EP. 63: Why Contractors Will Make or Break the Heat Pump Transition, with Panama Bartholomy

Most of our guests are contractors building heat pump businesses. Panama Bartholomy is the guy in the room when states decide what those businesses will be operating inside of. He's the founder and executive director of the Building Decarbonization Coalition, a nonprofit that brings contractors, manufacturers, utilities, and government agencies to the same table — and in many of the states with the best heat pump incentives in the country, his team is advising on the policies and programs behind them.

Panama's path here is not the usual one. He was raised in an all-solar house in Northern California, spent the first half of his career in state government working on buildings and energy, ran energy efficiency finance programs in Europe, and came back in 2017 to a question he couldn't put down: everyone seemed to agree on what it would take to get heat pumps into American homes, so why wasn't anyone organizing around it? He spent six months with a briefcase and a PowerPoint asking utilities, manufacturers, and agencies what was holding things back — and found they agreed on about 80% of the answer. The BDC was built to move that 80% together.

The early adopters are almost done

The heart of this episode is a phase change. By Panama's numbers, heat pumps have outsold furnaces four years running, and in September 2025 they outsold air conditioners for the first time ever. That growth ran on early adopters — homeowners willing to rip out working systems, and contractors willing to go out on a limb.

Panama's argument is that this era is ending. What comes next is mainstream, and mainstream means selling. "I tell my staff all the time," he told us, "this transition is going to live or die on our ability to engage the contractor community." Contractors make the sale. Contractors give homeowners the confidence to buy. Contractors put in the quality installs that generate good stories instead of callbacks. In his words: the linchpin is the contractors.

Notably, he doesn't think the barrier is technical skill. The BDC's sequence with contractors is engage, empower, educate — in that order — because, as he put it, we already have an incredibly well-trained contractor community in this country. What's missing isn't ability. It's a reason to change, and the sales muscle to act on it.

Two-thirds of a gas bill isn't paying for gas

The most counterintuitive stretch of the conversation was about gas economics. Panama's claim: twenty-five years ago, a third of a typical gas bill paid for infrastructure and two-thirds paid for the fuel. Today that has flipped. Since new federal safety guidance followed the 2010 San Bruno explosion, utilities have been replacing pipe at a pace of roughly $50 billion a year — pipe built to last 70 years, financed by ratepayers over decades, in states that plan to wind down gas service well before it's paid off.

The result, he says, is an artificially expensive floor in every gas bill. Even the most efficient gas appliances on the market can't get a homeowner below the infrastructure costs baked into the bill. And when Ed pushed on the Massachusetts problem — 35-cent electricity and homeowners upset about winter bills — Panama's answer was about control: electric rates are governed by state utility commissions, while gas prices ride a global market whipsawed by geopolitics. The most future-proof thing a contractor can hand a customer is a highly efficient system whose fuel price their own state regulates.

The install is the product

One more thread worth your attention: Panama pointed to a new University of Oxford study of heat pump projects across the UK that asked what matters more to system efficiency — the building envelope, or the quality of the installation. The finding, as he described it, was clear: sizing and install quality had the bigger impact.

For contractors who've built their business on doing the design work right — real load calculations, right-sized equipment, a trained crew — that's validation from an unexpected direction. It's also, in Panama's telling, why the BDC has focused its contractor work on correct sizing and clean installation: quality installs prevent the callbacks that make contractors hesitant to lean into heat pumps in the first place.

The takeaway

Panama sees the whole board — ten states representing about half of U.S. gas demand and half of HVAC sales — and his read is that the next few years belong to the contractors who treat heat pumps as arrows already in their quiver, not a niche experiment. If you want to follow the trends he's watching, the BDC publishes a free monthly newsletter and a quarterly Momentum blog at buildingdecarb.org.

Timestamps

[00:00] – Introduction

[03:35] – Introducing Panama Bartholomy and the Building Decarbonization Coalition

[04:16] – BDC's mission: accelerating heat pump adoption through collaboration

[06:22] – Panama's journey into energy policy and building decarbonization

[10:17] – How the Building Decarbonization Coalition was founded

[14:49] – The three pillars of BDC: policy, market transformation, and consumer education

[24:37] – The biggest challenges contractors face when adopting heat pumps

[30:39] – Why sales training is often the missing piece

[33:17] – Why contractors are the linchpin of the heat pump transition

[38:25] – The future of natural gas infrastructure and what's next for electrification

[50:25] – Where contractors can access BDC resources and stay informed

[52:01] – Final thoughts and closing remarks

Transcript:

00:00:00.000 — 00:00:57.680 · Speaker 1

If you look at your gas bill, two thirds of your gas bill now is paying for the infrastructure. That financing that I mentioned, and only one third is paying for the actual gas that you're using. And so what's happened is this massive investment in the gas system has created a new, artificially expensive flaw in all of our gas bills so that even if you are cutting back and you have the most efficient gas appliances in your house, you have a flaw that you will never get below because of the investments that have been made.

As gas utilities are racing to get pipe in the ground before either climate laws or affordability conversations catch up with them. Yeah, there's all sorts of public health reasons to start to get off of gas and stop burning gas and buildings. But increasingly there is a very dire affordability challenge with gas, and it becomes more and more affordable for us all to be moving off of a gas system.

00:01:01.990 — 00:01:47.110 · Speaker 2

Hey, y'all. Today we have a different kind of episode. Usually we're talking to heat pump entrepreneurs, contractors who are building excellent heat pump businesses. But today we have Panama Bartholomew. He's a little different. He's the founder and executive director of the Building Decarbonization Coalition, which is a nonprofit coalition that brings together contractors, manufacturers, utilities and government agencies to the same table to advance the policy that accelerates heat pump adoption. I know a ton of our customers are often thinking, what the heck is going on at the state or utility level? If you have had that thought, this one's for you. And in a lot of states with the best heat pump incentives, Panama and his team are the ones in the room advising those states and utilities on what they should be doing. A ton of his perspective is stuff that I really agree with, including his main thesis, which is that we've entered the contractor phase of the heat pump transition. We're in a phase where mainstream contractors become the linchpin for everything that happens next. I'm really curious what you think of the episode, so drop us a comment wherever you're listening or send us a note at hello@amply.energy. We'd love to know what you thought of this episode. Okay. Three quick announcements before we get started. First, super excited. We just became official partners of the National Comfort Institute. We love the National Comfort Institute and everything they stand for. And their high performance HVAC summit is coming up in September in Pigeon Forge, Tennessee.

Go to www.gotosummit.com for more information. And they've been kind enough to give us a discount code. The discount code is AMPLY2026. All one word. But the 2026 is in numbers, not letters. So AMPLY2026 all one word. Second, we've got another of our favorite conferences coming up, the US Heat Pump Summit. It's September 15th and 16th in Worcester, Massachusetts. If you're building a heat pump business, these are your people. We have discount code there, too. It's just AMPLY, all one word. Our name. Use that for a discount when you register. All right. Last. If you're enjoying this podcast, please subscribe. Give us five stars. Or even better, write a review. We make no money on this podcast, and that sort of thing does a lot to help out what we're doing. Okay. With those out of the way, let's get on to the episode.

00:01:50.830 — 00:01:53.230 · Speaker 2

Welcome to the Heat Pump podcast. I'm Ed Smith and.

00:01:53.230 — 00:02:08.750 · Speaker 3

I'm Eric Fitz. We are co-founders of Amply Energy. Today we are super excited to invite Panama Bartholomy. He is the founder and Executive director of the Building Decarbonization Coalition to the podcast Welcome Panama.

00:02:08.789 — 00:02:23.790 · Speaker 1

Thanks. Really good to be here. Guys, I listen to your very first podcast ever. I was at a heat pump conference over in China and working out, trying to work off the jetlag and listening to you guys. And so long time listener, first time caller. I'm really excited.

00:02:23.830 — 00:02:25.430 · Speaker 3

Oh, awesome. So great to have you here.

00:02:25.470 — 00:02:31.190 · Speaker 2

You were the one. You were the one listening to that first episode. Other than our mothers. Nice.

00:02:33.110 — 00:02:47.670 · Speaker 3

Awesome. Panama. Give us in a minute or two. We just want to hear a little more background on what is the Building Decarbonization Coalition, and really just want to help everybody understand what you guys are doing, what you're up to.

00:02:47.710 — 00:03:48.580 · Speaker 1

Yeah. The heart of the coalition's about how to install heat pumps more easily, more cost effectively. And so the word coalitions in there. It's a group of contractors, manufacturers of heating equipment, utilities, government agencies all coming together to try to make it easier and more profitable to install heat pumps.

And we basically work on three things. It's like, how do you get a lot more heat pumps out there into the market? Everything from lowering costs to getting more of the products that we need out there. How do you shrink the gas system over time? Because ultimately that's what we're trying to do. We're trying to get all of America's buildings off of gas and over to clean electricity.

And then how do you normalize electrification? Your air conditioner shouldn't be something you fight with your uncle about over Thanksgiving. It should just be something that keeps your family really cool in the summer and warm in the winter. And so what we try to do is we try to bring everybody together and to be able to actually work on these solutions in a way that's going to help the market and make it even easier.

Transition.

00:03:48.620 — 00:03:53.340 · Speaker 3

And is there a particular part of the country that you're mostly operating in today, or is it national?

00:03:53.380 — 00:04:42.580 · Speaker 1

No, we operate all over the country, Ultimately, heat pump installs happen down at the ground level in homes and communities. And so we focus our efforts around state policies and working in different states generally. That's where you have some of the biggest changes about whether they be building codes or incentive programs or utility rates.

And so we keep it at the state level. Man, once you get up into the federal level, no, thank you. So well, there's enough complexity there. But we work all over the country generally focusing on ten states that collectively represent about half of all gas demand in the country and half of all heat pump sales, HVAC sales and water heater sales in the country.

And so that leads us towards generally a lot of the northeast, a lot of the upper Midwest, and then the West Coast with a little bit of sprinkling of the Mountain West in there.

00:04:42.620 — 00:05:02.290 · Speaker 3

Got it. Awesome. Tell us a little bit more about you. How did you end up founding the BDC? And you come from the California Conservation Corps? You were part of the Energy Commission in California? Yeah. How did you end up where you are today?

00:05:02.330 — 00:06:29.200 · Speaker 1

Yeah. So I was born and raised up in Northern California. I was raised on a marijuana plantation by a couple of pot farmers in the late 70s, early 80s, and in a all solar house. And so from like very early age, we had parents basically like, telling us to do stuff differently and to look for opportunities for change.

I really finishing high school. It's like nobody expected me to go to college. Everyone was just pretty much just maybe you can do these things to stay out of jail and put you on a path towards some really easy career that would keep me out of trouble. But eventually I did go to school and a couple professors really changed my life.

One around light engineering and one around politics. And I left there and went to spend the first half of my career in state government, All of it focused around buildings and energy. And so I've been in this space now for about 25 years, working on the intersections of building and energy, and how do we keep people happy and comfortable and their lives affordable while using a lot less energy?

Second half of my career has been spent in the nonprofit sector, trying to be able to help the market, to make it easier for installers and manufacturers and other market actors to be able to put in really high efficiency equipment. So I spent about four years in Europe working on energy efficiency finance, and then came back to the United States and started this organization.

00:06:29.240 — 00:06:41.880 · Speaker 2

Some of our audience was starting to think this episode wasn't for them. Just when they heard Building Decarbonization Coalition, and then when they heard Pot farmers, they're right back into it. That's nice. I like how you got them there.

00:06:41.880 — 00:07:12.000 · Speaker 1

It was an amazing time up there. You had this really unique moment of this evolution of that industry where Up until that point. The mid 70s. Nobody was killing the male plants. And so everything was sold for a really low price. And once you kill the male plants and allow the female plants to grow, you get a much higher quality product.

Since a mia that completely changed that industry and allowed for an explosion of growth and sales and profit.

00:07:12.040 — 00:07:13.880 · Speaker 3

That's for a whole nother podcast. Amazing.

00:07:14.320 — 00:07:18.520 · Speaker 2

For our sister podcast, the Pot Farmer podcast. Indeed.

00:07:19.360 — 00:07:21.520 · Speaker 4

And but what drew you.

00:07:21.560 — 00:07:36.320 · Speaker 3

Specifically to Buildings and energy, and why was that something that was. Yeah, that you spent so many years within the state government and then other later parts of your career? Obviously. Why buildings?

00:07:36.320 — 00:08:36.590 · Speaker 1

There's something about the fascination of just this is where we spend our time. This is where the energy used. People focus so much on clean power generation, putting in solar and wind and more efficient gas and all the transmission, but ultimately 75% of the electricity actually gets used in buildings, and that's where people feel it.

That's where people feel the bills. That's where people are experiencing the interaction with the energy. So for me, that's always been the most fascinating part. It's probably also the hardest part of the transition, to be honest with you, not to take anything away from folks that work on shutting down a coal plant or anything like that, or building a transmission line, but actually getting hundreds of millions of consumers to put in heat pumps is just an incredible challenge.

And it's something that's exciting to me because it takes a combination of policy changes, market adaptability, and consumer education and engagement. And so for me, it's always just been fascinating. And it's job security. It's a long one. It's a long tail to this one.

00:08:37.630 — 00:08:59.190 · Speaker 3

And to take it a little bit further, you got into it a bit about the start of BDC. Can you just talk a little bit more about the origin story? What was the specific problem that led to the founding of that organization. You've clearly touched on that. There's. It's about this coalition. So that was the solution.

But what was the problem side and how did you end up deciding that this is how you want to focus your time?

00:08:59.190 — 00:12:00.010 · Speaker 1

So. Through my time of working in government, I had got to meet just a whole bunch of different people at the utilities, at the manufacturers, the design, construction, installation community. And when I came back from Europe in 2017, I was like, that's the opportunity for a career pivot, right? I've been doing this for 15 years.

It's an opportunity to be able to move into maybe another field. But when I came back, there was a whole different conversation happening in America that had been happening before. For 40 years, we've been talking about energy efficiency and how do you just basically provide the same or better output for less and less input?

And when I came back, there was a whole conversation happening about how do you eliminate pollution from buildings completely, like how do you use the cleaner and cleaner grid and then all electric, high efficiency appliances to basically just completely eliminate pollution from buildings. And there is more and more research happening around the impact of buildings on based out here in Northern California, we got five of the worst air quality basins in the country out here, and we've done a ton of work on cars and power plants, and we haven't done a lot of work on buildings.

And so what that's left us with is buildings are actually producing twice the amount of smog out here in California by burning gas. And all of our power plants and cars combined in car crazy California. So there's all this new research coming out around the impact of cooking with gas in buildings, and what impact that was having on people in it.

So you have this wonderful mix of a real acceleration of heat pump and cooking technology, right at a time of greater awareness and a real interest among policymakers and industry players about how do we go for it? How do we really accelerate building decarbonization? So I came back and I started talking to all the folks that I already knew, and it went around for about six months with a little briefcase and a PowerPoint, and it was just like, so what do you guys think?

What do we need to do? How do we get more heat pumps involved? What's stopping us, what's holding us back? What policies, programs, etc.? And the crazy thing is, I heard a lot of similarities. 80% of the people I was talking to again, like utilities, manufacturers, government agencies, nonprofits, they all agreed they all are coming up with the same solution sets about 80% of it.

And so I thought, can we put together a group that could work together to accelerate that 80%? And maybe the confidence we build in the market and the faith that we build in each other by working on that 80% and getting wins, allows us to make that 20% easier to attain and us more willing to work together on that 20%.

And so out of that belief and that hope, the Building Decarbonization Coalition was really birthed. And it's an opportunity for all those entities to be able to work together to accelerate things faster than they would normally happen. This stuff isn't going to happen all by itself. You got to have the right conditions to be able to get heat pumps in faster than what the market would normally provide, and so that's what we're trying to do.

00:12:00.050 — 00:12:21.130 · Speaker 3

Awesome. The coalition aspects makes so much sense, especially if we're trying to move things more quickly. You can't have everybody independently reinventing the wheel around, running into the same problems and trying to discover the same solutions. If you can share those ideas, share what's collectively a big challenge, then everybody learns faster or you come up with solutions faster.

So that's excellent.

00:12:21.170 — 00:13:11.000 · Speaker 1

Yeah, and my time in government taught me that government doesn't listen to the market well. And we unfortunately need groups and structures that make it easier for the voice of the contractor to actually land inside the halls of power. I went and talked to a group of contractors about six months ago, and I said, the building codes and all these policies they're setting.

Everybody else is in the room except for you guys, the utilities, the manufacturers, like all the activists, they're all they're the voice of the contractor is really absent in setting the very policies that dictate the way that you're going to have to do your work, and we have to get them more involved.

And so that's really what the coalition is about, is like, how do you center the voice of the people that are actually doing these installations and setting up the rules and the programs that are supposed to be helping them on this path?

00:13:11.000 — 00:13:19.760 · Speaker 2

That's going to land well with our audience, who are by and large, heat pump contractors. You said a couple of things in there that sparked a two parter question finally.

00:13:22.040 — 00:13:46.280 · Speaker 2

What's the 80% that everyone agreed on? What is the crux of what you guys are driving to get adopted? And then the second one is it's the actual work you guys do to disseminate that. What's the product? Or if you look at people on your face page on your company, like what are they actually doing day to day To make sure we get all of that in place in the ten states you guys are focused in.

00:13:46.280 — 00:19:43.480 · Speaker 1

So that 80% I mentioned about what folks agree on basically breaks down to everyone agrees we need more consumer education, and we need a centralized place for people to be able to get information about what is this? What would it do to my home, what are the resources available for me? And then critically, how do I find a qualified contractor who's going to help me put in a heat pump or a heat pump water heater instead of talk me out of it?

And so the consumer education and the consumer engagement and help is one thing that everybody agrees on incentive programs that actually work for customers and work for contractors. And in this country, we got like a 40 years of experience about programs that barely work or don't work at all, but the real agreement that they change the vibes.

One of the biggest impact of the Inflation Reduction Act and all the tax credits and the promise of those rebates wasn't necessarily the actual money that flows is. That was a real vibe changer, when all of a sudden everybody was talking about heat pumps. And you had The New York Times and the Associated Press changing from stories about what's a heat pump to how to choose the right heat pump for your house.

And what was my experience working through the tax credit system and so developing incentive programs that actually work for contractors? Sure, they got to work for consumers, but if they don't work for contractors, they're not going to work for consumers. And so how do you design programs that actually work?

The third area is really focusing in on what are the easiest parts of the market to get to first, before you get to the hard parts. And so one thing we heard from manufacturers early on in 2018, 2019, time frame is like focus on new construction. First, that's an area where it's the most cost effective to be able to put in heat pumps, heat pump, water heaters.

You're going to train a whole bunch of contractors by doing that about putting in heat pumps and you don't have any friction. There's no real cost change. Any small cost differences there between systems are going to be completely lost in the overall purchase price of a house. And so the manufacturers are really clear upfront to be able to focus in on that.

And what that did is that gave us a whole bunch of areas to really work on initially to be able to get the market moving. And with that market momentum, you actually have some greater faith from both market actors and policymakers and be like, oh, look, consumers are liking this. The installers are installing this, manufacturers are making this.

Let's continue. Let's get more programs, let's get more policy, let's get more installation. Your neighbors talking about it. And now we're putting in a heat pump in their house. And so those are some of the things that they all agreed on. And it doesn't happen by itself. What it takes is folks working in the policy forums.

And so a big part of our team actually goes into those halls of power the state legislatures, the government agencies, and we fight. You say this program's not good enough. This program is not going to work for the people that are actually have to install heat pumps in this country, in this state, and we need to change it.

And so we have lobbyists and we have people that are really experts in both building efficiency, but also in government policymaking in there trying to bring the voice of the market into that. The second big area we work on is what we call a market transformation. And so we work directly with manufacturers, directly with installers, directly with distributors and retailers to try to figure out what are the barriers holding, whether that be panel sizing or electrical upgrades, whether that be like a lack of products to fit all the different form factors that you find out there in the market.

Whether you need a 120 volt systems rather than 240 volt systems for, say, pump water heaters or stoves. And so what we do is we work directly with manufacturers and manufacturers in our coalition, about 95% of North American market share of water heating manufacturers and about 80% of North American market share of HVAC manufacturers are in our coalition.

And then we got a number of cooking manufacturers as well. But the heart of our effort is really over there on the water heating and the space conditioning systems. And so we have staff that works directly with them constantly. What are you facing? What are the barriers? What are your affiliated contractors telling you.

And then we take that and we see can we do market solutions to that. Don't even involve the government? Or are there areas where you need government agencies to be able to push so that the market solutions can come out more easily? And the third area we work on is consumer education and contractor engagement.

And so I mentioned it earlier. What is the basic information that consumers need on this. And that's what is the thing. What is a heat pump. Why is it good for me? Where can I find all the rebates that are available to me in one place? By searching by system, I'm trying to put in or the my zip code, or maybe my income level.

And then how can I find a contractor as quickly as possible? How can I find a contractor that's been prescreened and is going to be someone that helps me put in a heat pump, rather than talks my family out of it, or craps all over heat pumps. And so our organization really works in those three areas like policy change, market transformation and consumer engagement.

And then the last area is really contractor engagement. It's like, how do we help the small business be able to make this transition sometimes multi-generational. They've installed like really similar systems like how do you actually help them down this path of letting them see a little bit into the future about where their state's going on policy, and then how do you help them access programs and training and everything else that they need in order to be able to make the switch, so that more and more of their business is in line with where their state's going, so they're better prepared for the future, rather than one of the folks that's left behind in the transition.

00:19:43.520 — 00:20:11.000 · Speaker 2

I was just going to say, we are excited to get on your The Contractor portal. I think I just signed that contract yesterday, so it seems like an incredible source of knowledge. And going through the contractor side, I was poking around on the consumer side there, really elegant, beautiful websites. You guys have done that.

Clearly you've done a ton of research into your user, whether it's the consumer or the contractor. What are the questions top of mind? What's an easy way to access the information? Super impressive stuff.

00:20:11.040 — 00:22:58.060 · Speaker 1

Yeah. Thank you. As you said, when you run a coalition, if you're going to be successful, it comes down to listening. And it's a lot of it's the same with businesses, right? It's just listening to your customer and really understanding them and having the ability to be able to control your ego enough to be able to correct.

Once you've heard from the customer that what you've done actually doesn't work for them. And so a lot of self-correction. A really great team that works on this. And the contractor director you talk to, we've rolled it out in both California and Colorado now. And it is what I described. And that it is a easy tool for customers to immediately be able to find qualified contractors that want to install heat pumps in people's homes so that people can search up based on their zip code, based on their utility territory, based on that, they want a water heater.

Do they need to replace their air conditioner? And they can find a list of contractors, but not just a list of actual qualifications they may have. Are they eligible for this program? Are they in this utility program? Do they have this industry certification, whether that be like Nate or the quality HVAC certification?

Do they perhaps use a certain software that is better than others? Are they trained up in that. And so we call that badging. And it's been a really amazing to see the impact of badging in this directory. And so customers can go into this directory. They search for contractor and they have all this contractors.

But then they see these little badges on different contractors about what they're trained in, what they're eligible for. And we find a total spike in people that have a single badge versus no badges at all about people clicking on their profiles and then asking for a consultation with them. There's about a 15% spike.

If you have one badge and there's a 50% spike if you have two or more badges on it. And so we really encourage the contractors to come in about, let's really tell your story. You guys have gone through some hard work in your organization to be part of this program, or get your folks trained up or your BPI. Let's put that up there in a badge to be able to recognize it.

And then if you click on the profile, you see the service territory they cover. What are their expertise story about the contractor and the easy way to click on get me a consultation with this guy. I want to talk to this guy and bring him over to my house and get a quote for it, and so you can take him all the way through to getting the person out there.

And it's been a lot of talking to contractors to really understand from them. They're incredibly busy people. They can't spend a lot of time setting up another profile on another page. They want to be able to get through as quick as possible. And so we've tried to make this a really elegant process to take part in, and then to be able to have customers actually engage with as well.

00:22:58.100 — 00:23:38.140 · Speaker 3

Awesome. All right, Panama, tell us a bit more. So having a portal to really help consumers identify these qualified contractors that have all these different training qualifications and demonstrate that their experience in installing heat pumps is fantastic. Can you talk more about the other side, specifically the contractor side?

What are some of the most common challenges that you see from or reasons why when you're engaging with contractors, why they're saying, I'm thinking about heat pumps, but I'm going to hold off for now. Or what are the barriers around the contractor side of getting involved in this? I'll say this movement of heat pumps.

00:23:38.180 — 00:28:49.620 · Speaker 1

Yeah. So I'm going to break it down into inertia and no judgment in that inertia sales and then installation quality and callbacks. So the first one inertia why should someone change? If you look out around the country, there's exactly the right number of installers as what the market is asking for, because it takes everybody, it takes a while to be able to get on their list, to be able to have somebody come out and do an install.

And so Adam Smith was right, and we have exactly the right number of companies for the demand that's out there. And so that means is why should I change what I'm doing? What I'm doing is working, I'm booked two months solid and I don't need to do anything different. And what we're trying to do is be able to show contractors and help contractors.

What's coming down the pike? We have 100, 125 year old industries installing very similar technology. And there's big changes coming. Big changes underway. And there is a sense of inevitability about these changes. What we're trying to do is to be able to help the contractors say, okay, this is coming.

This is the time frame that is coming on. We have this window opportunity right now where there's a lot of resources, there's money being invested, there's training programs out there, not just on the technical side, but also on the other side of the running this business. You should be taking advantage of these opportunities now and starting to see about transitioning over to more and more heat pumps.

We're not so doctrinaire or severe, which is just like you need to stop doing any furnaces or gas water heaters right now. We understand that this is a transition over time, and you actually need to be able to work with installers and market actors to be able to make that happen. So one, we understand the inertia and we're trying to help people overcome it.

The second is the sales side. It's like if you can install a water heater, if you can install an air conditioning system, it's like you generally are most of the way there to be able to install heat pump, water heater or heat pump. And after you do a few, you're good to go. Of course, you can always get better and better at it, but generally a skill set is there where the skill sets not there a lot is how to sell heat pumps, and it was really fascinating to look deeper into really successful programs like the State of Maine's programs that you guys have done shows on, and what the state of Maine did to actually help these companies make this transition, or even bringing brand new companies into being around this transition.

And one of the big areas of focus was on sales training and the state subsidizing sales training through the Carnegie Mellon Institute to be able to actually help people on the ground. The salespeople at these companies get better at selling heat pumps? Because heat pumps are different. They feel different.

People have all sorts of questions like, what's it going to do to my bill? How is it going to look? Do we have to have these stubs coming out? There's all sorts of questions. And so the sales process was a really critical difference. And we hear that coming up as a real challenge because it's like you just do a box swap.

There's not a lot of you don't got to really sell that. It's just here we're going to put in the same thing that you had when you're selling something different. It helps to have some training to be able to work people through that. And then the third thing is really installation quality and callbacks. And just like one of the number one concerns from contractors, of course, is just how am I gonna install this new technology that my guys don't have a lot of experience with?

And then we're just going to get a ton of callbacks, either because people don't know how to live with the heat pump, or we didn't do a good install, or I don't know which companies to do to work with. Yeah, it's just I'll deal with this next year. And so I was really fascinated by. Last month, a study came out at the University of Oxford, and it was looking at what has a bigger impact on the efficiency of a heat pump system.

Is it the efficiency of the house like the envelope of the house, or is it actually the quality of the installation? And they took just like a ton of research or projects all over the UK. And what they found is very clearly is the quality of the installation that has the biggest impact, the sizing and then the actual installation that was done on the project rather than the thermal efficiency of the building.

And so what that's really led us to is the real belief in focusing in on helping contractors, being able to correctly size systems, to be able to offer exactly the right system for the house they're working on, and making sure that there's a good process for installation, and a well-trained crew for installation to prevent those costly callbacks.

And so, like you guys at AMP please like providing just like fantastic tools and other tools in the market to really help people be able to get that real quality installation that's needed to prevent that callback. And so I think we're just seeing this surge of innovation happening right now that's going to be able to help people get more comfortable with having heat pumps become more and more of their business, and not have some of these concerns over why should I, how do I sell it?

And is this going to be a whole bunch of callbacks?

00:28:49.620 — 00:29:14.860 · Speaker 3

So helpful to hear these different areas that are the most common barriers for a contractor to start participating and getting engaged with heat pumps? What are some simple recommendations that you have based on everything that you've learned around? What are the first steps that you can take to get over the challenges related to install, or on the sales side, or any one of the areas?

00:29:14.900 — 00:31:39.610 · Speaker 1

Yeah, I think the sales side is some of the biggest. Ultimately, you need to be able to have your sales staff to be able to clearly communicate the benefits of a heat pump and why somebody should go ahead with that heat pump. And there is just a ton of sales training out there right now, particularly around heat pump water heaters.

And so that's what I usually tell contractors first, if I'm engaged with them in a conversation about this, like they already have some interest, they're already seeing stuff happening within the industry. Akers is talking about all the time contractor magazines, talking about all the time. Their chosen manufacturers and distributors are talking about all these changes.

It's like there's a cacophony of information that this transition is underway and inevitable. And so if I'm already talking to them, I say focus on sales and getting your name out there first and foremost, so that there's some demand so that there's a reason to send your guys and gals over to the training programs.

So we follow this path with contractors, engage in power and educate. So often the people that work on workforce development. They jump right to educate. They're like, we just need to provide technical training to all these folks. Nobody knows how to do this. And it's ridiculous. It's like we have an incredibly well trained contractor community in this country.

What they need is a reason to make this transition. And so we want to figure out a way to engage with contractors first and foremost. Like, why should you care as a contractor? What is this happening? What's the timeline and what do I need to know as a contractor? Secondly, like really empowering them, like how do we give them the tools for this transition?

How do we give them information about what are the key talking points or the sales points about what it's like to live with the heat pump, what it's going to do to your bill, how it's going to change your living environment, how do you get them free leads through our contractor directories give people tens of thousands of free leads every year.

Like how do you really empower them to make money off of heat pumps at that point? Once they're engaged and they understand what's going on more fully and they're like actually making some money and they're empowered, they might actually be interested in the education at that point, then they're actually going to have a reason to send their texts out to those training programs and their salespeople out more fully to those programs.

And so for us, you've got to focus in on the engage and the empowerment part early on in this process. And I really think time and again, we see that the sales piece is one of those critical missing pieces for contractors up front.

00:31:39.650 — 00:32:08.490 · Speaker 2

All right, Panama, super interesting. I'm taking away loud and clearly the BDC fully believes contractors are absolutely essential to this transition. But I was reading an article that you were quoted in and you said explicitly that we're entering the contractor phase, and it's like they're the linchpin of where this all goes next.

Am I reading you right? If so, why are they that important to this next phase?

00:32:08.530 — 00:34:18.550 · Speaker 1

That is because we've gotten to the point of this transition that we're beyond the early adopter heat pumps, about sold furnaces the last four years. Across the country we actually last September 2025, for the first time ever, you actually had heat pumps out selling air conditioners. And we started to see that some of the first months of this year as well.

And so pretty soon we're going to have heat pumps outselling all other parts of the HVAC industry. And what we've done in this movement, this most recent movement heat pumps have been around for a long time, but the surge of heat pumps, where they become a dominant part of the market. It's been on the back of a lot of early adopters in the consumer side and early adopters on the contractor side, and we're getting to the point now in the transition where a lot of those folks that are just willing to go for it and try and rip out systems that are already working, or systems that are dying and going ahead and putting in a heat pump, we're getting beyond that now.

We're getting to the point where we actually have to be doing sales around this, like really heavy sales around this, and we're going to have to move beyond that contractor set were just really going for it with heat pump into the mainstream of the contractor community. And so I tell my staff all the time, it's like this movement, this transition is going to live or die on the our ability to be able to engage the contractor community in this.

The contractors are the ones that are making the sale. The contractors are the ones that are giving the consumers the confidence to be able to make this buy. The contractors are the ones that are putting in the quality installs. So there's good stories coming out of each one of these installations. The contractors are the ones that the policy makers and the utilities are relying upon to be able to actually carry out the work necessary to allow those laws and all these programs to work.

The linchpin is the contractors. And so we actually need to make it easy and profitable for the mainstream contractors to be able to start to transition more and more over to this, the early adopters were almost done, and it's time to move into the mainstream. And the contractors are going to be the key about whether we're able to do that.

00:34:18.590 — 00:34:50.350 · Speaker 2

I love that I get this all the time from friends and family who called someone they wanted a heat pump. They got three quotes, and one of the quotes actively dissuaded them away from a heat pump. They're like, what's this about? There's all these concerns. It's the counter selling is real, right? So if someone's listening, who's in that category, what is the pitch?

You've mentioned making money. What's the like? Hey. Come over. Your concerns are unfounded for x, y and just what's the pitch for them to like? Hey, put the heat pump arrow in your quiver.

00:34:50.350 — 00:36:45.420 · Speaker 1

So it's really. How are you preparing your business? Everybody is in a company that is part of an overall flow of change within their industry. And forget about just heat pumps or forget about electrification. It's like there is just there's technological change. there's cultural change. There's economic change that happens.

And you always, as a business owner, have to be adjusting and adapting. In this case, it's pretty clear with heat pumps outselling furnaces for four straight years, starting to outsell air conditioners. 60% of all new homes built last year in America, according to the Census Bureau. Used electricity for heating, water heating.

It's pretty clear where this is going. And so it's about getting your company ready for what's coming so you can continue to be competitive. You can make money, you can continue to pay your staff and either stay where you're at or to be able to expand. There's an inevitability to this transition that we talk about with contractors.

To be able to help them be able to see is, okay, I have to add this arrow into my quiver, and it's going to have to be more and more of the arrows in my quiver are going to have to be heat pumps, because I see. And I have the tools to be able to see about where we're going here. And so that transition conversation, it hits with people because they already see it out there, or they're already getting way more calls about heat pumps than they did five years ago.

They're seeing way more articles out there, the trade press or the mainstream media about it. And more and more people are talking about it. You're starting to see it more and more on the sides of their competitor's vans, and they're starting to see it more and more and their competitors billboards. And so it's out there more.

And so the messaging when we bring it to contractors, it's harder because they're surrounded by that information ecosystem already.

00:36:45.460 — 00:36:52.620 · Speaker 2

Awesome. Very compelling. All right. I want to underline this transition is

00:36:53.700 — 00:37:15.890 · Speaker 2

the shift away from gas infrastructure. So you've got some pretty interesting views on why states should stop investing in that. And I've heard you on a couple of podcasts make the case pretty persuasively to skeptics. So walk me through the core argument there, because I think it's pretty interesting.

Sure.

00:37:15.890 — 00:38:24.440 · Speaker 1

So the scenario you focus on a lot. I would love to just focus on selling heat pumps and talking to contractors and customers, but the reality is, the whole second half of our organization, we focus on the gas system, the natural gas system, like the pipes that bring gas to people's buildings and the workers that work on that and the utility models behind it.

Because as we sell more and more heat pumps, as there's less and less customers on the gas grid, that's going to have impacts. And those impacts bring about concerns that lead to changes in policy that create more barriers to putting out more heat pumps. And so you have to focus in on the impacts on the gas system.

And so I just want to ground the conversation a little bit on some of the current realities of the natural gas System. We are in the middle of one of the biggest times of investment into the natural gas system. In 2010, there is a horrible natural gas explosion in Northern California in the Bay area called the San Bruno Explosion and a whole neighborhood.

00:38:24.480 — 00:38:25.760 · Speaker 2

I was living in the bay for that.

00:38:25.800 — 00:38:26.800 · Speaker 1

Okay, so.

00:38:26.840 — 00:38:28.360 · Speaker 2

Yeah, yeah, I remember it very well.

00:38:28.400 — 00:41:31.190 · Speaker 1

Yeah. Huge fireball. A number of people killed in a neighborhood set on fire. And the federal government right after that, put out new guidance for gas utilities around leaky pipes and replacements. And what you saw is, since 2010, an incredible spike of investment into the natural gas system by utilities paid for by you and I, the ratepayers.

And so what you now have is since 2010 and over doubling of investment into natural gas replacement. This is a new pipe being laid out to new neighborhoods. This is replacing old pipe with new pipe. And this is 70 year pipe. So right now gas utilities are spending about $50 billion a year about replacing old pipe with new pipe.

And the way that utility finance works is a utility has a project. They take out financing for that project they put in the pipe and then us as ratepayers repay that. Over time, many states are planning on getting off of gas in the next 25 years, but we're investing $50 billion a year about putting 70 year pipe in the ground.

And so at a time when states are planning to abandon this infrastructure, we're making long term investments that we are all on the hook for, to be able to put that in the ground. So at the same time as we're trying to build out the electric system and make the electric system more and more reliable, cleaner and cleaner, we're also gold plating, a gas system that we're planning on abandoning well beyond before we finished the paying it off and the financing for it.

And so what that's resulted in is our gas bills have completely flipped 25 years ago. If you looked at your gas bill, only one third of it was paying for the pipes, in two thirds was paying for the actual commodity that you use that's flipped. Now around this country, if you look at your gas bill, two thirds of your gas bill now is paying for the infrastructure that financing that I mentioned, only one third is paying for the actual gas that you're using.

And so what's happened is this massive investment in the gas system has created a new, artificially expensive floor and all of our gas bills, so that even if you are cutting back and you have the most efficient gas appliances in your house, you have a flaw that you will never get below because of the investments that have been made.

As gas utilities are racing to get pipe in the ground before either climate laws or affordability conversations catch up with them. And yeah, There's all sorts of public health reasons to start to get off of gas and stop burning gas and buildings. But increasingly, there's a very dire affordability challenge with gas, and it becomes more and more affordable for us all to be moving off of a gas system that we're investing heavily in right now, and putting every dollar that we're spending on investing in terms, investing in kilowatts instead, and really making the type of electrical system that we need for our modern society.

00:41:31.230 — 00:42:20.180 · Speaker 2

Let me push on that one for a second, because we engage in this conversation all the time, especially around. So I live in Massachusetts, $0.35 a kilowatt hour on my bill. It's some of the highest, most expensive electricity in the US, and we actually have decent natural gas rates. So I know the infrastructure's going in, but there's been a bunch of stuff in Massachusetts, like there's a big push for heat pumps, and people are outraged by their bills.

And so get your argument with macro level. But a lot of times what I hear contractors say is, God, I just don't want to have this customer call me in January and be like, what did you do to my bill? So that takes the affordability down macro level to the micro. And I know Massachusetts very specific. But if a contractor came to you and was like, I don't see heat pumps being more affordable as you make this argument about gas, what would you say to them?

00:42:20.180 — 00:44:37.050 · Speaker 1

We have a big change going in affordability around the country right now. What gets all the news is electric prices going up. But what we're seeing is that's generally happening in a few hotspots around the country. And sorry, you said you live in a hotspot where you're seeing it. What we are seeing, though, is in every state in the country, we have gas prices going up significantly.

And over the past couple of years, gas prices, natural gas prices for homes has gone up 60% higher than electricity prices now starting from a lower floor. But the rate of increase is much faster. And a lot of it's due to those infrastructure issues that I mentioned, But also we are now part of a global market for natural gas.

And so when you have things like disruption in the Middle East, when you have things like the war in Ukraine, disrupt the global natural gas market, and all of a sudden you have new demand for natural gas in Europe or in Asia. And there's it's more cost effective. It's a higher profit to export that natural gas rather than use it here domestically, you see those surges and gas prices that we've seen the last two winters.

And so every household is different, right? We never make promises to any customer about here's exactly what this furnace or this heat pump is going to do to your bill. We generally say this is what and this is what it should do. We have much better control over electric prices in this country than we do over natural gas prices.

Electric prices are governed by public utilities commissions, boards of public utilities in each state. Natural gas. We govern the infrastructure. We don't govern the overall price of it. And that is something that's at the whim of geopolitical activities and events outside our control and is leading to spikes, usually during the wintertime when families can least afford it.

And so the best way to really futureproof your customers is give them a product that is highly efficient, and that we have a lot of regulatory control over the price of, rather than something that is part of a system that has dramatically spiking costs that we don't have control over and is at the whim of geopolitical events.

00:44:37.090 — 00:44:59.640 · Speaker 2

I love it. Awesome. All right, Panama, you're in an interesting position running the organization. You do being deeply involved in ten different states. I'm curious what trends are you paying attention to now? What's exciting to you, and what do you see Seal changing over the next few years across the rest of the country.

00:44:59.680 — 00:48:17.260 · Speaker 1

Yeah. So the sales numbers are really incredible to see. If you look at what's the rate of success. You have to look at how the market's transforming and the fact that before 2021, furnaces and boilers were always the dominant technology. And to now see heat pumps out selling them for four years in a row.

And you think about the last four years. And it has been an absolutely crazy time in the economy and a crazy time in the HVAC community as well. But there's resilience and heat pumps continuing to outsell the fact that 60% of all homes are being built using electric heat now across the United States. It's absolutely incredible.

The trend lines just look like they're going to continue to be able to go up. We are starting to see, for the first time in decades, an actual drop in gas demand in buildings. Gas demand for power plants is way up. Gas demand for manufacturing is actually up. Gas demand for commercial and residential buildings for the first time are starting to actually go down as we get more and more efficient products out there.

But as more and more people are exiting the gas system as well. And so what you see there is when you have declining gas demand, the people that are left on the system are going to be responsible for paying off the financing that I mentioned for that gas system. And so with less and less customers to pay off, fixed cost gas companies are going to have to raise rates on the people that are remaining.

And that's going to make it even more cost effective for more people to electrify. And so more people exit the gas system, which will then need to cause higher rates. And so all of a sudden, you have a spiral happening where higher and higher rates are leading to more and more people leaving in the higher and higher rates.

And so I'm fascinated to watch that where that's happening and those utilities that are trying to get in front of that by starting to look at how do you take whole neighborhoods off of the gas system at once? At our organization, we call it neighborhood scale building decarbonization. And you're seeing this happen in Seattle.

You're seeing this happen in parts of Massachusetts. You're seeing this happen in parts of California, up in New York, where utilities are saying instead of spending 4 to $6 million a mile to replace the gas line to this neighborhood, that needs to be replaced, we're going to go ahead and electrify all the buildings on that gas line and cut that gas line off, and we're actually going to have significant savings after doing that to ratepayers and to be able to not put that gas line in.

So it's fascinating to watch neighborhood scale building decarbonization happen right now. We also look a lot. Yeah, yeah. We often look at a lot of policies. And there's a real question after the 2024 election. Is there less political appetite to pass building electrification laws or rules? And what was fascinating is the last two years we work mostly in ten states, but we follow legislation at the state level all the way across the country is that you saw the same amount of laws introduced in 2025, and then in 2026, as you did in 2024, around building electrification.

And this.

00:48:17.260 — 00:48:17.940 · Speaker 2

Really.

00:48:18.060 — 00:48:36.580 · Speaker 1

This is codes, this is incentive programs. This is education programs. This is thermal energy networks. So you haven't seen a deterioration of lawmakers interest and recognition that this is a transition that has to happen. Even as you've seen some of the political firmament change across the country.

00:48:36.580 — 00:48:41.660 · Speaker 2

That's super surprising and very interesting. And I haven't heard that or read that anywhere else. That's cool.

00:48:41.660 — 00:48:44.540 · Speaker 1

I have a great place. You can read about stuff like that.

00:48:45.540 — 00:48:56.900 · Speaker 2

Actually, that's where I was going to go. If someone's listening this and like, I want to check out BDC. I want to see what resources are there for contractors. Like where should they go? What should they look at?

00:48:56.940 — 00:49:29.980 · Speaker 1

So our goal is to be able to provide resources for contractors and other folks in the HVAC and the plumbing market to really help them see what's happening. What are the trends that are happening, what are the rules that are passing? What are the programs that are on the horizon? And so we do that in a number of ways.

We put out reports that are really easy to access and read, including quick summaries. But we also put out a monthly newsletter and then a quarterly report on trends across the industry. And so our website is building.

00:49:31.300 — 00:50:22.570 · Speaker 1

There's a free newsletter to sign up for. Scroll all the way to the bottom of the website, the home page. You can sign up for our newsletter, and we send out a monthly newsletter that has everything that's happened over the last month in building electrification. Like what new products are out, what new laws are passed, what new trends have happened, etc.

Quarterly, we put out what we call our momentum blog. And that momentum blog really goes into market activities that are underway and legislative activities that are underway. And so it has things like overall sales numbers that have changed, overall construction numbers. How is the gas industry changing?

It's just a wonderful but really accessible set of information resources that anybody can be able to pick up and get a sense of where the market's going nationally and also going down into their states.

00:50:22.610 — 00:50:30.930 · Speaker 2

Panama super inspiring vision of the future and what's happening. I learned a ton. Thank you so much for joining us on the Heat Pump podcast.

00:50:30.930 — 00:50:58.810 · Speaker 1

I appreciate it. And Eric, and what you guys are doing is so critical for this moment. You heard me say, this is the age of the contractor right now, and we have to be helping make it easier and more profitable for them. And so tools like amplify, podcasts like this, like those are the things that we need to make it easier and more profitable to actually make this transition happen.

So thank you for having me on. But more importantly, thank you for everything you're doing for this movement.

00:50:58.810 — 00:51:11.170 · Speaker 2

I appreciate that we think it is fun and inspiring to play where we are lucky enough to play right now. We pinch ourselves. What we're doing, it amply is the most fun Eric and I have ever had in a job. So thank you so much, Panama. Talk soon.

00:51:11.210 — 00:51:11.570 · Speaker 1

All right.

00:51:11.570 — 00:51:12.170 · Speaker 5

Bye bye.

00:51:15.210 — 00:51:37.610 · Speaker 3

Thanks for listening to the Heat Pump Podcast. It is a production of Amply Energy and just a reminder that the opinions voice were those of our guests or us, depending on who was talking. If you like what you've heard and haven't subscribed, please subscribe in your favorite podcast platform. We'd love to hear from you, so feel free to reach out! You can reach us once again at hello@amply.energy. No .com just energy. Thanks a lot.