Heat Pump Water Heaters
see also on this page: Incentive Programs Hot water recirculation systems
Water heaters that run on natural gas (a.k.a. "fossil gas" or "methane gas") have been the most popular type in California for more than the past half century. This is because, until recently, the only alternative to gas water heaters - electric resistance water heaters - cost around four times as much to operate. And because standard electric (i.e. "electric resistance") water heaters are so energy wasteful, the CA building energy code (Title 24) does not allow them except where they are replacing a like unit.
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The good news is that there is a technology that can heat water efficiently and economically, without relying on fossil fuels! The technology is called a Heat Pump Water Heater, or HPWH. And there are incentive programs to help make these water heaters even more affordable.
Heat pumps are a relatively new technology for heating water, but the technologically is proven, and increasing in popularity. My family replaced our natural gas water heater with a HPWH in December 2021, and are happy with this upgrade. Using heat pump technology to heat water is a variation on the heat pump technology used to provide space heating and cooling (see Space Conditioning page of this website), which has been around for many decades.
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HPWH Considerations:
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Electrical Requirements: Most HPWHs are 240 volts, which draws a lot of amps. A home's electric service and electric panel may, or may not, have adequate amps to accommodate a new 240 volt HPWH. If the available amps is inadequate, there may be ways to reduce amp requirements at other electric devices to free up available amps. If not, and the current home amperage is inadequate, and a 240 volt HPWH is desired, then a service and panel upgrade would be required.
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Voltage: As noted above, most HPWHs are 240 volts. This high voltage is necessary to power electric resistance heating, which operates when the air temperature is too low for the heat pump technology to heat water effectively. More recently, manufacturers started offering 120 volt HPWHs to lower the cost of installation, while meeting the demand to electrify and save energy. Rheem, A.O. Smith, RUUD, and State (and possibly other makes) now offer 120 volt models. 120 volt models do not include electric resistance heating, and therefore are not meant to be used in climates that experience much freezing weather. Rheem rates their models to be acceptable for most of California (excepting the Sierras and the far Northeast corner of the state). These types of HPWHs plug into a standard 120 volt receptacle (note: 240 volt HPWHs typically need to be "hard-wired" to a 240 volt circuit). 120 volt water heaters are very unlikely to require a home electric service upgrade. Note that some manufacturers make both "shared circuit" and "dedicated circuit" models. The dedicated circuit model produces hot water at a more robust rate. However, installing such a water heater would require a dedicated circuit for only the water heater, which would also involve a new breaker for that circuit in the electric panel. This electrical upgrade would be less costly than adding amperage to one's electrical system for a 240 volt HPWH (see first point above).
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Capacity: As with any water heater purchase, size/capacity/hot water volume is always important. You don't want to be caught short of hot water, but you also don't want to pay for more water heater, nor use more energy to heat the water, than necessary. We had a 40 gallon gas water heater, which was fine for our needs. However, our new HPWH is 50 gallons because (as explained by HPWH dealers) HPWHs heat water a bit more slowly than gas water heaters do, so having a modest increase in stored hot water can be beneficial. HPWHs are very well insulated to reduce tank heat loss, thus needing less energy to keep the stored water hot.
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Location: HPWHs exhaust cool air (due to the process of recovering warmth from the air to heat the water). HPWHs are often located in a garage. They may be located in a crawl space, or in attic space (if structural concerns and leak drainage are addressed). Because the heat pump exhaust cool air, and the heating efficiency is reduced in colder air, it is important for the HPWH to be in a large space. If the HPWH must be located in a smaller space (e.g. a utility closet accessed from the outside), then it is imperative that the HPWH exhaust air be ducted to the outdoors. Otherwise, the space the water heater is in will be so cold as to significantly reduce its efficiency. Even if the HPWH is located in a large space, like a garage, ducting the exhaust to the outdoors would improve its energy-efficiency. But in a larger space, where the cold air exhaust won't impact the air temperature as much as it would in a small space, the payback in energy cost savings for adding this feature may take a long time. In our case, the only practial location for a ducted cold air exhaust would have been near our front door, not exactly a welcome location for visitors! Our HPWH installer told me that they have never done a HPWH installation with a ducted exhaust, likely due to cost and practical considerations. Our plumber said that we would have to hire an HVAC company to install a ducted exhaust. That said, if you can afford to install an exhaust, and have a good outdoor wall location for the exhaust register, consider doing so to make your new water heater even more energy-efficient. Note: The energy code does not allow water heaters to be located outdoors.
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Energy Efficiency / Energy Code Compliance: Like installing new space conditioning equipment, new water heater installations are supposed to be done under a building permit, and must meet applicable energy and plumbing codes. While HPWHs sold in CA likely meet energy code efficiency requirements, it's best to check - and choose one of the higher efficiency models if possible. To meet energy code energy efficiency, electric water heaters (except those that are replacing electric water heaters) must be HPWHs that meet the Northwest Energy Efficiency Alliance (NEEA) HPWH Tier 3 (or higher) rating (or meet other efficiency requirements if Tier 3 is not met). The NEEA HPWH ratings are found at https://neea.org/img/documents/HPWH-qualified-products-list.pdf . The HPWH efficiency requirement is found in the CA Energy Standards. Alteration project HPWH requirements are at Section 150.2 (a) 1. D. ii., which is on page 348 (new construction HPWH requirements are basically the same). The Energy Standards are available at https://www.energy.ca.gov/publications/2022/2022-building-energy-efficiency-standards-residential-and-nonresidential . The link to the PDF document titled "Commission Final Report: 2022 Energy Code" is at the bottom of the page.
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Noise: When in heating mode, HPWHs do create some noise - similar to that of the outdoor unit of an air conditioner, although not as loud. HPWHs have sound ratings. If you are sensitive to sounds, choose a quieter model, and if possible do not attach the tank to an interior wall (i.e. if in a garage, attach it to a side wall if possible). Our new HPWH is attached to the garage side of our powder room wall, so the sound is somewhat loud in that room when the heat pump is operating. However, we find that almost the only time the heat pump motor/pump/fan system operates is during hot water use - and for a while after until the tank's water is hot again. The great majority of the time, our water heater is quiet.
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Condenser Water: Like all heat pumps, a HPWH generates a small amount of condenser water. This must be drained someplace. In our case, a pump was already nearby for the AC system condenser water coming from the AC coils in the furnace. The HPWH installer simply piped the water heater condenser water to that same pump (which pushes the drain water to the backyard).
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INCENTIVE PROGRAMS Here are some agencies that offer and/or list programs (e.g. rebates, tax credits) to make more affordable home upgrades to change from gas to electric heating equipment and to increase energy-efficiency:
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BayREN (Bay Area Regional Energy Network, a coalition of the Bay Area’s nine county governments) https://www.bayren.org/
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Golden State Rebates, a project of California's Investor Owned Utilities. See https://goldenstaterebates.com/
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The Switch is On, a project of the Building Decarbonization Coalition. They list both rebates and tax credits. See https://switchison.org/
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OUR NEW WATER HEATER: Rheem XE50T10H45U0 50 gallon HPWH. NEEA Tier 4 efficiency (the highest efficiency classification available; the energy code requires at least Tier 3 efficiency, as explained above). According to https://carbonswitch.co/heat-pump-water-heater-reviews , this model has both highest efficiency and lowest sound of tested models. That said, I am not endorsing our water heater model because it was only recently installed, and therefore I cannot offer any assurance as to its quality. However, it does come with a 10 year tank and parts warranty.
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OUR NEW WATER HEATER WAS INSTALLED BY A CONTRACTOR OUTSIDE THE BAYREN PROGRAM BayREN rebates require the use of BayREN certified contractors, although this program is expiring in late October 2024. A new BayREN rebate program, for 2025, is not expected to include the use of certified contractors.
My experience with BayREN was not favorable. That said, please know that it is possible that my experience, and the installation prices we paid as compared to the price quotes from BayREN certified contractors, were an aberration. I recommend that anyone considering installing a new HPWH, and/or other type of energy-efficient equipment for which BayREN offers rebates, procure at least a couple quotes from BayREN contractors, and at least a couple quotes from contractors outside the BayREN contractor pool.
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SELECTING NON-BAYREN CONTRACTORS TO GET BIDS FROM While you can have some confidence that a BayREN certified contractor for water heating heat pumps (and/or other equipment) are proficient at installing this type of equipment, how does one select non-BayREN contractors to get quotes from? My recommendation: Get educated, look at reviews, and get references. Try to be knowledgeable about heat pump water heaters (or whatever other equipment you wish to install) so that you will understand the basic concepts that the contractor may introduce. And so that you can ask good questions. If the contractor understands that you are knowledgeable, they are less likely to cut corners. As for reviews and references, make sure that they are for the same, or very similar, work as you are considering doing. And don't feel rushed to select a contractor. Tell contractors that you are getting multiple bids. If they are unclear in what they are offering, and they can't clarify this to your satisfaction, either pass on them, or see if it becomes more clear as you talk to other contractors - and perhaps do more research on terms and system choices.
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Notes on working with BayREN, working without BayREN, our HPWH contractor selection, and installation costs:
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After first contacting BayREN, they assign an agent to contact the potential customer. It took weeks before the agent made contact with me.
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The BayREN website only discusses single-family homes and multifamily buildings. It does not tell readers what program townhomes fall under. I found that townhomes fall under BayREN's single-family home program if the townhome has its own energy meters. If your home is a townhome, consult with BayREN to confirm which program your home is eligible for.
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The BayREN program information to contractors and building owners as to HPWH model qualifications is not correct. Some of the criteria they indicate does not meet CA energy code requirements.
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Some BayREN affiliated contractors offered a quote without discovering that the space our old water heater was in would not accommodate the clearances required for a HPWH. Some BayREN affiliated contractors required a fee in order to make a required visit to provide a quote. Note: Some contractors can provide a quote using answers to a questionnaire, combined with homeowner-supplied photos of critical areas.
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BayREN affiliated contractor quotes (excluding the $1,000 rebate, rounded to closest $100):
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a) $7,200 80 gallon Tier 3 efficiency HPWH. Quote excludes plumbing changes, excludes bollard. Quote preliminary as firm did not do a site visit.
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b) $9,800 50 gallon Tier 3 efficiency HPWH. This quote included all plumbing, and installation of a bollard to protect the water heater from driving into it.
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Our new HPWH, not using a BayREN affiliated contractor (and therefore no rebate): Total cost $4,835
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Rheem 50 gallon Tier 4 efficiency: $1700
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Water heater delivery: $90
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Water heater installation + haul-away old water heater: $1500 (local plumbing company that specializes in water heater installations, with good Yelp reviews).
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Electrical work: $1300 (adding 240V line from sub-panel in garage to the new HPWH location in garage).
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Bollard: $80
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Bollard installation: $165
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​CONSIDERATIONS: The BayREN quotes included electrical work (plumbing outfit would subcontract this work) and building permit. As the cost was less - based on quotes and product cost research - to not hire a BayREN approved contractor, I acted as "general contractor", purchasing the water heater and bollard, hiring all of the 'subcontractors' (in our case: plumbing, electrical, bollard installation), and coordinating delivery times and work schedules. It is not a lot of work, but I can understand some preferring to pay more (if necessary), hire a single entity, and have them take care of the entire project. For similar projects to this one, others may find that BayREN contractors - when also considering the rebate - will provide a competitive price to doing the project as I did. A few days after the water heater was installed, I realized that the plumbing company omitted a couple of things (including pipe insulation) that are code required. They came back and fixed these items without argument. It is important that when homeowners act as general contractors, they push contractors to meet all code requirements.
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HOT WATER PUMPED RECIRCULATION SYSTEMS
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For larger homes, hot water recirculation systems, which use a pump to circulate hot water so that it is immediately available when a faucet is turned on, have become somewhat popular in the past decade or so. Recirculation systems that are constantly pumping hot water around are very energy-wasteful, because the home's pipes lose heat 24/365 (all of the time). If you have such a system, or are considering installing such a system, there is an energy-efficient way to recirculate hot water so that it is available quickly. It is called "demand" recirculation. Demand systems, as the name implies, require a user to press a button or to turn on a tap, which signals a pump to turn on in order to push hot water to that location. On-demand recirculation systems save energy because the hot water is not constantly circulating throughout the home, losing heat through the piping. For more information on "demand" type hot water recirculation systems, type "demand type hot water recirculation" into your favorite search engine.
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Of course, pumped recirculation systems do have more than a minor cost. For new construction projects not yet designed, sometimes most plumbing fixtures can be located close enough to the water heater that wait times will be acceptable without using pumped recirculation.
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Note that for pumped recirculation systems, 100% of the piping must be insulated - including piping that is within ceilings, walls and floors.
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