Commercial Heat Pump HVAC Program

Help the City design a new, comprehensive heat pump HVAC program and get up to $120,000 in rebates! Palo Alto commercial customers who are using natural gas for heating can upgrade to a heat pump HVAC system with the City’s new boosted incentive. Share program-specific data related to your participation in the program that will help us identify any hurdles, limitations, and other factors as the City develops a sustainable, long-term commercial program.

Boosted Incentive Available

Regular Heat Pump HVAC Incentive

Boosted Heat Pump HVAC Incentive (limited to first 10 customers)

$650/ton*

$3,500/ton*

$100,000 rebate cap per customer

$120,000 rebate cap per customer

 

*A ton, as used in the HVAC field, refers to the cooling capacity. A one-ton heat pump is equivalent to 12,000 BTUs per hour, approximately heating or cooling 500 square feet, although actual coverage can vary depending on factors such as insulation, ceiling height, and climate conditions. Consult with an HVAC professional to correctly size your heat pump HVAC system.

Free Consultation With Electrification Expert

The City offers consultation with an electrification expert to customers participating in the Commercial Heat Pump HVAC Program. This service is available upon request for complex rooftop unit (RTU) projects or unique RTU replacement challenges. Provided by Prospect Silicon Valley, technical assistance will include system sizing, energy modeling, electric capacity analysis, building electrification guidance, finance and incentive opportunities, and general project feedback.   

If you are interested in receiving this consultation, please contact utilityprograms@cityofpaloalto.org with your heat pump HVAC project questions.  

 

Steps to Apply

Step 1.Prepare your Application

Make sure your project complies with the Program Eligibility Requirements and Terms and Conditions listed on the webpage, as well as on page 16-17 in the Business Customer Rebates Catalog. Prepare your pre-installation supporting documentation.

  • Estimates for installing gas versus heat pump HVAC equipment (drawings and estimates by a certified engineer are also accepted)
  • Photos of existing equipment
  • New proposed equipment specification sheets

Step 2.Submit your Application

You will submit your application through the City’s Business Customer Rebate portal using your utility account number and address.

Submit your Application

Step 3.Get Pre-Approved for the Rebates

Program staff will schedule a pre-installation inspection, if needed. Participants in the Business Energy Advisor program who have completed site assessments may forgo an additional pre-inspection. After a pre-inspection, you will be preapproved to proceed via email. Funds are reserved for your project only after a building permit is issued.

Do not purchase equipment until you receive this notice.

Step 4.Apply for a Building Permit

Before installing your equipment, get an issued permit with Planning and Development Services. You will have 8 months to complete the installation from the permit issued date. If the project is not completed during this time, you will be moved to the waitlist.

Apply for a Building Permit Now

Step 5.Install Equipment and Upload Supporting Documentation within 8 Months of Permit Issuance

  • Final paid invoice from installer and professionals
  • Post-installation photos
  • City permits with final signature
  • CPAU may schedule a post-installation inspection, if necessary.

Step 6.Receive your Money Back

We will verify your documents and send your incentive check within 2 – 4 weeks.

Eligibility & Terms and Conditions

  1. Applicant must be on a commercial rate schedule for electric and gas utility services from City of Palo Alto Utilities (CPAU) at the time of application. 

  2. Applicant must have an existing space heating system that runs on natural gas. 

  3. New construction projects are not eligible.  

  4. Applications will be accepted on a first come, first-served basis until all 10 slots have been filled. A waitlist will be created for customers who apply after the slots have filled up. Rebate funding is subject to availability and may change without prior notice. 

  5. Applications must be approved before purchasing the equipment in order to receive rebates.  

  6. Projects shall not commence until CPAU issues a notice of approval. CPAU reserves the right to reject any application that is incomplete or does not meet the program criteria.  

  7. Heat pump HVAC equipment must meet all Eligibility Requirements and specifications listed in the Business Customer Rebate Catalog to receive rebates.  

  8. All equipment must be purchased and installed within 8 months of the permit issued date from the City’s Building Department. Extensions may be granted on a case-by-case basis if there is not a waitlist.  

  9. All equipment must be installed in accordance with all applicable federal, state, and local laws, building codes, manufacturer’s specifications, and permitting requirements. Contractors must hold the appropriate license for the work performed.  

  10. Applicant certifies that it meets the Program Eligibility Requirements, and that the information is true and correct to the best of its knowledge.  

  11. Applicant certifies that they have read and understood the Eligibility Requirements listed in the Catalog and the Terms and Conditions. 

  12. If Applicant is a tenant, Applicant certifies that it has obtained the property owner's permission to install equipment.  

  13. Applicant and its agents shall indemnify and hold the City of Palo Alto harmless from any damage, loss or liability that may arise from the undertaking of this project and participation in the Program.  

  14. Applicant understands CPAU is not responsible for taxes that may be imposed on Applicant and/or its agents as a result of receipt of any financial incentives from CPAU. Applicant is urged to consult a tax advisor concerning program rebates and incentives.  

  15. Applicant understands that participation in the Program is subject to acceptance of the rebate application by CPAU.  

  16. Applicant understands that if CPAU agrees to rebate application, a notice of approval will be issued specifying the potential reimbursement amount, project deadline, and other terms.  

  17. Applicant understands that any changes to the notice of approval must be in writing and approved by CPAU.  

  18. Applicant understands CPAU reserves the right to cap the rebate amount at $120,000 or the total project cost, whichever is less.  

  19. Applicant understands that it must complete project(s) in the City of Palo Alto service territory and must provide copies of invoices and any supporting documentation as requested by CPAU as a prerequisite to receiving any rebates.  

  20. Applicant understands that rebates may require pre- and post-inspections and/or measurements of product performance, and that rebate amounts can be adjusted based on results of the inspections or measurements. Therefore, Applicant agrees to provide access to the project site for these purposes to CPAU and/or its agents.

Contact Us

Utility Program Services

 

Incentive Availability

Incentives are available on a first come, first-served basis, subject to funding. The first ten customers who complete installation will receive payment. If funds are unavailable, join the waitlist and we will contact you if a spot opens.

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