Heat Pump Water Heater Costs and Savings

Heat pump water heaters are the most efficient water heaters on the market. Because they transfer heat instead of creating it, they use less energy. Powered by clean electricity instead of fossil fuel gas, heat pumps are a win for healthier air quality and your energy bills.

As the local community-owned electricity provider, Silicon Valley Clean Energy provides rebates and incentives for all customers to transition to a heat pump water heater. Additional incentives are available from local cities. In this article, we’ll walk you through what you can expect to spend and save on a heat pump water heater.

According to an analysis of over 600 real projects submitted by Silicon Valley Clean Energy (SVCE) rebate participants, the median cost of a heat pump water heater installation is $7,225, including equipment and labor.

The actual cost depends on a variety of factors, including the water heater you’re replacing, the tank size, and labor and materials. To ensure you have the best options, we recommend obtaining quotes from 2-3 service providers.

As a reference point, below is a sample project estimate from the Full-Service Home Upgrades program by Silicon Valley Clean Energy, which provides pre-vetted contractors to install heat pump water heaters and apply for rebates, all with transparent pricing. Prices are all-inclusive and cover equipment, materials, prevailing wage labor, and a standard one-year warranty.

A recent study by Silicon Valley Clean Energy (SVCE) and WestLight Energy shows that despite recent increases in electricity rates, heat pumps can help customers throughout the Bay Area save money on their utility bills today. Analysis was conducted using real-world SVCE rates and market-ready equipment.

In the South Bay, heat pump water heaters can deliver $6,000-$7,600 in average lifetime (15-year) bill savings compared to existing gas water heaters.

To maximize savings with a heat pump water heater:

• Choose a high efficiency unit. The uniform energy factor (UEF) describes a heat pump water heater’s efficiency, and the higher the better. A UEF of 3.5 or higher is common and will result in bill savings compared to a lower efficiency unit.
• Enroll in a heat pump-friendly rate plan, such as E-ELEC or EV-2A. These rates are designed to reduce costs for homes with heat pumps and offer high discounts on off-peak electricity between 12 a.m. – 3 p.m.
• Sync your water heater to off-peak energy use. Connecting your water heater to Wi-Fi or CTA-2045 will optimize your unit to heat water when energy is cheapest. Alternatively, manually program the water heater to off-peak periods (12 a.m. – 3 p.m.)
• Set your water heater to “Heat Pump” mode. Avoid the “Electric/Heater” setting, which uses the most energy.
• Adjust to “Auto/Hybrid” mode on days when hot water usage is high––for example, when having visitors. Turn on “Vacation” mode when taking longer trips.
• Inspect filters every season. Set a reminder for regular cleaning and replacement.

With rebates and incentives available, installing a heat pump water heater can be cost competitive or cheaper than traditional gas units.

Home Rebates by SVCE are available for all customers, including extra rebates for income-qualified households. Certain cities and California State also offer additional rebates. Maximize savings by stacking rebates from different sources.

Income-qualified renters and homeowners may receive a heat pump water heater and installation at 100% no-cost through SVCE.

Rebate amounts are subject to change.

Typically, rebates are available for a limited time or until funds run out. Rebate providers, including SVCE, may also require reservations before installation. It’s best to apply for rebates as soon as you start your project.

Reembolsos por autoservicio

If you already have a contractor or prefer to install a heat pump water heater yourself, reserve your rebate and claim your reimbursement through the SVCE Home Rebates program.

Full-Service Installation and Rebates

Take the hassle out of your installation with the SVCE Full-Service Home Upgrades program. Our pre-vetted contractors will handle your project from start to finish, including a free assessment, installation with warranty, and applying for permits and rebates. Income-qualified residents may even receive a free heat pump water heater and no-cost installation.

Sustitución de emergencia

It’s cheaper and easier to replace a water heater before it breaks (at the 8 to 12-year mark), but if an emergency comes up, SVCE is here to help. Our Emergency Water Heater service provides same or next-day service to help replace your broken water heater with a heat pump water heater. White-glove support includes pre-vetted contractors, a free assessment, installation with warranty, and applying for permits and rebates.