2026 PSE&G Building Decarbonization Program: Heat Pump and Hybrid Heating Rebates
If your air conditioner is aging, your furnace is nearing replacement, or you want a more efficient alternative to combustion heating, many homes in the PSE&G service area are well suited for heat pump upgrades. PSE&G's Building Decarbonization program supports the most common upgrade paths with rebates up to $10,000 ($12,000 income qualified) and 0% on bill financing.
Current program terms run through June 30, 2027.
Three pathways, three rebate tiers
PSE&G structures its incentives as a percentage of project cost, capped at defined maximums by pathway. Choose the level of electrification that fits your home and comfort level:
| Pathway | What it means | Standard rebate | Income qualified |
|---|---|---|---|
| Clean Heat | A cold climate heat pump fully replaces your fossil fuel heating system | Lesser of $10,000 or 50% of project cost | Lesser of $12,000 or 60% |
| Dual Heat | A heat pump does most of the work; your existing system assists on the coldest days | Lesser of $5,000 or 50% of project cost | Lesser of $6,000 or 60% |
| Hybrid Heat | Heat pump capacity supplements your current system as a first step | Lesser of $2,000 or 30% of project cost | Lesser of $3,000 or 40% |
Clean Heat typically offers the highest incentive levels and works best in homes with ductwork, open layouts, or strong insulation and air sealing. Dual Heat and Hybrid Heat use integrated controls to coordinate the heat pump with your existing gas system, so you can reduce reliance on combustion heating without removing it entirely.
Additional rebates for related work
| Item | Maximum rebate |
|---|---|
| Decommissioning the old heating system | $2,000 |
| Re ducting work | $2,000 |
| Dual fuel / hybrid control unit | $1,500 per unit |
| Heat pump water heater (as part of a project) | $750 |
| 240 volt circuit | $300 per circuit |
| Panel replacement | $300 (income qualified: up to $4,000) |
| Additional electrical wiring (income qualified) | Up to $2,500 |
0% financing up to $75,000 when you combine programs
PSE&G offers up to $50,000 of 0% interest On Bill Repayment to qualified borrowers for standalone Building Decarbonization projects, with no bank loan, no origination fees, and no credit check; qualification is based on your utility payment history.
Here is where the program gets genuinely powerful: combine your heat pump project with a PSE&G Whole Home Energy Solutions project on the same home, and the combined 0% financing limit rises to $75,000. Both rebates apply too: up to $7,500 from Whole Home Energy Solutions for insulation, air sealing, and efficiency work, plus up to $10,000 ($12,000 income qualified) from Building Decarbonization for the heat pump, along with the adders above. One project, two rebate checks against the invoice, and one 0% payment on your PSE&G bill.
The sequencing matters: a tighter, better insulated envelope means a smaller heat pump that costs less and performs better. Your audit models both programs together so you can see the full stacked picture before you decide anything.
Why the home itself matters for heat pump performance
Heat pumps perform best when they are installed in homes that are tight, well insulated, and able to hold conditioned air. That does not mean your home has to be perfect, but insulation levels, air leakage, and distribution all matter. In a well sealed, well insulated home, a heat pump can maintain more even temperatures, cycle more efficiently, deliver better comfort across rooms, and operate closer to its intended design performance. That is why heat pump upgrades are most successful when planned as part of a whole home approach rather than treated as a standalone equipment swap.
Why we always start with a home energy audit
A Home Energy Audit is the foundation for a successful heat pump project. It allows us to understand how your home currently uses and loses heat, identify the right heat pump or hybrid pathway, flag insulation or air sealing opportunities that improve performance, confirm eligibility across multiple incentive programs, and help you prioritize upgrades based on comfort, practicality, and incentives. From there, you decide what makes sense now and what can wait.
The audit costs $99 (a $299 value), credited toward your project if you move forward. Your rebates come from PSE&G; Ciel Power is a participating contractor and manages the load calculations, equipment selection, installation, and every rebate application on your behalf.
Frequently asked questions
What is a heat pump, in plain English?
A heat pump is an electric system that moves heat instead of creating it by burning fuel. In winter it pulls heat from the outdoor air and brings it inside; in summer it works like a high efficiency air conditioner. One system handles both heating and cooling, with no on site combustion required.
Which homes are the easiest fit?
Homes with central air and existing ductwork, homes with a forced air furnace, homes where the air conditioner is older or due for replacement, and homes planning an HVAC replacement anyway are often strong candidates for a straightforward upgrade path.
Will I need electrical upgrades?
Many homes do require some level of electrical work to support a heat pump system. That is expected, and it is specifically addressed in the PSE&G incentive structure, which offers support for qualifying 240 volt circuits and panel work. We help you understand what is required before any decisions are made.
Can I combine Building Decarbonization with Whole Home Energy Solutions?
Yes, and it is often the strongest approach. Both rebates apply to the same project, and combined 0% on bill financing rises from $50,000 to $75,000.
Do I have to remove my gas system entirely?
Only for the Clean Heat pathway. Dual Heat keeps your existing system as backup for the coldest days, and Hybrid Heat adds heat pump capacity alongside your current system as a first step.
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