Denver Heat Pump Rebates

How to Save Thousands Before Summer Ends

If you're a homeowner in Denver or along Colorado’s Front Range, 2025 might be your best — and possibly last — chance to cash in on massive rebates for installing a heat pump.

Thanks to a push for cleaner, more energy-efficient home heating and cooling technologies, heat pump rebates in Xcel Energy territory have tripled this year. But here's the catch: funding is limited, and our policy team at Zero Homes expects Xcel Energy to reduce or even pause these rebates before the end of the summer. So if you're thinking about making the switch, now is the time to act.

Let’s break down what’s available, how to qualify, and what these systems actually mean for your home.

Why Heat Pumps Come with Big Rebates

Heat pumps are incredibly efficient systems that provide both heating and cooling by moving heat rather than generating it. In cold climates like Colorado, newer models — especially cold climate heat pumps — can operate efficiently even during frigid winter temperatures. The most affordable type of heat pump is called an air source heat pump (ASHP) — it extracts heat from the air. Ground source heat pumps (also known as geothermal heat pumps) extract heat from the ambient temperature deep in the ground, which is why it’s often much more expensive.

Because they help reduce greenhouse gas emissions and energy bills, heat pumps are central to many local, state, and federal climate initiatives. That’s why there’s so much money on the table right now to help homeowners make the switch.

If you’re new to heat pumps, check out our Heat Pumps 101 Guide to get familiar with how they work and what options are out there.

What Heat Pump Rebates Are Available in Denver?

Homeowners in Xcel Energy territory — which covers most of the Denver metro area and the Front Range — are eligible for the following 2025 rebates:

• Standard Air Source Heat Pump (ASHP), ducted or non-ducted:
  💰 $900 per ton (cooling capacity rated at 95°F)
  Keep scrolling to find out the difference between standard and cold climate ASHPs
  

• Cold Climate Air Source Heat Pump (ccASHP), ducted or non-ducted:
  💰 $2,250 per ton (heating capacity rated at 5°F)
  Learn more about Ducted vs Non-Ducted Heat Pumps
  

• Heat Pump Water Heater (HPWH):
  💰 $2,250 rebate
  Learn more about Heat Pump Water Heaters
  

• See more from Xcel Energy here (fair warning: it’s a bit confusing)

And that’s not all — you may also qualify for:

• 🏛️ Colorado State Tax Credit: $1,500

• 🇺🇸 Federal Tax Credit (IRA Section 25C): Up to $2,000

Combined, Zero Homes customers often see upfront cost reductions of around 50% — averaging about $8,000 in total incentives.

But again, these Xcel rebates have already tripled since early 2025 and could shrink or disappear altogether before fall. Don’t wait to get started.

What Are the System Requirements?

Rebates are only available for systems that meet minimum performance standards. Here’s a quick overview of the technical requirements:

Standard ASHPs (ducted, non-ducted, or mixed):

• 15.2 SEER2

• 11.7 EER2

• 7.8 HSPF2

Cold Climate ASHPs (ducted, non-ducted, or mixed):

• 15.2 SEER2

• 10 EER2

• 8.1 HSPF2

• Coefficient of Performance (COP) at 5°F ≥ 1.75

• Heating capacity at 5°F must be ≥ 70% of rated capacity at 47°F

These ratings confirm that your system is capable of delivering efficient heating and cooling even in Denver’s variable climate. 

What Do These Ratings Actually Mean?

You don’t need to memorize these, but your installer does. Here’s a quick glossary to help you decode the jargon:

• SEER2 (Seasonal Energy Efficiency Ratio 2): Measures cooling efficiency. Higher is better.

• HSPF2 (Heating Seasonal Performance Factor 2): Measures heating efficiency. Also, higher is better.

• EER2 (Energy Efficiency Ratio 2): Measures peak cooling efficiency at high outdoor temps.

• COP (Coefficient of Performance): A ratio of heat output to electricity input. A COP of 2 means you get 2 units of heat for every 1 unit of electricity.

These numbers affect both your system's rebate eligibility and your long-term energy savings. Systems that exceed the minimum standards may qualify for even more rebates under Xcel’s Whole Home Efficiency bundle.

Cold Climate vs Standard Heat Pumps: What’s the Difference?

Standard air source heat pumps are efficient in mild to moderate climates. They operate at near perfect energy efficiency until around 40 degrees F.  For Colorado winters, cold climate heat pumps (ccASHPs) are designed to perform reliably even when temperatures drop well below freezing.

The good news? You don’t have to choose one or the other. Many modern installations use dual fuel systems, where the heat pump handles most of the heating and cooling, and a backup gas furnace kicks in only on the coldest days.

What’s the Rebate Process Like?

We’ll be honest: the application process is not simple. Each rebate comes with different paperwork, performance documentation, and contractor requirements.

To qualify for the Xcel Energy rebates:

• Your system must meet the correct SEER2, HSPF2, and COP ratings

• You’ll need to use a participating contractor (👋 that’s us)

• The installation invoice must be dated in 2025

• All forms and documents must be submitted before rebate funds run out

Timing is critical. The funds are first-come, first-served — and this year’s boost in rebate amounts has created a surge in applications. That’s why starting early is so important.

Work with Zero Homes — Denver’s Heat Pump and Rebate Experts

At Zero Homes, we specialize in helping homeowners in Denver and across the Front Range upgrade to heat pumps with minimal hassle and maximum savings.

Our average customer sees about $8,000 in combined incentives, and we manage the rebate process for you — start to finish. With rebates expected to shrink by the end of summer 2025, the time to act is now.

Ready to explore your options? Reach out today and let’s get started while the full rebate stack is still available.