When it’s time to replace a home appliance, it’s a great time to move forward on our energy transition. Yes, the up-front cost will likely be greater than conventional systems; but when energy credits and reduced long-term utility bills are factored in, it almost always makes economic sense. PLUS, we are reducing our environmental footprint! See how Climate Elder Rick Schneider ‘did the math’ and recently replaced his water heater with a heat-pump system.
Our gas water heater recently went out and we replaced it with a heat pump water heater. To learn more about heat pump water heaters, check out this DOE website:
LES provides a $500 rebate if you install a heat pump water heater (HPWH). To get the rebate, you need to use a contractor that is participating in the LES Sustainable Energy Program (SEP). If you go to the LES SEP website, they have a tool where you can find participating contractors. Along with HPWH contractors, they list contractors for heat pump HVAC systems, insulation installation, and other energy efficiency projects for which LES offers rebates:
In addition to the LES rebate, the Federal government has three different incentive programs, under the Inflation Reduction Act, to help homeowners with the expense of installing an HPWH or other energy efficiency projects. I assume you can only use one of the programs for any given project.
Energy Efficient Home Improvement (Tax) Credit. 30% tax credit for home improvement projects. There is a $2,000 cap on the credit amount for installation of a HPWH.
HOMES (Home Owner Managing Energy Savings) Rebate Program. Amount of rebate depends on the amount of energy saved. Low to moderate income households qualify for double the rebate amount and are eligible for up to 80% of the projects costs.
High-Efficiency Electric Home Rebate Act. Only available to low to moderate income households. Offers up to $14,000 per year in discounts for electrification projects.
The federal programs are still being set up. To find out more about them check out these links:
We chose John Henry Plumbing. We had a 50 gallon HPWH installed at a cost of $3,200. That cost is after the $500 LES rebate. The contractor applies for the rebate and it just show up as a line on your invoice from the contractor. LES sends you independent confirmation that the rebate was applied for and issued to the contractor.
Prior to selecting a HPWH, I asked the contractor to also give me an estimate for the installation of a regular electric water heater. That cost estimate was $1,600. No LES or federal rebate is available for the installation of a regular electric water heater. We will have to wait until the federal programs get set up to see how much federal credit or rebate we will get. However, if we utilize the tax credit, the cost reduction would be $960. In addition, the Energy Star estimate for the annual cost of electricity for the HPWH was $154 and for the regular electric water heater was $575. We used the formula provided on the DOE site (top link) to calculate our energy costs given our current electricity rates and anticipate annual hot water use. Our estimated annual electricity cost for heating water was $75. So any additional cost of installing the HPWH, compared to the regular electric, would soon be made up with saving on our electric bill.
There was one additional cost to this project. We had to have new wiring run from our electrical panel to the new water heater. This cost would also have been incurred if we had gone with a regular electric water heater.
