Switch to an Electric Water Heater

heat pump water heater people

Switching to electric is better for the environment, your wallet, and your health. Be part of the community for change by upgrading your water heater.

Heat pump water heaters (HPWH) use electricity to move heat from one place to another rather than generating their own heat, like a refrigerator working in reverse. This makes them three times more efficient than other water heaters, according to the Department of Energy, and provides you a great opportunity to take local climate action in your home. The City encourages the community to consider home electrification, by shifting away from carbon-based fuels to electricity for space and water heating, transportation, and cooking. Benefits of switching to an electric heat pump water heater include:

  • Environmental: 90% of homes in Palo Alto have gas-powered water heaters, making water heating one of the largest sources of greenhouse gas (GHGs) emissions in Palo Alto homes. Gas water heaters produce GHGs while electric heat pump water heaters powered by Palo Alto's 100% carbon neutral electricity have a zero-carbon footprint.
  • Save Money: Because of their high efficiency, the costs of heating water with an electric water heater are lower than the cost of heating water with a gas tank water heater.
  • Health & Safety: Burning natural gas creates combustion gases such as nitrogen dioxide, carbon monoxide, and formaldehyde. Switching to an electric water heater eliminates the risk of back-drafting these unhealthy gases into your home.

Make the Switch to Electric

It’s now easier than ever to switch to an electric heat pump water heater. Choose our full service solution to have a City contractor install your electric heat pump water heater. Get pre-negotiated prices with two payment options. The full service solution also allows you to skip the hassle of filling out a rebate application.  

Are you unsure which program is best for you? Contact our Efficiency Advisor to get free, unbiased advice.  

Compare HPWH Programs

  Full Service Solution
Full Service Solution with Monthly On-Bill Payments
Apply for a Rebate
What this option is The "no hassle" option The "no hassle" option The "do-it-yourself" option
Contractor City Contractor City Contractor Choose your own contractor
 Cost $2,700 $1,500 plus $20/month for 5 years Average project costs $4,500 to $5,500 before rebate
Rebate Included Included $2,300 with approved application


Full Service Solution

Step 1.How to Qualify 

  • Be a residential customer who receives utility service from City of Palo Alto Utilities (i.e., must pay residential rates for electric and/or gas utility services). 
  • Have an existing gas water heater. New construction projects are not eligible. 
  • Be current in paying your utility bills for the past 6 months to be eligible for the monthly, on-bill payment option 

Step 2.Sign Up for the Full Service Solution 

Complete the form below and an Efficiency Advisor will contact you. Due to high interest in the program, an Efficiency Advisor will contact you within 4 - 6 weeks. 

Click here to view form.

Step 3.Get a Complimentary Site Assessment  

An Efficiency Advisor will send you a site assessment agreement to sign. Then, the City’s installation contractor, Synergy, will contact you to schedule a site assessment. 

During the site assessment, Synergy will determine the scope of your heat pump water heater project, including any additional modifications or upgrades needed to support the installation.  

Step 4.Review Your Estimate and Choose a Payment Option  

After your site assessment, you will receive a cost estimate for your heat pump water heater project via email from Synergy. Choose one of the two payment options based on your estimate:   

  • $2,700 due upon completed installation. 
  • $1,500 due upon completed installation plus on-bill payments of $20/month for 5 years. 

These prices reflect a standard installation for a 65-gallon heat pump water heater. Some homes may require additional modifications and upgrades, which may increase costs. If you accept your estimate, you will receive additional enrollment documents via DocuSign.   

Step 5.Get Your Water Heater Installed and Pay Your Portion 

Once you complete your enrollment documents, Synergy will obtain the necessary building permits and schedule your installation.  

After your water heater is installed, you will pay Synergy any remaining balances. If you enroll in on-bill payments, they will begin within 1 – 2 billing cycles. 

Apply for Rebate

Step 1.Get a Free Consultation with our Efficiency Advisor

Call our Efficiency Advisor to determine if a HPWH is right for you. We can also help you with other home energy questions you may have.  

Step 2.Complete the Online Application

Learn about eligibility and rebate amounts below, and submit your HPWH rebate application. You will be notified via email within the next 5 days if your project is approved.

Apply for a Rebate

How to Qualify

  • Be a residential customer who receives utility service from City of Palo Alto Utilities (i.e., must pay residential rates for electric and/or gas utility services).  
  • Submit a completed online application and be approved prior to purchasing equipment.
  • Rebates are for replacing existing water heaters only. New construction projects are not eligible. 
  • The new HPWH must meet Product Tier 3 or higher tier from the Northwest Energy Efficiency Alliance (NEEA) Qualified Products List.

Rebate Amounts

Rebate funding is subject to availability and may change without prior notice.  

Existing Water Heater Rebate Amount
Effective Date
Natural Gas $2,300 Projects with final inspection permits dated on or after October 4, 2022
Natural Gas $1,500 Projects with final inspection permits dated on or before October 3, 2022
Electric $500 Projects with final inspection permits dated on or after October 4, 2022

Step 3.Find a Contractor

A  list of contractors in Palo Alto who have already installed or are able to install water heaters in homes is available at the bottom of the page. If you're installing it yourself, please review the HPWH Installation Steps for Professionals.

Step 4.Apply for a Permit 

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

Permit applications may be submitted online through the Palo Alto Online Permitting Service Portal. A registered account is required to submit an online application. Please read through the Online Permit Services page before submitting an application. 

     Step 1: Log in or register for an OPS/ACA Account

     Step 2:
Submit a pre-application with a completed Building Permit Application

Step 5.Prepare for an Inspection

Prior to scheduling an inspection, prepare for your inspection by reviewing the HPWH Inspection Guidelines.

Step 6.Collect Your Rebate

Once you’ve passed the inspection, use the link included in your application approval email to submit the following documents. Your documents will be verified and you will receive the rebate check within 2 – 4 weeks.  

  • Copy of the permit with final inspection signature
  • Invoice for the purchase of the heat pump water heater
  • Invoice from the contractor/plumber/electrician


What tax credits are available for heat pump water heaters?  

You can claim 30% of the heat pump water heater project cost, up to $2,000. Please consult a tax advisor and learn more on the Energy Star website.  

Will a heat pump water heater work when it’s cold? 

Heat pump water heaters can work in extremely cold climates, including areas where it snows.  In the cold, the efficiency and rate at which the water heater heats water again (recovery rate) may be lower. If the water heater’s recovery rate can’t keep up with demand, it will switch to a heating element to ensure there’s enough hot water. 

What happens to a heat pump water heater in the event of a power outage?  

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.  

What are the maintenance requirements for heat pump water heaters?  

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. Refer to product manuals for more information regarding proper maintenance. 

Where can I install a heat pump water heater? 

Because heat pump water heaters use the surrounding air to heat water, they work best in areas with at least 700 cubic ft. A garage, basement, outside facing closet, or large utility room that doesn’t need to stay warm are great options for installation. 

Additional Resources

Contractor List

Note: This list is provided as a courtesy resource only. The City does not require or endorse the use of any of these firms. This list is not to be construed as exclusive, comprehensive or limiting in any way.

If you are a contractor interested in being added to this list, please contact: utilityprograms@cityofpaloalto.org

Both Electrical and Plumbing  Plumbing Work Only Electrical Work Only 

Alternative HVAC Solutions

(650) 322-4328

Awesome Plumbing Inc.

(650) 660-5352

Bayshore Electric

(650) 260-8658

Barnett Plumbing & Water Heaters


(650) 250-1875

Hansen A G Plumbing

(650) 323-4138

Willow Glen Electric, Inc.

(650) 353-7282

Bennett Plumbing

(650) 996-7264

Sahagun Plumbing

(650) 776-5240  


Cobalt Construction

(408) 272-8080


Commando Plumbing

(650) 690-4868


EJ Plumbing (Ask for Daniel)

(650) 787-1959; (650) 520-8718



(408) 623-7938


Fuse Service Inc

(408) 721-2530



(650) 520-9918



Supreme Comfort HVAC, Inc.

(408) 222-6463


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