Heat Pump Water Heaters


What is a HPWH?


Why install a HPWH?

Water heating accounts for a significant amount of energy used in our homes. Most homes in Palo Alto use natural gas to power their water heaters. Natural gas is a fossil fuel that emits GHGs into the atmosphere when used. Palo Alto is committed to providing clean energy. We have taken actions that have led to a carbon neutral electricity supply and today most of our electricity is coming from wind, solar and hydro resources. We are here to help if you are ready to make the switch.

  • Water heating is the largest source of greenhouse gas emissions in most Palo Alto homes.
  • 25% of home energy use is from water heating
  • 90% of homes in Palo Alto have gas-powered water heaters.
  • Gas water heaters produce greenhouse gas emissions (GHGs) while electric HPWHs powered by Palo Alto's 100% carbon neutral electricity have a zero carbon footprint.
  • Electric HPWHs have fewer health and safety risks than gas water heaters, with reduced risk of backdrafting.  
  • For customers with a rooftop PV system, the cost for water heating using a HPWH is often lower than the cost of water heating with a gas tank water heater. 

Program Details

The City of Palo Alto Utilities (CPAU) is currently offering a rebate of up to $1500 to residents who install a high efficiency, electric heat pump water heater (HPWH).


To participate in this program you must be a CPAU residential customer replacing a gas or electric water heater or installing a HPWH in an existing home. Rebate is not available for new homes. The new HPWH must be Energy Star certified and have a Uniform Energy Factor (UEF) of 2.87 or higher.

Rebate Funding Levels

Eligible residents that participate in the HPWH program can receive rebates for installation of a HPWH. Rebate funding is subject to availability and may change without prior notice.

Conditions Size of HPWH Tank Rebate
Replacing and existing gas water heater with a HPWH Up to 79 Gallons $1,200

80 gallons or more $1,500
Replacing an existing electric water heater with a HPWH 50 gallons or more $500

If you're ready to sign up for the program, please fill out the Heat Pump Water Heater Program Online Application before you begin your HPWH installation. A CPAU representative will contact you once we receive notification that your application has been submitted.

Heat Pump Water Heater Program Online Application

CPAU staff will review your application and, if approved, will send an email with instructions to submit the following required documents:

  • Copy of permit with final inspection signature
  • Invoice for purchase of HPWH
  • Invoice from contractor/plumber/electrician
  • Any photos that you would like to share (optional)

Is a HPWH right for you?

A heat pump water heater (HPWH) can provide residents with environmental, health & safety, and financial benefits. In order to evaluate whether a HPWH makes sense for your home, consider the following factors.


Garages and basements are the ideal locations for installing a HPWH. With certain precautions taken, HPWHs can also be installed in attics, indoor closets and outdoor water heater closets.

HPWHs need extra space around them for sufficient airflow. Most manufacturers recommend that a space be bigger than 700 cubic feet (79 square feet) and recommend that smaller spaces have a louvered door. There also needs to be a minimum clearance of 6" above and around the HPWH. Venting and duct options are available for confined spaces where 79 square feet is not available.

HPWHs need a drain for condensate. HPWHs can operate in both electric resistance mode and the more efficient heat pump mode. When operating the water heater in heat pump mode, it will dehumidify and cool the surrounding space.

Noise should be considered when choosing a site for a HPWH. The mechanical components produce 55 decibels or less which is slightly quieter than a refrigerator.


Depending on the make and model, HPWHs usually require a dedicated circuit of typically between 15 and 30 amps and a 240V electrical conduit from the electrical panel to the location of the HPWH unit. If you're interested in learning more about upgrading your home's electric panel, visit our Electric Panel Upgrade page.


While a household of three to four people might utilize a 50-gallon gas water heater, the best option for the same household would be a 80-gallon HPWH. The bigger tank allows the HPWH to support higher water draw volume without the need to operate using the less efficient electric resistance mode.

Steps to install

Ready to get started? The City of Palo Alto Utilities provides advice to residents on installing a heat pump water heater (HPWH) in Palo Alto.

Step One

Determine whether a HPWH is right for you. Our friends at the Northwest Energy Efficiency Alliance created a resource that allows you to identify the age of your water heater from the serial number. Alternatively, Palo Alto's trusted energy advisor, the Home Efficiency Genie, can help you with the age of your water heater or any HPWH questions.

Step Two

Complete the HPWH program online application.To get started and to learn about eligibility, application rules and more, please visit the HPWH program application.

Step Three

For those replacing a gas water heater with a HPWH, please review the installation steps at HPWH installation webpage.

Step Four 

Find a contractor. CPAU provides a list of contractors in Palo Alto that have already installed or are able to install HPWHs in homes or businesses. CPAU also provides Contractor Resources for contractors unfamiliar with HPWH installations.

Step Five 

Before your installation begins, you or your contractor must apply for a permit from the City of Palo Alto. Read the Permit Submittal Checklist to get started.

Once your rebate application is approved and your project is complete, you will need to submit all required documentation using the link included in your application approval email to receive your rebate.

Contact Us

Contact the Home Efficiency Genie, CPAU's expert on energy and water efficiency. The Genie can provide unbiased advice on whether a HPWH makes sense for your home.

Phone: (650) 713-3411

Email: utilityprograms@cityofpaloalto.org