Tax incentives lead to rush for efficient heating and cooling units in Missoula
(Missoula Current) On a recent afternoon, Liz Vedder, a saleswoman at the heating and cooling company Design Air in Missoula, priced out the cost of home installation on one of her top selling items—a ductless air unit known as a mini-split.
The mini-split, which has been available to homeowners in the western U.S. during the last decade, is gaining in popularity due to its dual function as both a heating and cooling unit, its energy efficiency and new federal tax incentives and rebates.
In mid-August, President Biden signed the Inflation Reduction Act into law, which offers savings for homeowners who install these energy efficient systems.
“The new climate change bill has sparked a ton of interest,” Vedder said.
Like Vedder and Design Air, HVAC installation companies across Missoula have seen an increasing interest in ductless mini-split systems.
The efficiency of a mini-split system comes primarily from the fact that it doesn’t rely on ducts to convey air throughout a home, meaning that air is going directly into a room as opposed to being lost in wall cavities or old ductwork. In summer, hot air is pulled from inside the house and moved outside, and in the winter months, the mini-split pulls heat from the outdoor air and brings it inside.
Lance Armijo, who works in the service department at Temp Right Service in Missoula, said he frequently talks to costumers about the mini-split.
“A lot more folks are calling, asking for sales quotes,” Armijo said.
Jennifer Bedard, who has worked at Air Quality Mechanical since 2011, said the uptick is partially driven by potential savings in utility bills. “Mini-splits are not inexpensive, but they pay off quickly,” Bedard said.
A mini-split unit costs anywhere from $2,000 to $14,000, with the price increasing depending on the complexity of installation. With rising fuel costs since 2021, the mini-split may be a more cost effective and efficient way for many to heat and cool their homes.
For houses currently using propane or oil furnaces, some experts estimate that replacing those systems with a mini-split could save homeowners an average of around $500 per year.
Incentives provided in the Inflation Reduction Act (IRA) are also driving sales. Under the new law, residents are eligible for savings between $2,000 - $8,000 in point-of-sale rebates or tax credits, dependent on income level.
Even before the IRA, residents of Missoula County were eligible for rebates on ductless air systems via local incentives. Dan Rogers, an energy services specialist at Missoula Electric Cooperative (MEC), explained that when MEC customers install an energy saving measure, including a mini-split system, they get money back from the co-op.
Mini-splits have been the standard in Europe, Australia and Japan since the 1970’s, but it was slow to catch on in North America. As both the technology and marketing of the systems improved, they became more widely used across the western U.S.
While the first mini-split was invented by the Japanese company Mitsubishi in 1959, it has taken a lot of research and development to get the system to a point where it can function effectively in a cold climate. According to Rogers, when the systems first became a viable option in colder regions, such as winter in Missoula, interest grew gradually.
Over the years, the general efficiency of the unit has improved. As the cost of the system has come down, and the efficiency has increased, the mini-split is becoming a popular option.
Climate change may provide further incentive. Average summer temperatures in Missoula County are projected to increase as much as six degrees by mid-century, according to a publication from Climate Ready Missoula, and if the heat wave of this past August was any indication, that change is already underway.
In a place like Missoula, where historically summer temperatures might not have necessitated an air conditioning unit, a mini-split is an appealing option to folks looking to upgrade their home cooling technology.
Most of the people calling Vedder at Design Air are interested in the air conditioning aspect of the mini-split, with heat as an added bonus.
Bedard said her company has seen an increase in demand across the board, with homeowners transitioning to the mini-split as a main source of both heating and cooling. The type of home in which the units are going also varies, with installations in both house remodels and in new construction.
For a three-story house on South Johnson Street, completed this past spring, technicians from Air Quality Mechanical installed mini-splits throughout the building as the only source of heating and cooling.
Because of their energy efficiency, the system is favored in the High Efficiency Electric Home Rebate Act (HEEHRA), part of the IRA. Specifically, the HEEHRA gives $4.275 billion in rebate funding for distribution by state energy offices and $225 million for Tribal Governments.
The policies to implement the distribution of these funds are not in place yet, but businesses like Design Air are already dealing with questions about how the program works.
According to the details of the HEEHRA, low-income households (those with an income 80% below an area’s median) are eligible for point-of-sale rebates up to $8,000, which in some cases could cover 100% of the unit’s cost. Middle-income, defined as 81-150% of the median, can recieve up to 50% off the cost, and even those with an income above 150% of the area’s median are eligible for a 30% tax credit, up to $2,000 off the cost of a new unit.
The median household income between 2016-2020 in the city of Missoula was $50,947, with the county average at $56,247, according to U.S. census data.
In spite of the rising interest, Rogers at MEC would still like to see more homes in and around Missoula using mini-splits. He estimated that currently MEC only sees two or three dozen homes collecting rebates per year.
“It takes a little bit for people to catch on,” Rogers said.