A heat pump water heater is an energy-saving, utility-bill-lowering champion, but its upfront cost can sometimes be a barrier. Standard gas and electric water heaters can cost half to a third as much as a HPWH.
Incentives are key to reducing this initial cost, making it affordable for families to install HPWHs and unlock their significant savings potential. ENERGY STAR estimates that a HPWH saves $500 a year compared to a electric resistance water heater.
We did a scan of the hundreds of HPWH incentives across the U.S. and this article profiles some of the top ones in each region of the country. With the federal tax credit for HPWHs (of up to $2,000) expiring at the end of the year, it’s the perfect time to point your customers to all the funding available to decrease the upfront cost.
Northeast
The Northeast is home to some of the highest HPWH adoption and biggest incentives nationally.
Top rebate: Efficiency Maine has long provided some of the top and most consistent incentives for HPWHs, and has the highest rates of HPWH installations in the country as a result. Efficiency Maine is currently offering a $1,100 instant rebate to plumbers at participating distributors (https://tinyurl.com/4m8zhruf).
There are many other great HPWH rebates available in the Northeast.
For example, customers who live in the National Grid territory of New York, Massachusetts, Maine and Rhode Island can get an $1,000 incentive.
Vermonters have lots of good options for rebates as well. Burlington Electric offers an $800 rebate for most HPWHs, Efficiency Vermont also currently offers a $600 rebate with an additional $400 for income-eligible customers.
Most homeowners in Massachusetts can receive a $750 rebate when selecting an ENERGY STAR certified unitary HPWH. Interestingly enough, for the emerging split system HPWHs, the rebate increases to $1,500 per system. In New York, homeowners can get a rebate of $700–$900 for HPWHs through the Clean Heat Program.
Midwest
HPWH rebates aren’t quite as high in the Midwest as in other parts of the country. Still, there are a couple of standouts:
Top rebate: Ameren Illinois, a public utility company that delivers electricity and natural gas to customers across central and southern Illinois, leads the rebates in the Midwest with a $1,150 discount on HPWHs through its contractor program.
Another notable mention is Efficiency United through its program partnership with Michigan utilities, which offers an $850 incentive for HPWHs. Most other Midwest rebates in our scan were between $300–$400. You can look for your utility using ENERGY STAR’s incentive finder (https://tinyurl.com/ynt6xejd).
South
The South is the perfect area of the country for HPWHs, because most existing water heaters are electric resistance, making for an easy switch since the needed electricity is already there.
Top rebate: The Tennessee Valley Authority’s Energy Right program offers an instant rebate of up to $1,300, which is available through its Quality Contractor Network.
In Georgia, Georgia Power offers a $1,000 rebate (up to 50% of the HPWH cost) to single-family residential consumers. In South Carolina, Dominion Energy provide a $750 rebate for HPWHs, but for replacing electric resistance water heaters only. In Florida, Duke Energy provides a rebate of $500 for a 50-gallon HPWH unit and $800 for a 80-gallon unit. Finally, in Texas, Austin Energy customers can earn a $800 rebate on a qualifying Energy Star certified HPWH.
West & Northwest Regions
The West and Northwest are leading the nation in HPWH installations and have the incentives to match.
Top rebate: Northwestern Energy, which provides energy to customers in Montana, South Dakota and Nebraska, offers up to a $3,000 instant incentive for customers and a $500 sales performance incentive to contractors for every qualifying installation.
In Colorado, Xcel Energy in Colorado offers a standard incentive of $750 for a HPWH. In Oregon, the Eugene Water & Electric Board offers a $900 rebate for HPWHs, with a higher incentive of $1,700 for income-qualified owners and $1,000 for rental properties. In addition, the Central Electric Cooperative in Oregon has two rebates, $1,000 for existing homes (in site-built, multi-family, or manufactured homes) that replace an electric water heater, and $300 for new-construction single-family homes or fuel-switching from a non-electric unit. Finally, in Washington, Seattle City Light offers a $750 rebate for qualifying HPWHs through an instant discount passed on by a participating contractor or a post-purchase rebate form for units bought from other suppliers.
California
California has a lot of existing gas water heaters which can be more challenging and expensive to retrofit with HPWHs. Still, the state has a goal to put in 6 million heat pumps and HPWHs by 2030. It can be expensive to install an HPWH in California, but many rebates are available to offset a portion of the upfront cost.
Top rebate: The Sacramento Utility District offers tiered rebates of $2,000 (50+ gallon), $2,500 (65+ gallon), and $3,000 (80+ gallon) for replacing a gas water heater with a heat pump model. For electric-to-electric replacements, a $500 rebate is also available. Additionally, they offer an Igo Electric Bonus/Panel Upgrade up to $2,000.
Silicon Valley Clean Energy offers customers replacing a gas water heater a rebate of $2,000, with that incentive increasing to $3,000 for income-qualified customers. For those replacing an electric resistance model, the incentive is $500, and income-qualified customers receive $1,500.
The Los Angeles Department of Water and Power provides a significant rebate of up to $1,500 for residential customers who install an ENERGY STAR qualified HPWH.
TECH Clean California offers varying incentives for single-family residents to install a HPWH, with rates based on location and income verification. Market-rate incentives are $1,100 in Northern California and $2,100 in Southern California, while the statewide equity rate incentive is $3,500 for income-verified customers.
Finally, the Golden State Rebates Program, a statewide initiative, offers up to a $900 instant rebate for customers of California’s largest utilities (SCE, SDG&E, PG&E) who replace natural gas storage tanks with HPWHs. Those replacing an electric storage tank will receive a $500 rebate.
This list is just a taste of some of the best HPWH rebates around the country. Check out ENERGY STAR’s incentive finder (https://tinyurl.com/ynt6xejd) if you don’t see your utility listed here.
Vidhisha Moopnar, Ph.D., a senior project analyst at New Buildings Institute, provides research, program development and stakeholder engagement support. Joseph Wachunas is a program manager for the New Buildings Institute, managing the institute’s Advanced Water Heating Initiative.
