State guide

Heat Pump Water Heaters in Minnesota

Heat pumps make financial sense in Minnesota. Estimated savings: $597/yr vs a standard electric tank.

$597/yr savings/4.0 yr payback/1 rebate program/16.3¢/kWh (10% below avg)

Utility rebates available now. IRA HEAR has not launched in Minnesota yet.

Running cost Rebates Best fits

Score breakdown: 49/100

Savings

37/55

Rebates

4/20

Climate

2/15

Install

6/10

RatingPlate Score. Based on EIA energy prices, ENERGY STAR data, state rebate programs, and permit research. Not a government rating or purchasing recommendation. FAQ

Minnesota electricity is 10% below the national average. Here's what that means for heat pump operating costs.

Running cost in Minnesota

At Minnesota's 16.3¢/kWh electricity rate, the most efficient heat pump water heater saves an estimated $597 per year compared to a standard electric tank.

Minnesota electricity

16.3¢

per kWh (EIA, 12-month avg. through Aug 2026)

US average

18.0¢

per kWh

Best HP annual cost

$135

A. O. Smith HPTS-50-2

Electric resistance

$733

~4,500 kWh/yr baseline

Colder inlet water (43°F annual average, 31°F in winter) means the heat pump works harder than DOE test conditions assume (58°F). Real-world efficiency will be slightly lower than rated UEF, and winter operating costs will be higher than the annual average.

Heat pump vs gas tank in Minnesota

At Minnesota prices (16.3¢/kWh electricity, $1.09/therm gas), a heat pump costs about $50 less per year to run than a standard gas tank, on the same DOE rated hot water load. See replacing a gas water heater in 2026 and all 50 states compared.

Heat pump

$139/yr

855 kWh/yr (median 50-gal)

Gas tank

$189/yr

173 therms/yr (UEF 0.64)

Difference

$50/yr

heat pump cheaper

Both use the DOE medium draw test load (55 gallons a day). Gas price: EIA, 12-month avg. through Aug 2026. Replacing gas with a heat pump also means adding a 240V circuit (or choosing a 120V model) and a condensate drain, and the federal HEAR rebate no longer covers gas replacements.

Why Minnesota changes the call

01Energy cost

Minnesota electricity is 10% below the national average. That directly affects how much a heat pump saves compared to a standard electric tank.

02Climate impact

Incoming water averages 43°F annually and drops to about 31°F in winter. Colder water means the heat pump works harder and real efficiency is slightly lower than rated.

03Available incentives

State and utility rebates can significantly change the payback period. Check what's currently available before finalizing your decision.

Rebates in Minnesota

Minnesota has 1 rebate program as of November 2026.

The federal $2,000 tax credit (IRA Section 25C) expired December 31, 2025. State and utility rebates listed below may still be available. Verify current status at the links provided.

Xcel Energy / Minnesota Power Heat Pump Water Heater Rebates

$300-$500 (Xcel $400, or $500 if eligible for Demand Management; Minnesota Power $300)

Who: Xcel Energy / Minnesota Power
Eligibility: ENERGY STAR certified (Xcel also accepts AHRI listed). Must be a residential electric customer of the utility. Minnesota Power: purchases January 1 to December 31, 2026; must replace an electric water heater or be new construction.
https://mn.my.xcelenergy.com/s/residential/home-rebates/water-heaters

IRA HEAR Rebate (Point-of-Sale)

Not yet available in Minnesota as of November 2026. Up to $1,750 for income-qualified households when available. Under federal guidance effective May 29, 2026, this rebate covers replacing an existing electric water heater (or new construction). Replacing a gas, propane, or oil water heater no longer qualifies.
Minnesota has not launched Save Energy Minnesota, its IRA HEAR and HOMES program. As of an October 12, 2026 update, the Minnesota Department of Commerce is awaiting U.S. Department of Energy approval of a revised application submitted in August 2026, with no estimated launch date. Heat pump water heaters are excluded from the state's separate state-funded rebate.

Install requirements in Minnesota

Electrical

Dedicated 240V, 30A circuit (most models). Some newer 120V plug-in models exist but most residential units require 240V. Check the unit's nameplate for exact requirements.

Condensate drain

Heat pump water heaters produce condensate during operation. A condensate drain line to an approved location (floor drain, condensate pump, or exterior) is required.

Air space

Approximately 700 cubic feet of surrounding air (roughly a 10x10x7-foot room). The heat pump extracts heat from surrounding air. Insufficient air volume reduces efficiency and can cause the unit to underperform. Some manufacturers allow ducting to supplement air supply in smaller spaces.

Noise

Heat pump water heaters produce operational noise similar to a window AC unit (45-55 dB). Consider placement away from bedrooms.

Best fits for Minnesota

A smaller set of representative fits using Minnesota's 16.3¢/kWh rate. Curated to show different trade-offs instead of listing every published model on every state page. See the full heat pump lineup.

Lowest running cost

A. O. Smith

HPTS-50-2

Lowest annual bill at this state's electricity rate.

$135/yr 46 gal UEF 3.80 63" tall

Best efficiency

GE Profile

PH80S10BPY01

Highest UEF in the published lineup.

$183/yr 80 gal UEF 4.40 76.375" tall

50-gallon sweet spot

Bradford White

RE2HP50-1NCTT

Common replacement size for 1 to 3 people.

$136/yr 45 gal UEF 3.89 64.125" tall

Large-household pick

Noritz

NHP120

Higher first-hour rating for heavier simultaneous demand.

$239/yr 109 gal UEF 3.38 85" tall

Tight-space pick

Bradford White

RE2H50S

Shortest cabinet among the published options.

$154/yr 45 gal UEF 3.44 59.1875" tall

Prefer to buy online? The 46-gallon Rinnai REHP50BM is a heat pump available on Amazon.

Check price and availability: Rinnai REHP50BM on Amazon (paid link)

Common questions: Minnesota

Is a heat pump water heater worth it in Minnesota?

Yes. Minnesota scores C on RatingPlate's analysis, with estimated savings of $597 per year compared to a standard electric tank. Payback on the higher upfront cost is roughly 4.0 years before rebates.

What rebates are available for heat pump water heaters in Minnesota?

Minnesota has 1 rebate program. The IRA HEAR program has not launched in Minnesota yet. Verify amounts and eligibility at the links in the rebates section above.

How much does a heat pump water heater cost to run in Minnesota?

At Minnesota's electricity rate of 16.3 cents per kWh, the most efficient heat pump water heater costs about $135/yr to run. A standard electric tank costs about $732 per year.

Do I need a permit for a heat pump water heater in Minnesota?

Minnesota does not have unusual state-level requirements beyond standard plumbing and mechanical permits. Check with your local building department for jurisdiction-specific rules.

What is the payback period for a heat pump water heater in Minnesota?

Without rebates, the payback period in Minnesota is approximately 4.0 years based on $597 in annual savings versus a standard electric tank. With available rebates, payback could be significantly shorter.

Your next click

All heat pump modelsCompare specs across brands Back to homepageCompare other types or find a specific model Lowest cost: A. O. Smith$135/yr in Minnesota Sizing guideWhat size do you need? Replacement cost guideEquipment, labor, and hidden costs Heat pump vs gas tanklessCompare technologies across fuel types

Sources

Electricity and natural gas rates: U.S. Energy Information Administration, residential sector (EIA, 12-month avg. through Aug 2026).

Rebate data compiled from state energy offices, utility program pages, DSIRE, and ENERGY STAR. Rebate amounts and eligibility change frequently. Verify at listed program URLs.

Inlet water temperatures estimated from NOAA climate normals using the Burch-Christensen mains water temperature model (NREL).

Model specifications from ENERGY STAR certified product data and manufacturer spec sheets.

Page updated November 1, 2026. Data freshness varies by source.

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