All Electric New Construction in New York

If you’re planning a new home or building in New York starting in 2026, you’re entering the “electric‑first” era of heating (and cooling). As a geothermal installer who has been working with builders, architects, and homeowners across the state, I want to walk you through what the upcoming code changes mean, why geothermal systems offer a compelling advantage (especially compared with air‑source heat pumps), and how the financial incentives stack up, and why those make geothermal even more interesting.

New Construction and Electric Heating

Under the All‑Electric Buildings Act of 2023 and related rulemaking, most new single‑family homes and low‑rise buildings in NY will be required to use all‑electric systems (i.e., no fossil‐fuel heating) starting January 1, 2026.

What this means for you, as a builder or homeowner of a new construction project: you need to plan for an electric‑based heating system (which could include heat pumps) rather than oil or gas furnaces/boilers. You also need to think about performance in cold climates, efficiency, reliability, cost of operation, and long‑term value.

Why Geothermal (Ground‑Source) Heat Pumps are the Best Choice

Given the mandate toward electrification, you have choices: Cold‑climate air‑source heat pumps (ASHPs) or geothermal/ground‑source heat pumps (GSHPs). As someone who installs GSHPs in New York, here’s why we believe they often make superior sense in new construction, especially when you plan well and build accordingly.

1. Superior efficiency and stable performance in cold climate

New York winters (especially upstate) can bring prolonged cold spells and sub‑zero nights. While modern cold‑climate ASHPs have made great strides, their performance still declines as outdoor air gets colder. By contrast, a geothermal system taps into the relatively constant subsurface temperature of the ground, so performance is far less impacted.

Example: An air-source heat pump works by drawing heat from the outdoor air and transferring it into your home. So, if it’s 20°F outside and your thermostat is set to 70°F, the system has to bridge a 50-degree temperature difference. The colder it gets outside, the harder the unit has to work to extract usable heat.

By contrast, a geothermal heat pump pulls heat from the ground, where temperatures stay around 50°F year-round. That means the system only needs to increase the temperature by 20 degrees to reach 70°F indoors. Because it starts with a much warmer and more stable heat source, it uses significantly less energy to maintain comfort—especially during cold winter months.

What that means in practice: more predictable heating capacity, greater comfort and fewer performance surprises.

2. Whole‑house heating and cooling (and longevity)

A properly designed GSHP can provide 100% of your heating and cooling needs, with no fossil fuel backup required. This is especially compelling in new construction, where you’re sizing mechanical systems, choosing ductwork or hydronic distribution, and coordinating with the building envelope. Because you have the “blank slate” of a new build, you can integrate the loop field, design equipment for peak loads, and optimize duct/hydronic layout for best performance.

Additionally, geothermal loops often come with 50+ year life spans underground, and the heat pump equipment has long warranty (10 year parts/5 year labor allowance!) and replacement cycles. Fewer moving parts (in the loop) mean less worry about outdoor‑air unit frost cycles, defrosting, and cold‑climate performance that ASHPs face.

3. 2026 New York Geothermal Incentives

Here’s where things get interesting. When you’re factoring in install cost plus operating cost, you’ll likely hear that geothermal has a higher upfront investment compared to many ASHPs. That’s true. But when you layer in incentives + tax credits + lower operating costs + long life, the math begins shifting.
Some of the incentives available in New York:

• The New York State tax credit for qualified geothermal energy system equipment is equal to 25% of qualified expenditures, limited to $10,000 for residential properties.
• Utility Rebates: Rebates via the NYS Clean Heat program and utility programs in NY that specifically cover geothermal full‑load capacity installations. The average rebate ranges from $6500-$7500.

These combined incentives can reduce the net cost of a geothermal system significantly, improving payback and making the decision more compelling.

Why air‑source heat pumps may not measure up (or carry more risk) in this new construction scenario

I’m not saying ASHPs are bad; they can absolutely work, especially in many modern homes with good insulation and favorable loads. But there are reasons why, from a geothermal installer’s perspective, I often recommend GSHP over simply installing an ASHP in these new‑construction, code‑electric scenarios:

• Cold‐climate performance: ASHPs lose efficiency (and capacity) when outdoor air is very cold. In our region that means winter mornings, wind, and deep cold—totaling more stress on the system and comfort risk. Geothermal avoids that by using ground temperature.
• Future‑proofing for electrification: With the code moving toward all‑electric and very high performance, you want a system that doesn’t “struggle” when the envelope is tight and the load is low but peak demands remain. GSHP provides that.
• Backup necessity: Some ASHP installs still include a backup electric‑resistance strip or fossil fuel backup because of cold spells. That adds cost, complexity, and may reduce overall efficiency advantage.
• Incentives gap: One significant factor is that many of the rebates and tax credits in New York are explicitly referenced for geothermal (ground‑source) systems. Starting in 2026, Clean Heat rebates for air source heat pumps in new construction applications will no longer be available.
• Lifecycle and value: From the new construction vantage point, you’re going to live in this building for decades. Designing once, getting a robust system, and not having to worry about capacity issues or retrofit surprises gives peace of mind—and geothermal often delivers that.

How to make geothermal work in your new build project

If you’re planning on new construction in New York (starting in 2026) and you’re seriously considering geothermal, here are some inspector/body‑of‑knowledge tips I share with clients:

• Engage early: Get your mechanical designer/contractor involved early in the project. Loop design, site planning for boreholes or horizontal trenches, coordination with foundation/excavation work. Because this is a new build you have more flexibility (and less disruption) than retrofits.
• Match the building envelope: Because code is demanding electrification and high performance, make sure your insulation, air sealing, ventilation, window performance, etc., are optimized. A geothermal system sized with a tight envelope and energy-saving ventilation will perform better and pay back faster.
• Size correctly: Avoid oversizing (which wastes cost) or undersizing (which risks comfort). Ensure your contractor uses a Manual J heat load calculation to size your system, and consider full‑load, part‑load, and worst‑case cold conditions. A ground‑source system is more forgiving when properly designed.
• Loop field design is key: For the GSHP, the ground loop is as important as the heat pump unit. Horizontal vs vertical loops, proper bore depth, ground conductivity, spacing, grouting all matter. In new construction, planning the loop field before landscaping or after foundation work is wise.
• Choose a qualified contractor: Ensure your installer is experienced in GSHP systems, understands NYS rebate/tax credit paperwork (which can be non‐trivial), and coordinates with your builder/architect for scheduling and site work.
• Stack the incentives: Get advice on how to combine state tax credits, utility rebates, and financing programs so you maximize savings.

Final Thoughts

The building code changes in New York mean you’re stepping into an era where electric heating in new construction isn’t optional, it’s mandatory. Given that shift, you have the opportunity now to choose a system that not only meets the code but gives you long‑term value, comfort, reliability, and energy savings. From my vantage as a geothermal installer, I strongly believe that a well‑designed geothermal (ground‑source) heat pump system is often the best choice for a new construction home in New York.

If you’re at the stage of selecting HVAC systems for your new build and want to dig into comparative costs, sizing, loop‑design options, or incentive details, our team would be happy to walk you through a case study or sample numbers!