Solar Panels

Solar Panels vs Heat Pump: Which Should You Install First?

By Jennifer Collins | 2025-07-28 | 11 min read
Solar Panels vs Heat Pump: Which Should You Install First?

You want to cut energy costs and go green. Both solar panels and heat pumps can help. But if you can only do one this year, which makes more sense?

The answer depends on your specific situation. Here's how to think through it.

The Quick Answer

In most cases, consider a heat pump first if:

Consider solar first if:

Now let's get into the details.

Heat Pump Economics

A heat pump replaces both heating and cooling. For homes currently using gas, oil, or propane for heat, the efficiency improvement is dramatic.

Typical costs:

Typical savings:

Replacing a gas furnace with a heat pump saves 30-50% on heating costs. Replacing oil or propane saves more. The exact amount depends on fuel prices and climate.

Example: $2,000/year in heating costs might drop to $1,200. That's $800 annual savings.

Payback: 10-18 years depending on climate and current system.

Solar Economics

Solar panels reduce your electricity bill by generating power when the sun shines.

Typical costs:

Typical savings:

An 8 kW system in a sunny state generates 10,000-12,000 kWh annually. At $0.15/kWh, that's $1,500-$1,800 in annual savings.

Payback: 8-12 years in most markets.

The Key Trade-Offs

Heat Pump Advantages

Solar Advantages

The Synergy Argument

Here's what makes this complicated: solar and heat pumps work exceptionally well together.

A heat pump runs on electricity. Solar generates electricity. Install both and you're heating your home with sunshine.

If you install a heat pump first, your electricity usage goes up. When you add solar later, you'll want a larger system to offset that usage.

If you install solar first, size it for future heat pump usage. Then when you add the heat pump, your panels already cover it.

The Deadline Factor

The federal solar tax credit for residential installations expires December 31, 2025. After that, it drops to zero for homeowners.

The heat pump tax credit runs through 2032.

If you can only do one thing in 2025, the solar credit deadline is more urgent. You can add a heat pump in 2026 or 2027 and still get 30%.

How to Decide

  1. Assess your current heating system. If it's failing or ancient, heat pump becomes priority. You'll need to replace it anyway.
  2. Compare energy bills. What do you spend on heating vs. electricity? The bigger expense is the bigger opportunity.
  3. Check your roof. Poor sun exposure or bad roof condition might delay solar regardless.
  4. Consider the deadline. The 2025 residential solar credit expiration is real. Heat pump credit has more runway.
  5. Get quotes for both. Real numbers beat hypotheticals. Compare actual payback periods for your situation.

The Both Answer

If you can swing it financially, installing both creates the best outcome:

Some installers offer packages. Some financing covers both. It's worth exploring if your budget has flexibility.

Bottom Line

There's no universal right answer. Your current systems, local energy costs, home characteristics, and budget all matter.

If forced to choose one for 2025, the residential solar tax credit deadline tips the scales toward solar. You can add a heat pump later and still get the credit.

But if your heating system is dying, don't let tax credits drive you into a cold winter. Replace what needs replacing first.

Planning for Both: The Smart Sequence

If you expect to eventually install both solar and a heat pump, planning ahead saves money and hassle:

Starting with Solar

If solar comes first, size it for future heat pump usage. A typical heat pump adds 3,000-6,000 kWh to annual consumption. Include that in your solar system sizing now, even if you're not installing the heat pump for a few years.

Benefits: You capture the 2025 solar tax credit deadline, and you don't need to add panels later when the heat pump increases demand.

Starting with Heat Pump

If heat pump comes first, make sure your electrical panel can handle future solar. Some homes need a panel upgrade for heat pump installation—if you're doing that work anyway, size the panel for eventual solar interconnection.

Benefits: You lock in the heat pump tax credit (available through 2032), and you immediately start reducing heating costs.

Regional Considerations

Your climate affects which investment pays back faster:

Cold Climates (Northeast, Midwest, Mountain)

Heating costs dominate energy bills. Heat pump efficiency has improved dramatically for cold climates—modern cold-climate models work well to -15°F. If you're paying $2,500+ annually for heating, a heat pump can save $800-$1,200 per year.

Solar payback takes longer in northern states with less sun, but electricity rates are often high enough to still make sense.

Mild Climates (Pacific Northwest, Mid-Atlantic)

Moderate heating and cooling loads mean neither system provides dramatic savings. Solar often wins here because baseline electricity costs are the bigger expense.

Hot Climates (Southwest, Southeast)

Cooling is the primary expense. Heat pumps are essentially air conditioners that also heat—you're not changing cooling efficiency much by switching. Solar provides more direct savings by offsetting high cooling season electricity bills.

Financing Considerations

Different financing options apply to each:

Solar: Solar loans, HELOCs, and specialized financing widely available. Many $0-down options. 10-25 year terms common.

Heat Pump: HVAC financing, home improvement loans, and HELOC. Terms usually shorter (5-15 years). Some utilities offer on-bill financing.

Combined: Some green energy lenders offer combined solar and heat pump financing. This simplifies paperwork and may offer better terms than separate loans.

Making the Final Decision

Use this framework:

  1. What's urgent? Failing equipment takes priority over optimization.
  2. What has the bigger deadline? The 2025 residential solar credit expiration creates urgency.
  3. What has the higher payback? Run actual numbers for your bills, not generalizations.
  4. What can you afford? A staged approach works if cash flow is constrained.

Both investments reduce energy costs and carbon footprint. Neither is wrong. The question is which sequence maximizes your specific situation.

Real-World Case Studies

Let's look at how different homeowners approached this decision:

Case 1: The New England Colonial

A 2,400 square foot home in Massachusetts heated with oil. Annual heating costs: $3,200. Electric bill: $1,800. The homeowners installed a cold-climate heat pump first, dropping heating costs to $1,500 (saving $1,700 annually). The next year, they added solar to offset their now-higher electricity use. Total annual energy costs dropped from $5,000 to under $1,000.

Case 2: The California Ranch

A 1,800 square foot home in the Central Valley with electric heating and cooling (already heat pump). Electric bill: $3,600 annually. Solar made more sense as the only option—no heating system to replace. An 8 kW system reduced bills to $600 annually, saving $3,000 per year with an 8-year payback.

Case 3: The Texas Split-Level

A 2,100 square foot home with a 15-year-old gas furnace and AC. The furnace still worked but wasn't particularly efficient. High summer cooling costs ($400/month July-September) made solar appealing. Installed solar first to capture the 2025 tax credit, planning to add a heat pump when the furnace eventually fails.

Common Mistakes to Avoid

Learn from others' missteps:

Undersizing Solar for Future Heat Pump

If you install solar first but plan a heat pump later, size your solar system for future electricity demand. A heat pump adds 3,000-6,000 kWh to annual usage. Undersized solar means adding panels later, which is expensive and may not match your original equipment.

Ignoring Electrical Panel Capacity

Both solar and heat pumps require significant electrical capacity. Many older homes have 100-amp panels that need upgrading. If you're doing panel work for one project, size it for both. Upgrading twice costs more than upgrading once.

Chasing Tax Credits Over Priorities

Tax credits matter, but don't let them override logic. If your furnace is failing in November, install a heat pump—don't freeze to meet a solar deadline. The heat pump credit runs through 2032.

Not Getting Multiple Quotes

Prices vary dramatically between installers. Get at least three quotes for either project. Compare not just price but equipment quality, warranties, and installer reputation. The lowest bid isn't always the best value.

The Complete Picture

When you install both solar and a heat pump, you create an exceptionally efficient home. Your heating runs on electricity, and your electricity comes from the sun. Net energy costs approach zero. Carbon emissions drop dramatically.

The order matters less than getting both done right. Whether you start with solar or heat pump, plan for the eventual combination. Size systems appropriately, ensure electrical infrastructure supports both, and capture available incentives.

The 2025 solar deadline creates genuine urgency. But rushing into a poorly-planned installation serves no one. Make the right decision for your situation, timeline, and budget.