David Rames, senior product manager at Midea America Corp., touched off a discussion about the way forward for the heat pump market with a blog post on the ACCA website. Affordable residential heat pumps that are easy to install, effective in cold climates, equipped with smart and grid-ready technology, and require minimal modifications to existing home infrastructure will lead the way, Rames wrote. Plus, state and utility incentive programs can help in many areas, and the OBBBA includes provisions, such as the extension and enhancement of the qualified business income deduction, beneficial to the industry, he said.  

“The elimination of 25C and 45L will create some short-term friction, especially for cost-sensitive homeowners who had already budgeted around those federal incentives. However, we don’t see this as a net loss for the industry — it’s a market shift,” Rames said in a recent interview, reiterating the main idea from his blog post.  

“While the 25C tax credit has been helpful in raising awareness, the good news is out on all-electric, all-climate heat pumps,” said Dana Fischer, senior director of regulatory strategy for the heating and cooling division of Mitsubishi Electric U.S. “We expect to see continuous growth in demand for heat pumps as residential housing developers and homeowners across the country seek the most reliable and high-performance systems to deliver resiliency and comfort.”  

Mark Schmidt, chief revenue officer at the startup heat pump manufacturer Quilt, said his company is building its success on many of the heat-pump features Rames mentioned in his post.  

MARKET NEWCOMER: A Quilt inverter compressor heat pump installed outside a home. Each outdoor unit is capable of running up to two indoor units. (Courtesy of Quilt)

“We believe contractors who can assess, quote, and install these systems quickly will capture market share,” Schmidt said. “Quilt was designed to make advanced heat pump technology faster and easier to deploy.”  

Replacements: The ‘Next Wave’  

Rames said the “next wave” of growth in the residential heat pump market will be in system replacements rather than in new construction. This means, he said, that ease of installation, adaptability, and integration with a home’s existing structure will be features that draw consumers and contractors to heat pumps.  

“The long-term growth opportunity lies in ease of install, flexibility, and labor-readiness. That’s where Midea is investing,” he said.  

An example is Midea’s EVOX G³ system, which includes the EVOX G³ Heat Pump, an inverter-driven, variable-speed heat pump for ducted systems that’s paired with a dual-voltage air-handing unit (AHU) that can run on either 115V or 208–230V electricity. The AHU has a modular design that enables installers to bring components into tight spaces and assemble them on-site, and it can replace a gas furnace without new wiring.  

“Modular AHU design, dual-voltage compatibility, and drop-in sizing keep labor and electrical upgrade costs low, making heat pump retrofits feasible even without incentives,” Rames said.  

ADAPTABLE: The outdoor unit of a Midea EVOX G³ heat pump system. The heat pump can be paired with a modular air-handling unit that can replace a gas furnace without new wiring and can run on either 115V or 208–230V electricity. (Courtesy of Midea America Corp.)

Midea’s Packaged Window Heat Pump, which installs in under an hour and requires no electrical panel upgrades, Rames said, is another example of a heat pump that’s easy to install.  

Smart controls, quiet equipment, and the ability to provide heating or cooling in extreme conditions are also selling points for homeowners, Rames said.  

Mitsubishi Electric offers the Premier MSZ-GX, a ductless mini-split system that Fischer said is a good option for contractors and homeowners.  

“For consumers looking to make the biggest difference in heating and cooling costs with the lowest upfront spend, single-zone ductless mini-splits cannot be beat,” Fischer said. “By placing a 1-ton or 1.5-ton ductless unit in the core of the home, bills can be dramatically lowered to less than conventional heating and cooling costs — all while providing quiet and efficient comfort in all seasons in the parts of the home where the homeowner and their family spend the most time.”  

Quilt’s inverter compressor heat pumps are designed for ductless systems, with each outdoor unit capable of running two indoor units. They have a maximum heating capacity of 25,200 Btuh and a maximum cooling capacity of 24,000 Btuh, and are rated at up to 25 SEER2 and up to 12 HSPF2. The system has over-the-air updating capability, smart controls, and onboard diagnostics that professionals can use to remotely access system data, Schmidt said.  

“The end of the 25C tax credit doesn't change the fundamental equation for heat pumps — it clarifies it. Look at the data: Heat pumps have carried the HVAC industry's total shipment growth this year, with four consecutive months of growth while air conditioner shipments declined,” Schmidt said. “The market was already moving this direction. Homeowners don't buy heat pumps because of tax credits; they buy them because they want better comfort, lower bills, and modern technology in their homes.”