Yes. PA net metering provides 1:1 full retail credits for excess solar generation. If you size your solar system to cover both your base electricity use and the added heat pump consumption, net metering credits effectively make your heat pump run on solar. The key is sizing the solar system large enough to offset the additional 4,000-6,000 kWh/year from the heat pump.
HEAR (Home Energy Assessment Rebate) is an IRA-funded program administered as "Penn Energy Savers" in PA. It would provide up to $8,000 for income-qualified households for heat pumps, insulation, and electrification. PA has been allocated approximately $129M. Program administrators have been hired (Resource Innovations for HER, EGIS BLN for HEAR), but the program is NOT yet active. Launch date is TBD pending DOE approval. Do not sign agreements contingent on HEAR funding.
Zone 4A (southeastern PA / Philadelphia) is ideal because milder winters mean the heat pump handles more heating hours efficiently, and eastern PA has the best solar production (1,250 kWh/kW/yr). Zone 5A (most of PA) works well with cold-climate heat pump models and hybrid setups. Zone 6A (extreme north) requires cold-climate HP models and has the lowest solar production.
Yes. Several PA lenders offer combined home improvement loans covering both solar and heat pump installations. A single loan simplifies payments. Alternatively, you can use a solar PPA/lease ($0 down, third-party claims Section 48) for the solar component and a separate loan or cash for the heat pump. PACE financing is also available in some PA municipalities for both solar and heat pump.
We analyze your fuel type, utility territory, climate zone, and roof to design the optimal solar + heat pump bundle. See exact savings for your home.