White House Announces Nearly $85 Million to Accelerate Domestic Heat Pump Manufacturing

In a significant push under the White House's Investing in America agenda, the U.S. Department of Energy (DOE) announced nearly $85 million in funding across four heat pump manufacturers. This initiative aims to accelerate the production of electric heat pumps, heat pump hot water heaters, and heat pump components at five factories located in New York, Tennessee, Texas, and Rhode Island.

The U.S. Department of Energy awarded Daikin Comfort Technologies North America, Inc. a $39 million grant to support the manufacturing of domestic inverter heat pumps. The grant will enable Daikin to enhance its production capabilities of these advanced, affordable, and energy-efficient electric heating alternatives.

The selected projects represent the second round of awards from the DOE, authorized by President Biden, utilizing the Defense Production Act (DPA) to increase domestic production of critical clean energy technologies, including electric heat pumps. Administered by DOE’s Office of Manufacturing and Energy Supply Chains (MESC), these projects are expected to collectively create over 500 high-quality jobs, including 220 positions in disadvantaged communities. This supports the President's goals of economic growth and maximizing clean energy benefits across all communities.

Aligned with the White House's Justice40 Initiative and funded by the Inflation Reduction Act - the largest climate investment in U.S. history - these projects will further the Administration's efforts to build a clean energy economy, create quality manufacturing jobs, save families and businesses money on energy bills, and strengthen national security by reducing reliance on fossil fuels and foreign adversaries.

The DPA investments announced today will boost American manufacturing of heat pump technologies used for efficient space heating, cooling, and water heating in homes, schools, and commercial and industrial settings. The awards will also increase the domestic production of compressors, components typically manufactured overseas in Europe and Asia, making it easier for U.S. manufacturers to build American-made heat pumps. These investments will enable the production of an additional 155,000 residential heat pumps, 440,000 residential heat pump water heaters, 2,000 school heat pumps, and 20,000 large heat pump compressors annually in the U.S.

These manufacturing investments complement direct consumer savings initiatives under the Investing in America agenda. Homeowners are now eligible for up to a 30% federal tax credit on the total cost of buying and installing a heat pump, with additional funding available for state home energy rebate programs.

Heating and cooling buildings account for more than 35% of U.S. energy consumption and contribute over a third of greenhouse gas emissions. Electric heat pumps offer an efficient alternative, reducing greenhouse gas emissions by up to 50% compared to the most efficient condensing gas boilers, a figure projected to grow to 75% by 2030. Heat pump water heaters are two-to-three times more energy-efficient than conventional electric water heaters, and heat pumps can save homeowners between $300 to $1,500 annually, depending on their current heating and cooling sources. Additional savings are available through the Inflation Reduction Act Energy Efficient Tax Credit 25C.