How This HVAC Company Gets 60% of Its Leads From Rebates w/ Adal Villalobos

Adal Villalobos runs operations at Villquin Air Services in the Bay Area, where roughly 60% of heat pump inquiries came through government and utility incentive programs rather than paid ads. This post covers how contractors get listed on those directories, what it costs, why staying on the list is harder than getting on it, and the political risk that comes with building on funded programs.

Most HVAC contractor rebate programs get treated as a closing tool. You mention the incentive during the estimate, it softens the price, the homeowner signs. Adal Villalobos treats them as something else entirely: a lead source that outperformed everything he was paying for.

Adal, who goes by AJ with clients, handles operations at Villquin Air Services, a family-owned company in Hayward serving the San Francisco Bay Area. He arrived with a business administration degree rather than field experience, which is the reverse of how most trades operators start, and he took over permitting, paperwork, program enrollment, and sales while his father and uncle ran the technical side. The company works almost entirely in residential electrification, converting gas systems to heat pumps in a region where that conversion is about to become mandatory.

This post covers what he told us on TradeOps Radio: how the directory channel works, what it takes to get and stay listed, the permitting problem underneath it, and the risk of building a lead engine on money that politicians control.

The difference is where the homeowner is standing when the phone rings.

A lead from an aggregator is a name that hit a form. That person may not know what a heat pump is, may not have priced one, and has often been sold to several contractors at once, which means they have already fielded a handful of calls before yours. You are starting the conversation at introduction.

A lead from an incentive program directory arrives after the homeowner has been through the program’s own education material. They know the technology, they know the money is real, and they are choosing from a list of contractors the agency has already screened. In Adal’s words, “it’s an easier sell, or it kind of sells itself.”

That screening is doing the work a brand normally has to do. Government agencies and utilities put real effort into justifying the investment to homeowners, because a conversion runs from a few thousand dollars to tens of thousands. By the time the call comes in, someone else has handled the objection about why this costs what it costs.

Between 2020 and 2025, Adal estimates about 60% of the clients inquiring about heat pumps found Villquin through one of these programs. That is not a supplement to a lead generation strategy. At that share, it is the strategy.

Requirements vary by program, but the pattern is consistent: training, credentials, insurance, and reputation.

Most programs require contractors to complete specific training before they can offer incentives. California’s TECH Clean California, one of the programs Villquin participates in, costs nothing to join and is open to B, C-36, and C-20 license holders, but incentives are only available through contractors who have finished the required coursework. Being listed as a qualified installer on the program’s public directory is named explicitly as a participation benefit. The agency is telling you the directory is the point.

Some programs also set insurance coverage thresholds above what a contractor would normally carry. Adal is direct that this is a real cost: “You have to put in more money to kind of increase your insurance coverage.” What comes back is directory visibility he describes as close to free marketing, though not quite.

Reputation matters at the application stage too. Agencies research contractors before listing them, and your review history is part of what they look at, which means the work you did on your website and local presence before you ever heard of these programs affects whether you get in.

The practical first step is finding out which programs operate in your service area. Utility programs, regional air districts, state initiatives, and county energy authorities all run separate lists with separate requirements.

Enrollment is not the finish line, and Adal was blunt about why.

Programs audit. They pull records at random, check whether the inspection actually got closed out, and contact homeowners directly to verify the work was completed the way it was reported. That is a level of scrutiny most lead channels do not apply after the fact.

“It’s not about just picking it up, it’s about finishing it,” he said, adding that long-term care for the client is part of what keeps the relationship with the program intact.

This is the underrated part of the channel. The barrier that makes it annoying is the same barrier that keeps it from getting crowded. Any contractor can buy leads from an aggregator tomorrow. Getting listed takes training, coverage, and a clean completion record, and staying listed takes doing the work properly on jobs nobody told you were being watched.

Every dollar in this channel is a political decision somebody made, and decisions get reversed.

Adal watched it happen. The federal 25C Energy Efficient Home Improvement Credit, worth up to $2,000 on a qualifying heat pump, was terminated for property placed in service after December 31, 2025 under the One Big Beautiful Bill Act. An administration changed and a line item that had been driving conversations disappeared.

Budgets run out early too, which is a subtler version of the same problem. Adal’s read is that most program funding gets claimed well before its projected end date, and he considers that a healthy sign rather than a broken one. It is also a scheduling problem: California’s single-family HEEHRA rebates reached full reservation statewide in February, with new requests going to a waitlist.

What partially offsets federal volatility is regulation moving the other direction locally. The Bay Area Air District amended Rules 9-4 and 9-6 in 2023 to require zero-NOx replacements, with compliance dates of 2027 for small water heaters, 2029 for furnaces, and 2031 for larger water heaters.

Two caveats matter here. The rules apply only to new equipment at replacement, and cooking appliances are not covered. The Air District also released draft flexibility amendments to the 2027 water heater date in July, so this is still moving.

The underlying case for the work holds regardless of who is funding it. Emissions from natural gas building appliances account for a similar amount of NOx pollution as passenger vehicles across the Bay Area, which is the health argument sitting underneath every one of these programs.

Ask Adal what actually limits throughput and he does not say leads.

“Sometimes I can get a permit in 30 minutes, sometimes it takes three, four months.” The variance is jurisdictional. Each city wants a different application, unincorporated county areas are easier, and multi-trade installations combining mechanical, plumbing, and electrical get a far more thorough review than a straight equipment swap.

He responded by building a cheat sheet organized by city and county, with expected timelines attached. The timelines are the valuable part, because they let him line up work instead of guessing.

Without that, capacity planning collapses. Ten projects sit in permit limbo with no visibility, then five approvals land in the same week and the crews are already booked two weeks out. Meanwhile the customer has been waiting and needs an explanation that makes clear the delay is not yours.

One hard rule came out of a mistake. Never pull a permit before the contract is signed. Villquin tried getting ahead of the process once, the client retracted, and the time and fees were gone.

Organic and word of mouth carry most of the rest. Adal’s favorite leads come from neighbors who have physically seen the work at the house next door, because the trust is established before the conversation starts. His website and review presence handle the searchers who arrive without a referral.

On paid, he tried several channels and kept one. He pulled spend out of Yelp and Angi entirely, including telling a previous marketing agency to stop, and moved it into Google Local Services Ads. His reasoning: “The LSA is a little bit more expensive lead, but it’s qualified and it’s kind of pre-screened.” When a lead turns out to be a bot or a scam, the platform refunds it.

The economics suit an owner who does not want to manage a click-based campaign. Paying per phone call makes the math legible in a way that impressions and clicks do not, which matters when you are the operations person, the salesperson, and the permit clerk.

None of it works without follow-up, which is the discipline he pushed hardest on. He segments his pipeline into hot, warm, unresponsive, unclosed, under contract, and completed, and he does not write off the dead ones.

“You lost a lead three years ago. Fine. Call them again now.” A system installed by someone else three years ago is a system that has probably never been maintained.

Three things come out of this conversation.

Find out which incentive programs operate in your service area and what it takes to get listed. Utility, regional, state, and county programs run separate directories with separate requirements, and the training and coverage costs are knowable before you commit.

Treat program compliance as lead generation, not paperwork. The audits and completion records that make the channel annoying are exactly what keeps competitors out of it.

Do not let one funded channel become the whole business. Federal credits vanished this year and program budgets close early, so the operators who stay steady are the ones with organic, referral, and paid channels running alongside.

The full episode with Adal Villalobos is on the TradeOps Radio YouTube channel, and subscribing there is the easiest way to catch the next one.

If most of your work arrives through channels you do not control, that is worth mapping before the next policy change rather than after. Book a free strategy call with TradeOps and we will look at where your leads actually come from.

Related: Google Local Services Ads for HVAC and plumbing companies.