Solar Water Heating Program

Solar Water Heating systems can be a good way to generate hot water for your home or business. They can be used in any climate, and the fuel they use--sunshine--is free. Solar water heating can help protect consumers against future gas and electricity shortages and price increases. They help preserve the environment by reducing carbon dioxide and other greenhouse gas emissions. The California Center for Sustainable Energy (CCSE) is administering the City of Palo Alto Utilities' (CPAU) Solar Water Heating Program (SWHP).

Although Palo Alto’s electric supply is now carbon neutral, it still makes a lot of sense to consider a solar water heating system for your home or business. Your local solar water heating system will deliver big benefits both to our community and to you personally. Benefits when you install a solar water heating system:
  • On top of knowing you’re making a big difference to the environment, you also get the personal benefit of money savings from reduced gas charges (or electric if you have an electric water heater) on your utilities bill!
  • You reduce both your and the City’s carbon footprint by avoiding greenhouse gas emissions associated with using natural gas.

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What is Solar Water Heating?

Solar water heating (SWH) systems use the energy of the sun to heat water. This is different from photovoltaic or electric solar systems that use the energy of the sun to create electricity. A solar water heating system includes a storage tank and solar collector(s). Solar collectors are typically placed on your roof top so that the sun can heat the water before sending it to your water heater or a storage tank. Most solar water heaters require a well-insulated storage tank. Solar storage tanks have an additional outlet and inlet connected to and from the collector. In two-tank systems, the solar water heater preheats water before it enters the conventional water heater. In one-tank systems, the back-up heater is combined with the solar storage in one tank.

Who is Eligible for Incentives?

The incentive program for SWH systems is available to residential, commercial, and industrial customers of the City of Palo Alto Utilities. To be eligible, applicants must purchase a new qualifying SWH system and be able to provide a copy of a CPAU bill. Solar pool heating systems are not eligible for this program.

Customers may choose from the list of Eligible Contractors, who have been pre-qualified to participate in the program, or install the systems themselves. Click here for a list of eligible contractors.

Participating SWH contractors and self-installers must attend a one day training offered by either CPAU or PG&E (CSI-Thermal) to qualify.

How much is the Incentive?

  • For residential systems, the maximum rebate is $2,719 for natural gas displacing systems and $1,834 for electric or propane displacing systems.
  • For larger systems, the maximum incentive is $100,000. To estimate your incentive, use the online calculator tool here.

Current Incentive Rates

  • Single-Family: Natural Gas Displacing Systems - $18.59/ therm
  • Single-Family: Electric/ Propane Displacing Systems- $0.54/ kWh
  • Multifamily/Commercial: Natural Gas Displacing Systems - $14.53/ therm
  • Multifamily/Commercial: Electric/ Propane Displacing Systems- $0.42/ kWh
  • Multifamily Low-Income: Natural Gas Displacing Systems - $19.23/ therm
  • Multifamily Low-Income: Electric/Propane Displacing Systems - $0.56/ kWh

In addition to the incentive provided by CPAU, you are eligible for a federal income tax credit. An individual can take a 30% credit for a qualifying solar water heating system through the end of 2016.


Handbook and Application Forms

The SWHP Handbook offers in-depth information about the program, design and technical aspects of a SWH system. Your contractor is required to complete the rebate application forms. If you have any questions, feel free to contact us for additional assistance by calling 866-611-CPAU or sending an email to Following are guidelines and informational materials in PDF format to assist you:



Solar Water Heating Resources

For more information on solar water heating technologies and applications:

If you need additional help, information or resources, contact us at the locations below. Click here to be added to our email list for updates on programs, rebates and workshops.

Toll-Free SWHP Hotline:
(866) 611-CPAU / (866) 611-2728

Application Mailing Address:
Center for Sustainable Energy
CPAU SWH Program
426 17th Street, Suite 700
Oakland, CA 94612

CPAU Address:
City of Palo Alto, Utility Marketing Services
250 Hamilton Avenue, 3rd Floor
Palo Alto, CA 94301
Tel: (650) 329-2241

Last Updated: Oct 1, 2015