Heating and cooling rebates

A heat pump HVAC system is simply an air conditioner that can run in reverse to heat or cool your home.

Heat pumps have changed

Today’s multi-stage heat pumps aren’t like older heat pumps that increased your energy costs and left your home uncomfortable. The difference is in the compressor, which is the heart of the HVAC system and responsible for about 80% of the energy consumption. SMUD recommends and provides rebates for new two-stage or variable-stage heat pumps. Here’s how they stack up:

Basic: Single-stage systems operate at one compressor speed—100% —or not at all. Even if you adjust your thermostat setting to heat or cool your home by one degree, the equipment runs at full speed. Because these systems turn on and off frequently, the compressor uses more energy, which increases your energy costs. These systems are not eligible for SMUD rebates.

Better: Two-stage systems can operate at a lower compressor speed (Stage 1- typically about 50%) or on high (Stage 2). This uses half the power of a single-stage system, which reduces your heating and cooling costs. By running longer at a low speed, these systems deliver increased comfort and a longer system life.

Best: Variable-stage systems use even less power because they can run at lower compressor speeds than two-stage systems. They also offer the most energy and bill savings, superior comfort and an even longer system life.

Features and benefits

More comfort. Two-stage and variable-stage systems circulate more air throughout your home, which helps to eliminate hot or cold spots and keep your home at a consistent temperature. Plus, a variable-stage system operates so quietly that you may not even realize it’s on!

Balanced humidity. Systems that have longer runtimes are better at maintaining the ideal levels of humidity in your home by season. Humidity levels are what help you feel cooler or warmer. You’ll notice less humidity in the summer (which helps you feel cooler) and slightly more humidity during the colder months (which helps you feel warmer).  

Better indoor air quality. Because the multi-stage systems run longer, the air filter traps more airborne particulates, lowering the dust and pollen levels inside your home.

Safer, cleaner and healthier. Homes and buildings that power appliances with electricity instead of gas are safer - No open flames, no gas leaks, no carbon monoxide. Residential natural gas appliances can produce pollutants including carbon monoxide (CO), nitrogen dioxide (NO2), formaldehyde (HCHO) and ultrafine particles. These pollutants are harmful and significantly contribute to asthma.

Better for the environment. More than 50% of SMUD’s power comes from carbon-free sources and SMUD’s goal is to be completely carbon free by 2030. When you switch from a gas HVAC to a heat pump HVAC, you’re investing in a cleaner, carbon-free electric future.

Myth: Heat pumps don’t work well in Sacramento.
Fact: New multi-stage heat pumps heat and cool extremely well in Sacramento’s climate.

Myth: Heat pumps cost too much to use.
Fact: While this may have been true for the old single-stage systems, new multi-stage heat pumps can keep your home comfortable for about half the cost of the old systems.

Myth: Heat pumps produce cold air during the winter.
Fact: It may feel cooler when the heat pump first turns on but the system quickly adjusts to warm your home.

Heat pump

Effective August 1, 2023, the rebate for two-stage split systems was discontinued.

• Split & mini-split⁽¹⁾ system
  • Variable-stage compressor
  • Must pass Title 24 via HERS CF3R and/or if new ductwork installed, it must be insulated to ≥ R8.
  • Connected thermostat (Wi-Fi enabled, 7-day programmable)

• Package system
  • ≥ 15 SEER2 
  • ≥ Two-stage or variable-stage compressor
  • Must pass Title 24 via HERS CF3R and/or if new ductwork installed, it must be insulated to ≥ R8.
  • Connected thermostat (Wi-Fi enabled, 7-day programmable)

⁽¹⁾ Mini-splits must service entire home and meet minimum HVAC system requirements.

These are a condensed version of the requirements outlined in the SMUD Contractor Handbook: Home Rebates Programs Requirements. Contractors are responsible for knowing all requirements, current program rules and advising customers appropriately. 

Eligibility requirements 

Eligibility for single-family and multi-family dwellings (up to 4 units).

To be eligible for rebates, the resident or homeowner must be a SMUD customer with an active SMUD account. In addition, the home must be individually metered by SMUD. For multifamily dwellings up to 4 units, each unit must be individually metered. 

The rebate is contingent on the project complying with all city/county ordinances, building codes and permit requirements, including inspections.

Manufactured, modular or factory-built homes have additional requirements. 

Eligibility for manufactured, modular or factory-built homes

Manufactured, modular or factory-built homes qualify for a rebate only if all of the following are true:

• Resident or homeowner is a SMUD customer with an active SMUD account.
• Home is individually metered by SMUD.
• Home is subject to state and local building codes. 
  • Contact your local building department to find out if your home is subject to state and local building code.
  • Mobile homes on a chassis and axle, constructed under HUD codes or that have a State of California Community Services Department sticker indicating status as a licensed mobile home may not qualify. 
  • Homes on a permanent foundation typically do qualify.