Get in the Weeds: Heat Pump Water Heaters

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.

No, federal tax credits expired on December 31, 2025. City of Palo Alto Utilities continues to offer residents rebates to help electrify their homes.

Yes, if you are part of the City of Palo Alto Utilities Rate Assistance Program (RAP) for financial reasons and live in a single-family home, you may be eligible for a no-cost direct installation of a Heat Pump Water Heater, Heat Pump HVAC system, Electric Induction Cooktop/range, and/or Electric Clothes Dryer through the Residential Energy Assistance Program.

Visit the Rate Assistance Program (RAP) webpage for the most up to date income requirements and to apply for RAP.

If you are already enrolled in RAP, get started with REAP by enrolling in the Electrify My Home program at paloalto.gov/electrifymyhome. During the enrollment questionnaire, select that you are interested in the income-qualified program.

The Emergency Replacement & Fast Program is designed for homeowners who need a new water heater as quickly as possible. Whether your gas water heater has unexpectedly failed or you simply want to replace it without delay, the program can install a new heat pump water heater within 48 hours in most cases. The City coordinates the contractor, permits, and available rebates, making it a fast and hassle-free way to switch to an energy-efficient heat pump water heater.

Learn more about the Emergency Replacement & Fast Program

The Electrify My Home program helps homeowners plan and complete home electrification projects, including installing a heat pump water heater. The program provides personalized guidance, a home assessment, customized recommendations, contractor support, and access to available rebates to help make the process as simple as possible. Whether you're replacing one appliance or planning a whole-home transition away from natural gas, Electrify My Home offers expert support every step of the way. 

If you're only looking to replace your water heater quickly, especially if your existing unit has failed, our Emergency Replacement and Fast Program may be a better option. This program is designed to restore hot water as quickly as possible while still helping you take advantage of heat pump water heater incentives.  

If you are hiring your own contractor, you are eligible for a rebate.

Apply for a Rebate Here

The price for a standard 65-gallon heat pump water heater installation is as low as $2,100. Actual costs may vary depending on site preparation and water heater location, with an average project cost of $3,300. Note that many homes may 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.

The City’s programs provides 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.

Let us help you! The City of Palo Alto has partnered with QuitCarbon to offer free phone consultations with Electrification Experts, who can save you money and time. Sign up at: QuitCarbon.com/PaloAlto.

A Home Energy Advisor 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.