It’s no secret that heat pump water heaters offer a lot more than reliable, precisely heated water. In addition to being three times more efficient than conventional gas-fueled water heaters, heat pump water heaters reduce carbon emissions and can provide major long-term energy savings. According to the California Energy Commission, commercial buildings consume the most energy out of all building types statewide, and analysis of NREL’s ComStock metadata suggests that commercial buildings in California could offer up to 235,035 megawatt-hours of electric savings potential.
Transitioning this sector from gas to electric could make a huge dent in the state’s decarbonization goals and help achieve a carbon-neutral California by 2045—which means commercial heat pump water heater installations need to dramatically increase.
Despite incentives from investor-owned utility efficiency programs like TECH Clean California, the commercial market has not yet fully embraced heat pump water heaters. The team on the recent CalNEXT Commercial Light-Duty Heat Pump Water Heater Focused Pilot wanted to understand and address the challenges heat pump water heaters face in commercial settings, so they built off existing research on barriers to adoption in other sectors to investigate they might impact commercial installation of light-duty heat pump water heaters. Light-duty heat pump water heaters have tanks between 65 and 120 gallons and are most commonly installed in residences and small-to-medium-sized businesses—and could be ideal for many kinds of commercial buildings.
The pilot team reached out to many community-based organizations, like places of worship and community centers, that typically use less water and could benefit from light-duty heat pump water heaters. Two churches signed up for the pilot, which installed two heat pump water heaters on each campus. The team’s experience working with contractors and church leadership on these projects helped better inform their understanding of the barriers heat pump water heaters will face in more widespread commercial adoption, along with possible solutions.
Customers and contractors aren’t yet widely comfortable with heat pump water heaters. The pilot team already knew that one of the primary challenges heat pump water heaters face is a general lack of familiarity with the technology. With that in mind, the team hypothesized that educating both customers and contractors about heat pump water heaters would be critical to unlocking the commercial market. Smaller community-based organizations typically don’t prioritize electrifying their appliances: It’s simply not in the budget. Additionally, contractors are reluctant to change their sales and installation practices, even when incentivized. As the pilot progressed, the team found they first needed to go to customers (like the churches that participated in the pilot) to get contractors on board.
Heat pump water heaters can cost more to install. While heat pump water heaters can decrease energy costs over time, upfront fees for installation can quickly add up. This is primarily because of existing building and water heater conditions, potentially needing to upgrade a building’s electrical capacity, and associated initial increases in energy costs that can come when shifting from natural gas to electricity. Space and airflow requirements can also make retrofit installations challenging and more costly, even when a heat pump water heater would otherwise be a great fit for a commercial building. For example, if an existing water heater’s room is too small or far away from power outlets to work well for a heat pump water heater, the heat pump water heater might need to be installed in a new location, adding money, time, and complexity to an otherwise straightforward project.
Educate customers and contractors—and let them see heat pump water heaters in action. In addition to providing educational materials in different languages, this pilot also prioritized real-world demonstration, offering up to three light-duty heat pump water heaters free of charge to small- and medium-sized contractors for installation at select commercial sites with lower hot water needs. Once they had finished pilot-related installations, the participating contractors reported feeling much more comfortable with heat pump water heaters—and were open to taking on future commercial projects.
Cut costs and layer incentives where possible. After these outreach efforts, the churches that participated in the pilot each agreed to replace their gas-powered water heaters with light-duty heat pump water heaters, layering TECH Clean California incentives with the CalNEXT Commercial Light-Duty Heat Pump Water Heater Pilot to fully cover the equipment and installation costs. Both projects required electrical upgrades and encountered space constraints, and without the free heat pump water heaters from CalNEXT, leadership at both churches shared these financial obstacles would have prevented them from being able to move forward. The pilot also found that expanding eligibility criteria for businesses and organizations that would otherwise be excluded from incentive programs—as well as updating equipment requirements and allowing for a wider range of sizes and types of replacement heat pump water heaters—could improve and maximize electrification efforts.
With continued education and outreach, updates to state-run energy efficiency programs, and offering appropriate incentives, heat pump water heaters have the potential to reach even more types of businesses and organizations. Small office buildings and warehouses are the most prevalent commercial buildings in California. According to the pilot’s findings, these kinds of buildings are also ideal candidates for early commercial heat pump adoption—and could enjoy significant energy savings while making a big impact on carbon neutrality.
Read the full CalNEXT report on the Light-Duty Heat Pump Water Heater Pilot and learn more about its promising research.