More than 170 households in Lincoln, Neb., expect to save on their heating and cooling costs thanks to the city’s heat pump incentive program, which launched in January.

Funded by a pilot incentive in the 2022-24 biennial budget, the city of Lincoln allocated $500,000 to help homeowners and single-family rental property homeowners purchase heat pumps. Forty percent of the funds are available to low- and moderate-income households through the Urban Development Department.

“What makes this new and unique is the city has augmented the funding for this incentive for homeowners,” explained Kim Morrow, Lincoln’s chief sustainability officer. “There have been other programs to help with energy savings, but they have not been funded by the city.”

She noted that the Biden administration has used an incentive approach to encourage behaviors that lead to the use of cleaner energy. In other words, providing rewards for changing the way private citizens and businesses use energy. Lincoln has adopted the incentive approach as part of its own sustainable energy program.

Homeowners can receive a $1,000 incentive toward the purchase of an air-source heat pump. Eligible low-income residents can receive $3,000. These can be combined with an $800 incentive from the Lincoln Electric System (LES) Sustainable Energy Program.

According to Energy Star, air-source heat pumps save energy by harvesting the outside air to use within a home’s heating/cooling system. They can be installed with existing ductwork typical of most American homes. Ground source heat pumps use the temperature of the ground around a building to heat or cool it. While they can be economical to operate, installation is more complex and expensive, involving digging the ground around a structure.

“Heat pumps save money on heating and cooling costs, contribute to cleaner indoor air quality and reduce greenhouse gas emissions,” Lincoln mayor Leirion Gaylor Baird said in an Earth Day message in April.

In the Lincoln program, to be eligible, an existing heat pump or air conditioner must be at least five years old. The new heat pump can also replace a gas furnace.

Commercial property owners as well as multifamily housing property owners, homes outside Lincoln city limits and new residential construction are not eligible for assistance from the Lincoln heat pump program.

According to Morrow, the incentive program covers the purchase and installation of air-source heat pumps with a minimum Seasonal Energy Efficiency Rating of 15.2 and a minimum Energy Efficiency Ratio of 12. She said residents are encouraged to consult a heating/cooling expert to help decide what option is best for their home.

Lincoln contractors participating in the program will apply for the city incentive as well as the Lincoln Electric System sustainable energy incentive on behalf of homeowners. Residents can find the names of participating HVAC contractors on the LES website. City officials encourage residents to contact one or more of the participating contractors for an estimate for a new heat pump. Additionally, they should ask what incentives — including federal tax credits for as much as 30% of the cost of a new heat pump — are available.

When the installation is complete, the incentives will be applied as a credit to the contractor’s bill.

The deadline to apply for the incentive program is Aug. 31 or until all the available funds have been used, whichever comes first.

Morrow said that as of early May, 64% of the $1,000 grants have been used, while only 30% of the $3,000 grants have been claimed. She believes these are being claimed more slowly because of the application process for low- to moderate-income homeowners, who must first apply through the Urban Development Program for the loan to help fund the balance of the heat pump’s cost.

“I also think there is more education to be done about heat pumps,” she added. Homeowners sometimes misunderstand that a heat pump provides not just heat but air conditioning to their homes.

She also said the newer heat pumps are more energy-efficient than older models. Homeowners may not understand the economic benefit of replacing a less efficient pump.

Morrow said Lincoln’s electric utility company has done an excellent job of building relationships with local HVAC contractors. “We rely on the contractors to educate consumers about the benefits of the program when a customer’s furnace or existing heat pump breaks.”

The heat pump program, along with other energy-saving incentives for Lincoln residents, is part of the Resilient Lincoln initiative that partners the city with Lincoln Electric System in committing to an 80% net reduction in the city’s greenhouse gas emissions by the year 2050.

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