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Updated: January 15, 2020

Heat pump rebate increase is about climate, money, jobs, Mills says

A couple speaks at a lecturn with microphones on it as Maine Gov. Janet Mills smiles in the background Photo / Maureen Milliken Josh and Christie Whitcomb, of Home Town Heat Pumps, of Benton, speak Tuesday after Gov. Janet Mills, right, announced heat pump rebates for some Maine residents and small businesses will double.
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The state has doubled the amount of its rebate program for homeowners that install high-performance heat pumps, a move that's not only about climate action, but also about creating jobs, boosting the state's economy and saving money on heat bills, Gov. Janet Mills said Tuesday.

The rebate hike is part of Mills "100,000 heat pumps initiative," which became law last year and is designed to ease the state's dependance on fossil fuels, particularly oil. It aims to have 100,000 homes using heat pumps by 2025.

The initiative was announced by Mills Tuesday at F.W. Webb, on Leighton Road in Augusta. The company is a heat-pump supplier, and Mills said the initiative will boost the economy as businesses that supply and install heat pumps meet the demand and add jobs.

“These new rebates will help make high-performance heat pumps more attainable for more Maine people, and the effects of this initiative will ripple across Maine’s economy,” Mills said. “Not only will it help create good-paying jobs, boost small businesses, and promote workforce training at our community colleges, but it will also help Maine people save money on their heating bills and reduce our reliance on fossil fuels, helping us protect our environment and fight climate change.”

The rebates, which took effect Jan. 1, are aimed at making it easier and more affordable for people who heat with oil or propane to install high-performance heat pumps. The higher rebates are only for those who heat with oil or propane, and only for heat pumps installed after Jan. 1. Some 62% of homes in the state are heated by oil, and 8% by propane, according to a study commissioned last year by the state Office of the Public Advocate.

The amount of rebate depends on the type of heat pump installed.

The Tier 2 rebate, which is for high-performance pumps that meet new Efficiency Maine standards, has increased from $500 to $1,000 for the first indoor unit installed, and from $250 to $500 for the second.

Heat pumps meeting Tier 1 rebate standards — lower efficiency requirements — are eligible for a $500 rebate for the first indoor unit and $250 for a second indoor or outdoor unit, which is what it's been in previous years.

There are also now $2,000 rebates for homeowners who receive heating assistance through the Low Income Home Energy Assistance Program, as well as additional help for low-income Mainers from a MaineHousing program that launched in October.

According to Efficiency Maine, the install cost for a ductless indoor heat pump is about $3,750, though costs may vary. With the $1,000 rebate, the unit would pay for itself in five to nine years. It says on its website that 45,000 Maine homes are now heating and cooled by heat pumps.

Saving money, the environment

The effort is paid for by the Efficiency Maine Trust, and doesn't rely on money raised by taxes to fund it, Mills said.

A high-performance heat pump, which is powered by electricity, can help an average Maine home reduce its oil consumption by 270 to 540 gallons a year; reduce its carbon emissions by an estimated 3,600 to 7,250 pounds a year per home, per heat pump; and, when the initiative is fully realized, can save Maine people between $30 to $60 million annually, providing an important boost to the local economy, Mills said.

"Generations from now, we're going to look back at 2020 and remember that it was the year the Maine heat pump revolution took effect," said Michael Stoddard, Efficiency Maine's executive director, who also spoke at Tuesday's announcement.

"We continue to see growth in consumer demand, which tells us these new models really work well, even when it’s freezing outside,” he said. “With these new rebates, Maine now has the opportunity to accelerate demand for heat pumps, maintaining its trajectory as a national leader in displacing high-carbon fossil fuels with cleaner electricity while lowering heating bills at the same time.”

The bill that set off the heat-pump initiative last year was sponsored by state Sen. Mark Lawrence, D-York, who also spoke Tuesday. He commended Mills for her work on climate change, citing her speech before the United Nations Sept. 23, when she told the assembly Maine would be carbon neutral by 2045.

Lawrence said Mills "is one of the first governors who said, 'If the federal government isn't going to to it, we're going to do it.'"

Call for trained technicians

Mills and Stoddard also said that the increase in demand will mean a need for more technicians.

Dave Daigler, president of the Maine Community College System, said Tuesday, "We're building a workforce."

“This sort of initiative is why we remain focused on providing critical, relevant workforce training at the community colleges,” he said. “As industries and policies shift, we adjust our programs to make sure students and trainees are learning the latest techniques and technologies to keep up with industry needs.”

Also speaking about workforce were Christie and Josh Whitcomb, owners of Home Town Heat Pumps, in Benton. The Whitcombs started the business in their basement and now employ 11.

They said the already existing rebates have helped their business grow. "Customer service has been our top priority along with helping our customers save substantially on heating and cooling costs," Christie Whitcomb said. 

Josh Whitcomb added that the technology "is advancing every year," and heat pumps can provide efficient heating and cooling, while also not releasing carbon monoxide into the air, and, since they don't use combustible fuel, they're not a fire hazard. The rebates, "get them in homes at a more affordable level."

Help for low-income Mainers

Another focus is reducing the high cost of heating homes for the state's residents.

"There can't be any higher priority in Maine than to focus on lower heating costs," Stoddard said.

Maine residents below federal poverty guidelines use an average 24% of their income on energy costs, as opposed to 14% for higher-income Mainers, according to a the public advocate study.

One of the initiative partners focused on helping low-income homeowners is MaineHousing, the state's housing authority.

MaineHousing in October launched a program that helps pay for heat pump purchase and installation for homeowners who are eligible for the Home Energy Assistance Program and Central Heating Improvement Program. MaineHousing's goal is 10,000 heat pumps by 2025.

The organization has worked with Efficiency Maine on the program, which is administered by Community Action Agencies. 

Dan Brennan, MaineHousing executive director, was also at Tuesday's announcement, and told Mainebiz Wednesday the new rebate program is "really a win-win."

“We’re glad to do our part in helping advance the governor’s heat pump initiative," he said. "Part of our mission is to help Mainers stay warm and lower their overall energy costs. Heat pumps help us achieve that, with the added benefit of reducing overall energy consumption."

Editor's note: This article has been updated to reflect that the rebate increase is only for homeowners.

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