North Dakota Heat Pump Rebates & Incentives (2026)
North Dakota's heat pump incentives come entirely from utilities in 2026. Otter Tail Power offers up to $1,000 per ton for cold-climate systems (with Quality Installation), and Xcel Energy provides up to $2,000 in flat-rate rebates. Federal tax credits are gone, and the state's IRA-funded HEAR and HOMES programs have not launched. This guide covers all major North Dakota heat pump incentives available in 2026, including Xcel Energy, Otter Tail Power, Minnkota Power co-ops, and the pending HEAR/HOMES programs. Here's what's actually available.
Last verified: March 24, 2026
Rates and program availability may change after this date.
North Dakota
Limited / Region-Dependent
Utility rebates only. Otter Tail Power offers $300–$800/ton for heat pumps. Xcel Energy provides $1,600–2,000 flat-rate rebates. Minnkota co-ops offer $150/ton. MDU offers nothing. Federal 25C/25D credits expired. HEAR ($37.1M) and HOMES ($37.2M) funded but not launched.
Sources:
The Short Version
✓ Otter Tail Power: Up to $1,000/Ton (With QI)
Cold-climate air-source heat pumps qualify for $800 per ton base, plus a $200/ton Quality Installation bonus through certified contractors. A typical 4-ton system yields $4,000 in rebates. Geothermal systems qualify for $1,200–$1,400 per ton.
✓ Xcel Energy: Up to $2,000 Flat Rate
Cold-climate heat pumps earn a $2,000 rebate for combined gas and electric customers. Standard heat pumps earn $1,600. Heat pump water heaters add $400.
✓ Total Potential Savings
$900 (Minnkota co-op territory) to $4,200 (Otter Tail Power territory with QI) from utility rebates alone. If HEAR launches, income-qualified households could reach ~$18,200 total incentives.
✗ Federal Tax Credits Expired
Section 25C ($2,000 heat pump credit) and Section 25D (30% geothermal credit) both expired December 31, 2025. No replacement legislation has been introduced.
⚠ HEAR and HOMES Have Not Launched
North Dakota received $74.3 million in IRA funding for HEAR ($37.1M) and HOMES ($37.2M), but neither program is accepting applications. No launch date exists. The ND Commerce Department warns that any current offers related to these programs are likely scams.
Federal Tax Credits Have Ended
Section 25C (Energy Efficient Home Improvement Credit) and Section 25D (Residential Clean Energy Credit) both expired on December 31, 2025, under the One Big Beautiful Bill Act (Public Law 119-21). The 25C credit previously covered up to $2,000 for qualifying heat pumps. The 25D credit covered 30% of installed cost for geothermal heat pumps with no dollar cap. Neither credit is available for systems installed in 2026. For details, see our federal heat pump tax credit explainer.
The IRS has clarified that eligibility depends on when installation is completed, not when payment is made. A heat pump purchased in December 2025 but installed in January 2026 does not qualify. However, homeowners who completed qualifying installations before the deadline but lacked sufficient tax liability may carry forward unused credit amounts to future tax years.
Home Electrification and Appliance Rebates (HEAR)
North Dakota received $37.1 million in federal IRA funding for HEAR, which would provide point-of-sale rebates on heat pumps, heat pump water heaters, insulation, electrical panels, and wiring. The program is administered by the North Dakota Department of Commerce, Division of Community Services, with Franklin Energy contracted for implementation. As of March 2026, the program has not launched and no estimated start date has been announced.
Planned HEAR Rebate Amounts (When Launched)
| Equipment | Maximum Rebate | Income Requirement |
|---|---|---|
| Heat pump (ASHP or GSHP) | $8,000 | 100% at ≤80% AMI; 50% at 80–150% AMI |
| Heat pump water heater | $1,750 | 100% at ≤80% AMI; 50% at 80–150% AMI |
| Electrical panel upgrade | $4,000 | 100% at ≤80% AMI; 50% at 80–150% AMI |
| Insulation and air sealing | $1,600 | 100% at ≤80% AMI; 50% at 80–150% AMI |
| Electric wiring | $2,500 | 100% at ≤80% AMI; 50% at 80–150% AMI |
| Per-household cap | $14,000 | Above 150% AMI not eligible |
⚠ Beware of Scams
The ND Department of Commerce has warned that any offers in North Dakota currently claiming to be HEAR or HOMES rebates are likely scams or fraudulent. These programs are not yet accepting applications.
Home Owner Managing Energy Savings (HOMES)
North Dakota also received $37.2 million for the HOMES program, which funds whole-house energy-saving retrofits based on measured or modeled energy reductions. Like HEAR, the HOMES application has been submitted to DOE but the program has not launched and no timeline exists.
Both HEAR and HOMES were not repealed by the One Big Beautiful Bill Act and remain federally authorized with funds available until expended or September 30, 2031. North Dakota could still launch these programs, but no public timeline has been provided.
Utility Rebate Programs
With no federal or state rebates active, utility programs are the only financial incentive for North Dakota heat pump buyers in 2026. Rebate amounts vary significantly by utility territory.
Xcel Energy (Fargo Area)
Xcel Energy serves the Fargo metropolitan area with both gas and electric service. Its joint Minnesota/North Dakota residential rebate program runs through the 2024–2026 cycle. Rebates are per-unit (not per-ton), making them particularly attractive for smaller systems. Quality Installation requires using an Xcel-registered contractor.
| Equipment | Requirements | Rebate (Gas+Electric) | Rebate (Electric Only) |
|---|---|---|---|
| Standard ASHP | 15.2 SEER2, 7.8 HSPF2 + QI | $1,600 | $1,100 |
| Cold-climate ASHP | 15.2 SEER2, 8.1 HSPF2, NEEP-listed | $2,000 | $1,500 |
| Mini-split HP | 15.2 SEER2, 8.5 HSPF2 | $1,600 | — |
| Cold-climate mini-split | 16.0 SEER2, 9.5 HSPF2, NEEP-listed | $2,000 | — |
| Ground-source HP | 16 EER2, 3.3 COP + QI | $500/ton | — |
| Heat pump water heater | ENERGY STAR rated | $400 | $400 |
Xcel Bonus Opportunities
Xcel offers a $600 insulation + heat pump bonus for customers who install qualifying insulation followed by a heat pump within two years. A Whole Home Efficiency bonus adds 25% to standard rebates when you complete three or more qualifying projects. An Electric Space Heating Rate provides discounted electricity from October through May.
Otter Tail Power Company (Eastern ND)
Otter Tail Power (OTP) serves parts of eastern North Dakota and provides the most aggressive per-ton rebates in the state. Rebates are calculated per cooling ton, and a typical residential system runs 3–5 tons. Rebates cannot exceed 75% of project cost (50% for geothermal), and requests over $10,000 require prior approval.
| Equipment | Requirements | Base Rebate | With QI | With QI + Energy Control |
|---|---|---|---|---|
| Cold-climate ASHP (ducted) | SEER2 ≥16.0, HSPF2 ≥8.0 | $800/ton | $1,000/ton | $1,040/ton |
| Cold-climate ASHP (ductless) | SEER2 ≥16.0, HSPF2 ≥8.0 | $600/ton | $800/ton | $840/ton |
| Standard ASHP | SEER2 ≥14.3, HSPF2 ≥7.5 | $300/ton | $500/ton | $540/ton |
| Geothermal HP | — | $1,200/ton | $1,400/ton | — |
| Heat pump water heater | ENERGY STAR | $200 | — | — |
The $200/ton Quality Installation (QI) bonus applies when a certified contractor participating in OTP's QI program performs the installation. The additional $40/ton energy control bonus applies when the system operates on OTP's Dual Fuel, Deferred Load, or Residential Demand Control rate. With both adders, a 4-ton ducted cold-climate system earns $4,160 in rebates. OTP's Deferred Load rate can reduce electric heating costs by up to 30%. OTP also offers a $150 heat pump tune-up rebate (once per 10 years).
Montana-Dakota Utilities (Western ND)
MDU serves Bismarck, Dickinson, Williston, and other western communities primarily as a natural gas utility. MDU explicitly states: "There are no incentive programs for North Dakota residential customers at this time." No heat pump, heat pump water heater, or energy efficiency rebates of any kind are available from MDU in North Dakota.
Electric Cooperatives
North Dakota's rural electric cooperatives fall into two generation-and-transmission structures, each with distinct rebate programs.
Minnkota Power Co-ops (Eastern ND)
Minnkota Power operates the centralized Value of Electricity (VOE) program across its member cooperatives, including Cass County Electric (Fargo area), Nodak Electric (Grand Forks area), and Cavalier Rural Electric.
| Equipment | Rebate | Maximum |
|---|---|---|
| Air-source heat pump | $150/ton | $1,500 per off-peak meter |
| Ground-source heat pump | $250/ton | $1,500 per off-peak meter |
Minnkota co-ops do not require heat pumps to participate in off-peak load management to receive the rebate. Off-peak electric rates range from $0.064–$0.081/kWh, providing significant ongoing savings beyond the upfront rebate.
Basin Electric Co-ops (Western/Central ND)
Basin Electric does not operate a centralized rebate program. Each member cooperative sets its own terms:
| Co-op | ASHP Rebate | GSHP Rebate | Notes |
|---|---|---|---|
| Capital Electric (Bismarck) | Varies | Varies | Call 701-223-1513; submetered heat rate available |
| Verendrye Electric (Minot) | $125/ton | $250/ton | Max $500 ASHP, $1,000 GSHP; 5% financing available |
| McLean Electric (Garrison) | $100/ton | $300/ton | 5-ton max for ASHP |
| Roughrider Electric (western ND) | Active | Active | Program runs through December 31, 2026 |
No cooperative in North Dakota offers income-qualified enhanced rebates or adders.
How Programs Stack
Stacking in North Dakota is straightforward — because so few programs are active. Utility rebates are currently the only layer available. When HEAR launches, federal guidelines generally permit stacking with utility rebates since they come from different funding sources, but total combined incentives cannot exceed 100% of project cost. The scenarios below show what a 4-ton ducted cold-climate air-source heat pump with a heat pump water heater looks like in each utility territory, assuming a total installed cost of $16,000–$20,000.
Above 150% AMI — 4-Ton Cold-Climate ASHP + HPWH
- Otter Tail Power ccASHP rebate (4 tons × $1,000 with QI): $4,000
- OTP heat pump water heater rebate: $200
- Federal tax credit: $0 (expired)
- HEAR: $0 (not launched; above 150% AMI ineligible even when active)
Realistic maximum: ~$4,200
Xcel territory: ~$3,000 (ccASHP $2,000 + insulation bonus $600 + HPWH $400). Minnkota co-op territory: ~$900. MDU territory: $0.
80–150% AMI — 4-Ton Cold-Climate ASHP + HPWH (if HEAR Launches)
- HEAR heat pump rebate (50% coverage): up to $4,000
- HEAR heat pump water heater (50%): up to $875
- OTP ccASHP rebate (4 tons × $1,000 with QI): $4,000
- OTP heat pump water heater rebate: $200
Realistic maximum if HEAR launches: ~$9,075
Without HEAR (current reality): same as above 150% AMI — utility rebates only.
Below 80% AMI — 4-Ton Cold-Climate ASHP + HPWH (if HEAR Launches)
- HEAR heat pump rebate (100% coverage): up to $8,000
- HEAR heat pump water heater (100%): up to $1,750
- HEAR electrical panel (if needed): up to $4,000
- OTP ccASHP rebate (4 tons × $1,000 with QI): $4,000
- OTP heat pump water heater rebate: $200
Theoretical maximum if HEAR launches: ~$17,950 (capped at $14,000 HEAR + $4,200 utility)
Without HEAR (current reality): utility rebates only — ~$4,200 in OTP territory.
What You'll Actually Pay (2026, Utility Rebates Only)
For a 4-ton cold-climate system installed for $16,000–$20,000: expect to pay $11,800–$19,100 out of pocket depending on your utility territory. OTP customers using a QI contractor pay the least (~$11,800–$15,800). Xcel customers pay ~$13,000–$17,000. Minnkota co-op customers pay ~$15,100–$19,100. MDU customers pay the full cost with no utility offset.
North Dakota has no state tax credits, no state heat pump loan program, and no local municipal rebates. These figures reflect utility rebates as the sole incentive layer.
Weatherization Assistance Program
The Weatherization Assistance Program (WAP) is the one active state-administered program that can help low-income North Dakota households reduce energy costs. Funded by the U.S. Department of Energy and administered through eight regional Community Action Agencies, WAP provides free weatherization services — insulation, weather stripping, furnace repair or replacement, and other cost-effective energy measures.
Eligibility requires household income at or below 200% of the federal poverty level. LIHEAP clients are automatically eligible. Households may receive weatherization only once unless the home was last weatherized more than 15 years ago. Contact the Division of Community Services at 701-328-5341 or your local Community Action Agency to apply.
✓ Best Candidates for WAP + Heat Pump
Low-income homeowners heating with propane or fuel oil in rural North Dakota stand to benefit most. WAP can address insulation and air sealing at no cost, improving the home envelope before a heat pump installation. If HEAR launches, these households would qualify for the maximum rebate tier.
Climate Context: Extreme Cold Demands the Right Equipment
North Dakota is among the coldest states in the continental U.S. Three of the state's four largest cities fall in IECC Climate Zone 7 ("Very Cold"), with Bismarck in Zone 6A. These temperatures push current air-source heat pump technology to its limits and make equipment selection critical.
| City | ASHRAE 99.6% Design Temp | IECC Climate Zone |
|---|---|---|
| Bismarck | -20.8°F | 6A |
| Fargo | -19°F to -22°F | 7 |
| Grand Forks | -22°F to -25°F | 7 |
| Minot | -22°F to -24°F | 7 |
⚠ Common Mistake: Installing a Standard Heat Pump Without Backup
Standard air-source heat pumps lose capacity rapidly below 5°F and may shut down entirely at -10°F or colder. In North Dakota, a dual-fuel configuration — pairing a cold-climate heat pump (NEEP-listed, COP ≥1.75 at 5°F) with a gas or propane furnace for backup — is essential, not optional. The heat pump handles the majority of heating hours efficiently while backup engages only during the coldest 35–88 hours per year.
Natural gas is the dominant heating fuel in North Dakota at roughly 46% of households, followed by electricity (34%, mostly resistance heat), propane (15%), and fuel oil (4%). North Dakota has the highest residential energy consumption per capita of any U.S. state, reflecting both the extreme climate and older housing stock. Natural gas prices in North Dakota run approximately 41% below the national average, which weakens the operating cost case for switching from gas to heat pump.
The strongest candidates for air-source heat pumps are the ~15% of households heating with propane and the 4% using fuel oil, where heat pump operating costs can be competitive even with North Dakota's extreme temperatures. Ground-source (geothermal) heat pumps sidestep the cold-air problem entirely — ground temperatures remain ~45–50°F year-round at typical loop depths, enabling consistent COP values of 3.0–4.5 regardless of outdoor conditions. For more on energy storage options, see our home battery guide.
How to Apply
Since utility rebates are the only active incentive, the application process depends on your electric utility. Here's the general process:
Identify Your Electric Utility
Check your electric bill to confirm whether you're served by Xcel Energy, Otter Tail Power, a Minnkota co-op (Cass County, Nodak, Cavalier), a Basin Electric co-op (Capital, Verendrye, McLean, Roughrider), or MDU. Your rebate options depend entirely on this.
Choose a Qualifying System and Contractor
Select a cold-climate heat pump that meets your utility's minimum efficiency requirements (SEER2, HSPF2, NEEP listing). Xcel requires a registered Quality Installation contractor. For OTP, using a QI-certified contractor adds $200/ton to your rebate — confirm the per-ton tier before purchasing.
Complete Installation and Submit Rebate Application
After installation, submit the rebate form through your utility's website or by mail. Xcel and OTP both offer online rebate applications. Co-op members should contact their local cooperative office directly. Keep all invoices, model numbers, and AHRI certificates.
Enroll in Off-Peak or Dual Fuel Rates
Ask about discounted heating rates. OTP's Deferred Load rate saves up to 30% on electric heating. Minnkota co-ops offer off-peak rates as low as $0.064/kWh. These ongoing savings often exceed the one-time rebate value over the system's lifetime.
What to Watch
HEAR/HOMES Launch Timeline
North Dakota's $74.3 million in IRA-funded rebates remain authorized but unlaunched. The Commerce Department's Home Energy Rebates page is the official source for launch announcements. When active, HEAR alone could provide up to $8,000 per household for heat pump installations.
IRA Funding Runway
While the OBBB Act repealed federal tax credits, it did not rescind IRA rebate funding already allocated to states. North Dakota's HEAR and HOMES funds remain available until expended or September 30, 2031. However, political pressure to claw back unspent IRA funds could change this.
Xcel Energy 2024–2026 Program Cycle
Xcel's current rebate program runs through the end of 2026. Rebate amounts and efficiency requirements may change when the next program cycle begins in 2027. If you're in Xcel territory, locking in current rebates before year-end is worth considering.
Cold-Climate Heat Pump Technology Advances
The DOE Cold Climate Heat Pump Challenge has produced units operating at -23°F in lab testing. As these next-generation ccASHPs reach market, North Dakota homeowners may eventually be able to reduce or eliminate backup heating requirements — making the economics more favorable.
Frequently Asked Questions
What heat pump rebates are available in North Dakota in 2026?
With federal tax credits expired and state HEAR/HOMES programs not yet launched, utility rebates are the only active incentives. Otter Tail Power offers $300–$1,000 per ton for air-source heat pumps (with Quality Installation bonus). Xcel Energy offers $1,600–$2,000 flat-rate rebates. Minnkota Power co-ops offer $150 per ton. Montana-Dakota Utilities offers no rebates.
Can I stack utility and HEAR rebates in North Dakota?
When HEAR launches, federal guidelines generally permit stacking with utility rebates since they come from different funding sources. However, total combined incentives typically cannot exceed 100% of project cost. As of March 2026, HEAR has not launched in North Dakota, so utility rebates are the only layer available.
Do heat pumps work in North Dakota winters?
Cold-climate air-source heat pumps (ccASHP) rated to NEEP specifications can operate effectively in North Dakota, maintaining a COP of 1.75 or higher at 5°F. However, with ASHRAE design temperatures of -19°F to -25°F, a dual-fuel configuration with gas or propane backup is strongly recommended for the coldest hours. Ground-source (geothermal) heat pumps avoid this limitation entirely, maintaining COP values of 3.0–4.5 year-round.
Who administers North Dakota’s heat pump programs?
The North Dakota Department of Commerce, Division of Community Services administers the state’s IRA-funded HEAR and HOMES programs (not yet launched) and the Weatherization Assistance Program. Utility rebates are administered directly by each utility: Xcel Energy, Otter Tail Power Company, and individual rural electric cooperatives.
Why hasn’t North Dakota launched HEAR or HOMES rebates?
North Dakota received $37.1 million for HEAR and $37.2 million for HOMES under the IRA. The state contracted with Franklin Energy for implementation, but applications are still pending DOE approval. No launch date has been announced. The Commerce Department warns that any current offers claiming to be HEAR/HOMES rebates are likely scams.
Sources
- ND Commerce — Home Energy Rebates Program
- ND Commerce — Weatherization Assistance
- Otter Tail Power — Heat Pump Rebates
- Xcel Energy — MN/ND Residential Rebate Summary (2024–2026)
- Minnkota Power — Rebates & Energy Incentives
- Montana-Dakota Utilities — Savings for Your Home
- IRS — 25C/25D Termination (OBBB Provisions)
Disclaimer: This page covers the main statewide, utility, and IRA heat pump incentives available to North Dakota homeowners in 2026. It does not calculate savings, guarantee eligibility, or represent any incentive program. Utility rebate amounts and program terms may differ from what is shown here; cooperative rebates in particular vary by member and may change without notice. We verify status regularly but programs can change without notice. Always confirm current amounts and eligibility with your electric utility, the ND Department of Commerce, and your contractor before making decisions.
See how this state compares → Heat Pump Rebates by State (2026)