Installing Heat Pump Water Heater in place of Gas: My dad’s place

My dad installed solar a couple years ago and radically cut his electric bill, but he was ending up with a net surplus at the end of the year (CA’s NEM2), so we figured it was a good time to make use of the “free” energy - by replacing his gas water heater with a heat pump water heater (HPWH). But, that’s not so easy in a house built 75 years ago!

Here’s time-lapse video of the process, that makes it look easy :)

YouTube

Why Choose a Heat Pump Water Heater?

Why did we want to switch to a heat pump water heater? Two primary reasons:

Efficiency - If you currently have a traditional gas storage water heater, like my dad, it’s about 60% efficient - that is, about 60% of the energy in the natural gas is converted to hot water. The rest of the energy is wasted up the chimney. Heat pump water heaters can be 300% efficient (and more - his was rated at UEF of 4.07, or 407%), which means they use 1/5 (80% less) energy to heat the water!

Cost savings - If you have enough solar, then the energy needed to heat the water with a HPWH is free (as was the case for my dad). If not, you can still save money - spend less $$ on gas and a little bit more on electricity, but you can still come out ahead.

Non-Solar cost savings example:

• In California, natural gas in 2023 averaged ~$2.15/therm and electricity ~$0.30/kWh.
• Converting Therms to kWh for gas means gas energy cost is $2.15 / 29.3 = $0.07/kWh. This is cheaper energy than electricity - BUT:
• Taking efficiency into account, it takes 5X as much gas as electricity to heat the same amount of water, meaning the equivalent cost/kWh for the gas water heater is $0.07 x 5 = $0.35 ... so the HPWH reduces your combined gas+electric bill for hot water by -14%, from an effective $0.35 -> $0.30 per kWh of energy.

And yes... it reduces pollution and greenhouse gas emissions.

Preparing for the Water Heater Replacement

There were two big factors we had to work through in doing this water heater replacement: first, finding the right contractor; and then, discovering all the rebates and credits we could qualify for - it turned out there were a lot!

Finding the right contractor -

This can be tricky, as traditional plumbers might not be familiar with HPWHs, and might recommend just sticking with gas. Why do they do this?

Because most water heaters are replaced in an emergency - ie, you’re stranded with a cold shower or flooded garage - there’s very little pre-planning that can be done at that point and it’s fastest to just replace what’s there with exactly the same thing, so many contractors are most familiar with just that. But, we wanted to pre-replace his water heater before it gave out so we wouldn’t be stuck in an emergency. (It was about 8 years old, from my experience it could give out as early as tomorrow – my last gas water heater only lasted 7 years – or as late as 4-5 years from now).

There were two ways I found most helpful in finding knowledgeable contractors:

• Use a service - There are starting to be services that specialize in finding electrification contractors. I used a new service called QuitCarbon, which will evaluate your individual situation and recommend contractors for you. Between my own house remodel over the past couple years and my dad’s current need, I talked with 4 contractors who specialized in HPWH’s over the course of a year and a half. These contractors were not traditional plumbers, but were people who were invested in newer, high-efficiency alternatives to traditional water heaters. I found these contractors to be generally quite knowledgeable.
• Word of mouth - It turned out that the “parents network” was pretty valuable - I met co-founder of the company emeraldECO through a friend of my daughter’s while she was in high school, and had talked with him at swim meets and over beers. I also used him as a consultant on my own home remodel project. Talking with others - neighbors, local acquaintances – about who they have used, and if they were satisfied with them, is also a good source of reliable potential contractors.

Discovering the rebates/credits -

My dad qualified for $5,400 in rebates, and plans to take advantage of $2,600 in energy efficient home improvement tax credits that expire at the end of 2025, so our motivation was to do this upgrade while all this help was still available. That’s a lot of money! But, finding all that’s available was haphazard. Both QuitCarbon, emeraldECO and many of the contractors told us about some of the rebates.

The rebates we used were the following:

• Golden State Rebates - $900 for HPWH. emeraldECO (and QuitCarbon) were on top of this one, which was a bill credit the contractor directly applied as a discount to their bill.
• Silicon Valley Clean Energy - We qualified for $3,500 in rebates from our electricity CCA (they are separate from utility PG&E), which included HPWH install replacing gas, prewiring, and replacing 2 electrical panels. The prewiring and electrical panel rebates needed to be done at the same time as the HPWH install. They were very helpful over the phone in clarifying what we qualified for - if you live in Santa Clara County give them a call at 1-833-243-4235. If you live elsewhere, be sure to check with your electric utility for available rebates.
• The town - My dad’s town had a $1,000 HPWH rebate that I randomly discovered on their website - so do check with the town you live in. I had to walk in to town hall to get qualified and added to the list, but for $1,000 it was worth it.

If you’re wondering what it actually costs to do a HPWH upgrade, SVCE provides a list of contractors and the actual costs of specific projects that each have completed in the area here. The least expensive was about $3,000 not including rebates (some were self-installed for less).

Installation Process

The installation was handled over two days, once the permit was applied for and approved by the city (which took about 3 weeks):

Day 1 - Electrical work. The electrical work was quite involved and required replacing the electrical panel shown in the above video, as well as another panel and running some additional wiring. This work took the whole day and involved shutting off the power to the whole house for a few hours.

Day 2 - Water heater replacement. The work to replace the water heater was quicker - it took about 4 hours total and involved shutting off the house’s hot water for a couple hours.

The last part of the process was final inspection by the city, which happened the following week, with the contractor meeting the inspector at the house within a 4-hour window.

Post-Installation Considerations

After the install, everything worked fine and my dad enjoyed his hot water and shower (we replaced his shower head, too). However, we ran into two issues, both of which were resolved consulting with the contractor:

• An un-insulated existing hot water pipe. There was an existing hot water pipe to one section of the house that didn’t get insulated as part of the install. This was fixed by the installer the following week while he was waiting for the city inspector to show up. Uninsulated hot water pipes can waste a lot of energy.
• Excessive energy consumption. As part of the HPWH replacement, we had installed a hot water recirculating pump that has “learning” built-in, meaning it uses sensors to learn when hot water is being used and turns on in anticipation to eliminate you having to run cold water out of the faucet or shower until it gets hot. The “learning” then shuts off the pump when it’s not needed, saving energy. This “learning” took a few weeks - and until that happened, there was a lot of energy being wasted keeping hot water in all the pipes 24x7. Once the initial time period passed, energy use dropped almost in half (see graph).

Checklist of Considerations

In considering what factors to look at when upgrading your water heater, I retrospectively created the following checklist, with the help of LLM’s, and added how we had addressed each item, so that you can benefit from what we learned on this project:

Heat Pump Water Heater Installation - Conclusion

Heating water in a residence is typically the second biggest use of energy, representing 12-15% of the total. By switching to a heat pump water heater, you can cut this down, and likely save money on energy bills. And for the next few months anyway, there are some big savings to be had with rebates and tax incentives - making it a good time to make these moves and do something that may even pay for itself over the life of the new water heater.

In the case of my dad, the upgrades needed were too extensive on his 75-year-old house to make this a purely economic tradeoff, but he was able to get some pretty major electrical improvement work done at a discount while also saving money on his energy bills.