Get in the Weeds: Heat Pump Water Heaters

Most homes in Palo Alto require additional preparation before contractors can do a standard installation that prepares and upgrades your home for expanded electricity use.

When you sign up for the full service program, a $1,000 credit is applied toward these site preparation costs.

If you are hiring your own contractor, you are eligible for a graduated rebate of 55% of project costs, up to $3,500.

Apply for a Rebate Here.

They’re safer, cleaner, and smarter than old gas water heaters.

In addition to helping the City of Palo Alto achieve its ambitious climate goals, heat pump water heaters are:

• Safer: Eliminate the risk of open flames, carbon monoxide emissions, or nitrogen dioxide emissions
• Cleaner: Eliminate burning fossil fuels inside your garage
• Smarter: Ability to heat your water during times with lower electricity prices, storing hot water to use whenever needed
• Cheaper: Use three times less power to heat your water than gas water heaters

Most likely, yes.

Your household will save money on utility bills with a heat pump water heater. The annual water heating cost for a 4-person household with a Heat Pump Water Heater is about half the cost of a gas water heater. Heat pumps save money because they consume up to three times less energy than systems that use natural gas, fuel oil, or electric resistance heat.

Yes, an additional federal tax credit of up to $2,000 is available.

Residents can claim 30% of the heat pump water heater project cost, up to $2,000. A tax advisor can help you take full advantage, and you can learn more from the federal government’s Energy Star website.

Yes, you have a household income less than 80% Area Median Income (AMI), you may be eligible for an additional Equity Incentive of $1,000+ for heat pump water heaters through the TECH Clean California program.

To be eligible, you must submit an application on the income verification portal and list the City of Palo Alto as the contractor, with the email address christopher.escobedo@cityofpaloalto.org. If you are approved, TECH Clean California will notify City staff and the additional incentive will be included on your installation invoice.

Additionally, if you are part of the City of Palo Alto Utilities Rate Assistance Program (RAP) for financial reasons and lives in a single-family home, you may be eligible for a no-cost direct installation of a HPWH through the Residential Energy Assistance Program. To be eligible, you must have a verifiable household income less than 50% of the Area Median Income. Visit the Rate Assistance Program webpage for the most up to date income requirements and to apply.

After you call, email, or submit the online form, here's what to expect:

Step 1: Agree to Have Your Home Assessed

To go into your home and conduct an assessment of electrical systems and usage, we need your permission. Sign the Site Assessment Agreement online after you sign up for the program. If you need assistance, call (650) 713-3411.

Step 2: Site Assessment

The City’s contractor, Synergy, will contact you to schedule the Site Assessment. Once you agree on a date and time, they will send a professional assessor to your home to look at your electrical panel, wiring, and major electric appliances. This allows us to determine the best project design for installing a heat pump water heater. A household member will need to be there when the Assessor comes to your home.

Step 3: Project Estimate

You will receive a cost estimate with details about the project and total cost to you after the site assessment. Move forward in the project by following the instructions on your estimate.

Step 4: Water Heater Installation

Next, you will sign the contract for work to be done, as well as Synergy and the City of Palo Alto. You’ll receive a phone call to schedule the installation on a day that works for you. Note: You’ll be without hot water during the installation, approximately 6-8 hours.

Step 5: Payment & Final Inspection

After the installation, you will receive an invoice. This will include your payment plan details you previously agreed upon in the contract. Synergy will schedule with you to do the final inspection for the City permit. Then, sit back and enjoy your new water heater knowing that it’s clean, environmentally friendly, and will save you money on your utility bills.

The baseline installation cost for a 65 gallon heat pump water heater is $2,300. This is the cost for a standard installation, and most homes will require some additional work like installing a space saver breaker, penetrating an exterior wall to install electrical conduit, or installing a condensate pump. This can range from a few hundred dollars to over $1,000. Fortunately, the City offers up to $1,000 in credits toward this additional site preparation work. You will receive an estimate for the work with no obligation to move forward with the project. The Home Efficiency Advisor can help you gain additional quotes if desired.

All heat pump water heater installations come with a limited one (1) year warranty effective from the date of installation. Customers may opt to purchase a Five (5) Year Extended Labor Warranty. The cost for the additional 5-year extended warranty is $390 for a 50-gallon heat pump water heater and slightly more for larger units.

The City’s program provides Rheem and AO Smith 240V heat pumps in 50-gallon, 65-gallon, and 80-gallon tanks to meet different household needs. 120V 65-gallon and 80-gallon water heaters are also available for households that do not have adequate capacity in their electric service panel. These models require less power and can plug into a standard wall outlet.

Heat pump water heaters work like refrigerators in reverse.

They extract heat from surrounding air and transfer it to water in the tank. They don’t have to burn gas to work. Instead, they only use electricity. That means they can be up to three times more efficient than gas water heaters.

Absolutely, just as refrigerators keep everything cold even when the kitchen is hot.

Heat pump water heaters work extremely well in Palo Alto's climate. If for whatever reason the water heater can’t keep up with demand, it will switch to a heating element to ensure there’s enough hot water.

You won’t lose the hot water you have stored.

The heat pump water heater will continue to supply the remaining hot water in the storage tank, although it will no longer produce hot water because neither the heat pump nor the resistance heating element will work without electrical power. When power is restored after the outage, the water heater will generally revert back to the most recent user settings.

Pretty simple, actually: Just clean air filters regularly.

Maintenance requirements are not difficult, but they are important. Many water heaters have air filters that should be cleaned regularly. On some units, the air filter is located on the top and extra clearance is needed to ensure that the filter can be properly cleaned. Your new heat pump water heater will include a product manual with the simple steps to properly maintain the appliance.

Heat pump water heaters work best in areas with at least 450 cubic feet of space.

In order to use the surrounding air to heat water, a garage, basement, outside facing closet, or large utility room that doesn’t need to stay warm are great options for installation.

Not necessarily.

A licensed contractor or the Home Efficiency Advisor from the City of Palo Alto can help determine whether you need any upgrades. Thankfully, if you do, the upgrades can be part of the City’s permitting and installation process — and you may even be eligible for federal tax credits for the improvements.

A Home Efficiency Advisor from the City of Palo Alto can analyze your home’s specific needs.

There are several ways to leverage the technology of heat pump water heaters to ensure you have more than enough hot water for you and your family:

1. Make sure the tank size accommodates your daily water usage needs.
2. Set the system to automatically preheat water before you need it.
3. Include, if necessary, a thermostatic mixing valve. It enables you to set the tank temperature higher, then mix that hot water with cold water to instantly bring the temperature down to a safe, usable temperature.

The amount of noise a heat pump water heater makes is usually quite minimal, similar to that of a refrigerator or air conditioner.

Most hot water heat pumps will make a light humming sound when they’re running. This is completely normal and nothing to worry about – it's just the sound of the unit moving heat, just like your refrigerator (but in reverse). The noise level should be no louder than a standard refrigerator or air conditioner running, so it shouldn’t be too loud or intrusive. Some models may produce a louder noise than others, depending on their design and efficiency. You can check the decibel ratings of different heat pumps before you buy one if you’re concerned about how much noise it might make.

Some HPWHs only require a 120V, 15A-20A circuit. These HPWHs may not require their own dedicated circuit depending on the model.

Heat pump water heaters have an average lifespan of 10 to 15 years, which is comparable to gas water heaters with a tank.

It is not typical for refrigerants in a heat pump water heaters to leak. In the rare situation where refrigerants leak from a heat pump, the emissions from direct space or water heating (burning gas or other fossil fuels in the home) are still significantly greater than the emissions from refrigerants.

The TECH Clean California incentive program for Heat Pump Water Heaters requires the use of a “thermostatic mixing valve.” This program offered customers $3,100 or more in incentives over a limited time period. It required mixing valves to help customers avoid running their water heaters during peak energy usage times.

Mixing valves can benefit your home by increasing the amount of hot water that is supplied, and they can help you save money on your utility bills in the future as well. These valves allow you to set your water heater to a higher temperatures, and mix in cold water for a comfortable and safe hot water temperature at your faucet or outlet, extending water heater capacity by 20 to 45%. You can find out more about it here: TECH HPWH Load Shifting Pilot.

Outside of the TECH Clean program, mixing valves are optional, but highly recommended for customers installing 50 gallon heat pump water heaters to ensure ample hot water capacity.  Some heat pump water heaters come with a mixing valve factory-installed, but most models currently do not come with this device unless it is requested to be added during the water heater installation.