The climate-friendly appliances are becoming the norm among American home builders. Here are the factors driving the shift.

Heat pumps are a key way to get fossil fuels out of buildings — and the tech recently notched a win in the U.S. housing market.

2025 marked the first year that over half the apartment buildings constructed nationwide came equipped with the überefficient electric appliances, according to U.S. Census Bureau data. Buildings with heat pumps, which can both heat and cool indoor spaces, accounted for 53% of new apartment complexes, up from 46% in 2024.

New houses, including row houses and town houses, aren’t far behind: In 2025, 48% were built with heat pumps, up from 45% in 2024.

The stats are the latest evidence that heat pumps are taking over the U.S. residential heating market. For the past four years, these devices have outsold conventional gas-fueled furnaces, which belch pollution that endangers health and warms the planet. The tech’s growing popularity is a positive sign for decarbonization, since burning fossil fuels in buildings contributes nearly a tenth of the nation’s total greenhouse gas emissions.

The data reveals another piece of good news: The majority of all homes built last year — 78% of new apartment units and 56% of new houses — had electric heating in some form, either heat pumps or less-efficient electric-resistance systems.

This trend toward electric heating has persisted for over two decades now, across federal administrations, though it varies regionally. For example, in the South, with its milder winters, 96% of new apartments are electrically heated; in the Northeast, it’s just 52%.

Driving the shift to heat pumps is likely a combination of factors, according to Alan Durning, executive director of the Sightline Institute, a sustainability nonprofit in the Northwest. The two that stand out, he said, are improvements to the technology and the increased demand for air conditioning during climate change–fueled heat waves. While heat pumps are pricier up front than gas furnaces, they can be competitive with a gas furnace plus central AC.

A federal tax credit expanded under the 2022 Inflation Reduction Act could have also spurred heat-pump installations. That incentive offered developers up to $5,000 per energy-efficient housing unit. But even though the credit expired last month after being axed by President Donald Trump and Republicans in Congress, developers still stand to profit by ditching gas in new buildings.

All buildings require electrical infrastructure. But hooking up to a gas pipeline on top of that adds complexity, time, and expense. New Mexico land developer John Moscato says that by skipping gas-line construction, his company reduces costs by $3,000 per lot. That adds up fast.

“In our upcoming development of 4,500 lots, we expect the savings of being all-electric to be approximately $13.5 million,” Moscato said.

Some states, like California, Colorado, and Washington, have standards that encourage new construction to go fully electric. But ​“red states are never going to pass laws requiring a phaseout of gas in new buildings,” Durning said.

Still, he said, policies that simply boost new housing in such states can move the needle toward cleaner buildings, since developers are increasingly likely to opt for electric heating appliances. And unlike gas bans, these laws are politically palatable, he added, pointing to recent pro-housing zoning reforms passed in deep-red Montana and Idaho. ​“We are getting accidental electrification,” he said.

Some legislators may ​“say climate change is a hoax, but they want to free the market in their cities to build more housing,” Durning said. ​“In red states, building more apartments will move us closer to decarbonization.”

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American solar manufacturers are navigating shifting federal policies on tariffs and tax credits, all while demand for their product continues to grow.

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Inside the vast Qcells factory in Cartersville, Georgia, workers — and a bevy of robots — move ultrathin slices of polysilicon through a lengthy series of machines and chemical baths to get what are known as cells.

“The $2.5 billion, the 3.5 million gallons of water, the 90 megawatts of power, the 60 tons of chemicals on-site, and all of the football fields’ worth of infrastructure you’ve seen is to arrive at this,” said Scott Bell of Qcells, holding up one of the paper-thin blue cells.

It’s the basic building block of a solar panel.

In June, the plant, about an hour northwest of Atlanta, began its expansion from assembling the major components of solar panels to bringing the whole production process under one roof. It’s a major milestone for the U.S. solar industry. China has dominated solar panel manufacturing since the 2010s, flooding the global market with far cheaper panels than anyone else could make. For a host of reasons — national security, labor practices, job creation — the U.S. is trying to bring back domestic production.

In its latest move, the Trump administration plans to levy new tariffs and impose minimum import prices on polysilicon, the key ingredient for solar cells. The new measures go into effect in December.

“Having the full supply chain is critical,” said solar manufacturing expert Ben Damiani, chief technology officer at Atlanta-based solar developer Cherry Street Energy. Moving that supply chain to the U.S., he said, hasn’t been a smooth road. ​“Probably the biggest hindrance has been the constant change of our own policies.”

The Biden administration took a carrot approach to attracting solar panel makers: The 2022 Inflation Reduction Act included tax credit bonuses for solar projects that used U.S.-made panels. Qcells, a South Korean firm, has said those incentives were a major reason they built their Cartersville plant.

The Trump administration, by contrast, is taking a stick approach. While last year’s One Big Beautiful Bill Act, or OBBBA, revoked most of the tax credits, it also made solar equipment from certain countries — including China — ineligible for the few tax credits that remain. That, along with the new tariffs, may help a U.S. manufacturer like Qcells compete with Chinese imports, which are now more expensive.

The two policy approaches have the same ultimate goal, according to researcher Coco Zhang of the banking and investment firm ING. But it’s been whiplash for companies.

Following Trump’s latest executive actions, Qcells is still likely able to find a way to be successful, Zhang said. But Qcells has already made a multibillion-dollar investment in its brand-new facility that took more than three years to come online. For other companies with less capital and poorer timing, the supply-side incentives for domestic production may not be enough — especially when the policies could completely change again.

As a part of the OBBBA, the Trump administration closed the IRA loophole that had left room for China-based solar companies to simply set up shop in the U.S., which, according to Zhang, may go further still toward rooting out Chinese competition. In the long run, she’s optimistic that the U.S. solar panel industry can complete its shift to domestic production. But because the rules discouraging foreign ownership cut deeper into the supply chain, those restrictions and the policy back-and-forth could make things harder to navigate in the short term, she said.

The short-term outlook is complicated for those buying solar panels, too. The phaseout of federal clean energy tax credits removed a major incentive to develop new solar projects, and the Trump administration has taken steps to cancel federal funding for clean energy projects and add new hurdles for solar and wind installations on federal land. The courts have blocked or reversed some of those actions, but the delays add costs and uncertainties even for projects that do ultimately move forward.

In the first quarter of this year, clean energy advocacy group E2 tracked nearly $13 billion in abandoned investments in solar, wind, and battery projects. But some $18 billion in new projects were announced as companies scrambled to meet the deadline of the expiring tax credits. While the new tariffs and price controls on polysilicon could help U.S. manufacturers compete to supply the solar developments that remain, they could also drive up costs for developers, Zhang said, and ​“limited U.S. supply means many will still depend on imports and face higher costs.”

But industry experts maintain that solar isn’t going anywhere. It’s still one of the cheapest sources of electricity at a time when energy demand is growing fast. Solar panels are also readily available, while gas turbines are backordered for years. Solar and storage made up 90% of new power added to the U.S. grid in the first quarter of the year, according to the Solar Energy Industries Association.

“We absolutely should make solar, right? Like it is the fastest deployed, lowest cost foreseeable,” said Damiani. ​“Solar will be, for the next hundred years, a good portion of our energy.”

The questions, experts agreed, aren’t whether solar development will keep happening, but how quickly, how much it will cost, and who — and where — will make the solar panels.

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It’s only the third such project to hook up to the U.S. grid. It comes as surging electricity demand drives interest in the source of around-the-clock clean power.

Sage Geosystems has hit a big milestone out on a rugged tract near San Antonio: The startup is producing power from its first next-generation geothermal plant. The system is just the third of its kind to come online in the U.S. as the sector races to commercialize the source of on-demand clean electricity.

The novel geothermal facility in Texas has been running since April, Sage exclusively shared with Canary Media. The Houston-based firm said the 3-megawatt pilot plant has performed reliably and as predicted after more than 120 days of grid-connected operations.

Cindy Taff, Sage’s CEO, said the results will ​“directly inform and de-risk” an upcoming collaboration in Nevada with Ormat Technologies, a conventional geothermal leader that is increasingly dipping its toes into next-generation technology. The Nevada project is a necessary precursor to Sage’s deal with Meta to develop 150 MW of geothermal power.

Sage’s enhanced geothermal system is a type of nascent tech that involves drilling deep into hot rocks and fracturing them to create water pockets, then using the heat to generate power. It’s distinct from the decades-old traditional geothermal plants that rely on what Taff called ​“very unicorn geology” — the few places in the world where a combination of water, heat, and permeable rocks are easily accessible.

For all the buzz around the technology, just two other enhanced systems have connected to the U.S. grid so far.

In 2013, Reno-based Ormat completed a 1.7-MW demonstration project at its conventional Desert Peak facility in western Nevada, before returning its focus to old-school geothermal for a time. That demo is no longer producing power, Ormat confirmed.

A decade later, Fervo Energy began operating a 3.5-MW geothermal plant in northern Nevada in partnership with Google. Building off that project, Fervo is now constructing a 500-MW facility in Utah, which is set to come partially online in October.

Sage likewise expects its early success in Texas to fuel its commercial-scale ambitions.

The startup has been developing the pilot since 2024, when it reached a deal with San Miguel Electric Cooperative to use land near a coal-fired power plant in the town of Christine. Sage built its own substation there and intermittently sells power to the Texas grid.

Taff said that one of the most promising outcomes has been the relatively limited water loss from the underground system. Sage’s approach involves creating a network of fractures, into which it pumps and stores large volumes of water. As hot water pushes up against the rocks around it, mechanical pressure builds, which is released when the crew opens a valve at the top. This is different from other enhanced projects, which use fractures to flow water between two wells without pressure.

In both cases, water can migrate into surrounding rock formations as it moves through the fractures. The more water a project loses along the way, the less efficient it becomes at producing energy.

Sage lost less than 10% of the water that it cycled through the Texas system on multiple occasions, which Taff said bodes well not just for the company but also for the larger universe of enhanced geothermal, if it adopts similar methods.

“The net power output that you can produce from these technologies is going to go up, she said, noting that curbing water loss will enable enhanced systems to scale commercially at a competitive cost.

Initially, Sage planned to use similar geothermal techniques to develop a long-duration energy storage system near the coal plant. But in recent years, Texas has built one of the largest grid-battery fleets in the world, making the timing less ripe for rolling out a novel storage technology. So Sage is now primarily focused on meeting the nation’s growing demand for around-the-clock clean electricity.

To that end, Taff said Sage expects to begin drilling its first well at one of Ormat’s conventional geothermal plants in Nevada later this year. Sage will provide the hot water it produces to Ormat to generate electricity at the existing facility — allowing Sage to demonstrate its technology without going through the costly, lengthy steps of connecting to the grid or building a power plant.

Sage hasn’t yet specified how large this system will be, but does expect to start producing electricity in 2027 and reach full-scale production in 2028. Once that happens, Sage will begin working with Meta to start developing 150 MW of next-gen geothermal power somewhere east of the Rocky Mountains. All told, Sage has lined up about a gigawatt’s worth of projects on paper.

The Texas pilot enables Sage to ​“actually model and predict how the [reservoir] behavior is going to be going forward,” she said. ​“And that sets us up very nicely for scaling and building commercial facilities with our approach.”

An update was made on Aug. 19, 2026, to confirm that Ormat’s Desert Peak project is no longer generating power.

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