California, New York, and several New England states have identified electrification of space and water heating in buildings as a critical step to reach greenhouse gas (GHG) reduction goals. When coupled with clean electricity generation, electrification of heating and hot water systems using heat pump technology can reduce GHG emissions and fossil fuel use. Air-source heat pumps (ASHP) are a key technology for building electrification, but there are still a number of barriers to their adoption by customers, installation contractors, and other market actors.

While all the Northeastern states tend to benefit from the generally favorable customer economics associated with fuel switching from propane or oil to ASHPs, programs in the region are taking different approaches to incentivizing heat pumps and are at varying stages of maturity. As a result, market adoption of ASHPs is highly variable by state. This report reviews the policy, regulatory, and program frameworks in Northeast states – New England plus New York – to identify the key factors driving program success and overcoming barriers to ASHP adoption.

The report focuses specifically on ductless mini-split heat pumps used for heating and cooling, which are the most common and rapidly growing heat pump technology in the Northeast. However, many of the lessons learned and recommendations are also applicable to other heat pump technologies, most notably heat pump water heaters (HPWHs), which are suitable for residential applications. Ground source heat pumps (GSHPs) are much more expensive and, in the Northeast, best suited to new construction and commercial applications. As such, GSHPs face a different set of opportunities and barriers and are not the focus of this report.