Hot water from a new heat pump water heater
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Water heater rebates

Want a Heat Pump Water Heater? CA Residents Can Save Big

Andrew Zoellner
March 8, 2024

To help California continue to transition to fully clean energy, the state started a taxpayer-funded program to help accelerate the state’s zero-carbon goals. The program has funding for both homeowners and trade professionals who want to install next-generation heat pump technology. The goal is to install six million heat pumps by the end of 2030 on the state’s path toward electrification.

As a homeowner, there are lots of rebates available depending on what zip code you’re in. You can see what programs are available in your part of California by using the Switch is On website. In addition to rebates available from your utility provider, city, and county, there is also up to $5,800 available if you use a TECH-certified contractor to install your heat pump water heater and connect it to a demand response program, such as OhmConnect. OhmConnect pays you to conserve energy at specific times, lowering your bill and earning you rewards.

Why should you install a heat pump water heater?

Heating water with natural gas is pretty efficient (around 95%) but has a major downside – it releases harmful gases as part of the combustion/heating process. If everything is working correctly, those gases are exhausted out of the home, but when things aren’t working correctly, it can lead to a build-up of carbon monoxide in your home. Electric water heaters are a cleaner option (that don’t involve combusting fuel inside your home) and are 100% efficient, but they can hit your wallet harder due to higher electricity costs.

Enter the heat pump water heater – a game changer in energy-efficient water heating. Imagine a system that doesn't just generate heat but smartly 'harvests' it, offering an incredible 200%-300% more efficiency compared to using that same electricity to run a traditional electric water heater. This isn't just efficient; it's super-efficient, making it the top choice for eco-friendly water heating.

How does it work? A heat pump water heater gathers residual heat from the air around it, compresses it, and then transfers it to your water. You're still using electricity, but you're using it to move heat, not make it, which means you get more hot water for less energy.

Switching to electric water heating with a heat pump water heater also means you're ready for renewable energy sources. Plus, the reduced electricity use with a heat pump water heater narrows the cost gap with gas. Another bonus? No worries about harmful exhaust gases since there's no gas involved and, therefore, no need for an exhaust system. It's clean, efficient, and future-friendly!

Because a gas water heater doesn’t require electricity to operate, if you’re making the switch to an electric heat pump water heater, you may also need to run a new outlet or new circuit to where your water heater is located, which can add some complexity. Fortunately, there is funding available to help with that update, too.

How do water heaters participate in demand response?

Think of demand response as a clever way to manage electricity usage, helping you get the most bang for your buck.

When it comes to demand response and your water heater, it's kind of like filling a thermal piggy bank. Most of the day, your hot water is just sitting in the tank waiting to be used. As it cools down in the tank, it heats back up.

Here's how it plays out: Your tank water heater is great at getting water hot and keeping it that way all day. But most of the time, that toasty water just sits there, unused, especially during the middle of the day. Now, we usually need hot water in the morning and evening – times when, unfortunately, electricity costs more because everyone's cooking, doing laundry, or showering.

With demand response, you’re just asked to not use hot water. If you’re using a connected water heater, the water heater is simply told not to heat during an event. With a little planning (and changing the time you do some hot water-intensive chores such as running the dishwasher), the water that’s already in the tank, hot and ready to use, can get you through those few hours, saving money and energy.

What are the incentives?

Homeowners can receive up to $3,800 toward the heat pump water heater installation, as well as $2,000 toward any electrical upgrades related to installing the water heater. But, you need to use contractors and installers that are part of the program. This program also makes sure these installers are fully trained on best practices for installing heat pump water heaters. OhmConnect partner Rheem, for example, will help installers make sure they’re fully certified to install heat pump water heaters. For homeowners to receive the full rebate, they need to connect their water heater to a demand response program such as OhmConnect, with the help of their installer..

In addition, homeowners continue to be eligible for federal tax rebates of 30% of the installation cost for a heat pump hot water heater, up to $2,000. And you’ll benefit from efficient and demand response savings on your electric bill. All in all, it’s a huge investment in electrification, workforce training, and reducing the carbon footprint of home water heating.

Get started today! Head to The Switch is On to find rebates and certified contractors and learn more about what to expect when installing a heat pump water heater.

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