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By Sherry Listgarten

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About this blog: Climate change, despite its outsized impact on the planet, is still an abstract concept to many of us. That needs to change. My hope is that readers of this blog will develop a better understanding of how our climate is evolving a...  (More)

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On price gouging and other obstacles to HPWH adoption

Uploaded: Sep 5, 2021
It is hard not to be worried about climate change these days. More of us are thinking about how we can reduce our emissions with changes to transportation, diet, shopping, buildings, and more. For homeowners and landlords, a straight-forward change we can make is to replace a gas water heater with a heat pump water heater (HPWH). This can often be done in a day if contractors and materials are available, at a cost of around $4000 not including rebates. But that is not what our nascent market is delivering. We need to fix that.

My parents decided a few months ago to replace their aging gas water heater with a heat pump water heater since water heaters represent about one-third of our residential building emissions. They read my two blogs on the topic to learn more about their options. I was excited because they are in Peninsula Clean Energy’s territory, which meant they would get a whopping $2500 rebate (1) as long as they used a BayREN-approved contractor. There are plenty of them to choose from. Since my research had shown these installations in this area to cost “around” $4500-$5000, this could be done at a reasonable net cost.

My parents wanted a 65-gallon, 15-amp version, but the estimates ended up being for the 30-amp version since local plumbing supply stores do not stock the 15-amp heater. Fortunately, their electric panel has plenty of room. The water heater closet could fit the new HPWH, and any hum wouldn’t be a problem as the closet abuts the garage and a bathroom. The location is very convenient to an electric box, so the electric work would be minimal. I figured this would be a pretty straight-forward and low-cost swap.


My parents’ gas water heater in an outdoor closet by the garage

My parents got bids from three local contractors, each of whom came out to take a look. To my surprise, the estimates were all much higher than I anticipated:




I was flabbergasted, and disappointed. How can we get widespread adoption of heat pump water heaters if we have to pay this much for a vanilla installation? And yet we need to wean ourselves off of the fossil fuels whose combustion is making the planet increasingly uninhabitable. What is going on, and how do we fix it?

None of the estimates included a breakdown of materials and labor, so once my parents picked a contractor (they chose the third listed above), I asked them to track how much time was spent on the installation. I figure the materials were about $2500 for the tank, copper piping, and other items. If you assume a 20% markup ($3000 for materials), then the contractor was charging $4000 in labor for this water heater replacement. I asked my parents to keep track of how long they spent on the job and what they were doing. My mom reported that one guy was there for about 9 hours and another for about 7 hours. An electrician was there for 1-2 hours, and a supervisor was there for about 4 hours on and off. That is a total of 22 hours at $180/hour. With the level of experience you would expect for $180/hour, the 22 hours seems extremely high. For reference, a local who has installed many HPWHs says “I have never had one take more than about 8 hours to install, and usually I am working by myself with one trip to the store.”

Where did the time go? My parents said some of the time was spent modifying the piping to accommodate a change from the gas tank’s hookups (on top) to the HPWH hookups (on the side). That is typical for these installations. But much more time was spent getting the duct set up to bring air from the garage on the left to the intake on top of the heater. Running the heat pump using air from the garage saves energy if the closet air gets cool (from operating the heat pump). That can happen even with vents in the exterior wall, so the duct can be helpful. But setting one up should not be a showstopper in terms of labor and cost.

Here is what the new water heater looks like:


My parents’ new 65-gallon heat pump water heater

From what I can tell, they did a fine job. The work is neat, everything fits well, the tank orientation is good, the duct work is nice, and the hot water pipe is well insulated. (2) You can see in the top right that they put in an expansion tank, which is almost certainly unnecessary because the gas tank water heater didn't have one. (3) How much did that cost, and how long did it take to put up? They also neglected to check a few things. For example, the day after the installation my parents noticed that the display was so dim as to be unreadable. My parents were also not able to use the app, which allows you to do things like put the heater in vacation mode. It would have been good to check both of these things during the first visit. But generally it seems to be working fine.

The problem is the high cost. Bret Andersen of Carbon Free Palo Alto notes that the Sacramento Municipal Utility District has overseen more than 1500 HPWH installs and the cost is down to about $4000 on average. An experienced workman doing 8-hour installations at a wage of $150/hour, plus $2500 in materials and a 20% markup would charge $4200. Prices under $5000 are pretty common in Silicon Valley Clean Energy territory. So the $7000+ prices my parents were quoted are going to be a big stumbling block for the heat pump water heater adoption that we know we need.

Rafael Reyes, Director of Energy Programs for Peninsula Clean Energy, agrees. “Clearly there is an issue here. We’re at the beginning of the beginning, so it’s not surprising that prices are high but it’s frustrating and disappointing.” Reyes shared the installation cost data that they have to date, covering about fifty installations this year. The average cost is around $6600 (the costs shown do not include the occasional panel upgrade), and they actually got somewhat more expensive over the six months.


Earlier installations are shown on the left, later installations on the right.

If you remove the top four and bottom four outliers, the picture looks more uniform, but the average is still a high $6300 and not getting any cheaper as contractors gain experience.


It’s interesting to look at the two top installers, emeraldECO and Shoreway Plumbing. The price at emeraldECO has held fairly steady, averaging about $6100.


Shoreway Plumbing costs more (average price around $6800) and seems to be getting somewhat more expensive as time goes on. Why?


Both are still well above $4000-$5000 per install. Why are prices so high? Here are some thoughts.

1. Contractors are incorporating the rebate into their price. Plumbers that work in San Mateo County are well aware of the $2500 rebate to customers, so it may be that they are raising their prices to soak up some of the rebate. Customers should ask that estimates separate out materials and labor, to put some pressure on the contractor for a realistic estimate. Rebating organizations should also promote pricing transparency, as Silicon Valley Clean Energy does. Peninsula Clean Energy has just begun publishing costs now that they have enough installations. The organization certifying the contractors, BayREN, should stop promoting those that are consistently charging more than a “fair” price.

It has also been suggested, most recently by Berkeley economist James Sallee, that some or all of the rebate could go directly to contractors. That might help to get contractors more enthusiastic about installing these appliances and keep prices more stable and lower across the market.

2. The rebate program increases the cost of the installation. The rebate program requires a permit. Only about 10% of water heater installations in our area get a permit, so this is a cost that is not normally incurred. A permit costs $600 in Foster City, where my parents live, plus the cost of hours of labor spent waiting for the inspector to arrive. Inspections can also result in conservative and costly features like the expansion tank in this example. David Coale, a big supporter of HPWHs in Palo Alto, is frustrated that the permit fee in Palo Alto, plus additional contractor hours, eats up nearly all of the $1200 rebate the City offers. “The rebate money from the utility just goes to pay for the cost of permitting and inspection, which is required to get the rebate.” Summarized another HVAC contractor I spoke with: “It’s grift, pure and simple.” Bruce Hodge of Carbon Free Palo Alto would really like to see cities certify trained and fair-priced contractors who can then operate without permits, speeding up and lowering the cost of installations. (4)

3. Contractors don’t know heat pump water heaters. Plumbers and HVAC technicians have spent years learning how to install and maintain gas appliances, and they naturally prefer what they are familiar with. They may not trust heat pumps, or understand the electrical requirements, or be confident about answering questions and maintaining them. As a result, they may charge more to work with them. Reyes points out that we saw similar reluctance with EVs in the early days -- salesmen would actively try to talk you out of buying one. We need quality, low-cost training for tradesmen on heat pump water heaters. BayREN provides this, and Peninsula Clean Energy has had some success recruiting San Mateo County plumbers to their program.

4. Contractors don’t like heat pump water heaters. I have yet to speak to a contractor who loves heat pump water heaters, even when they are familiar with them. This is partly because HPWHs have no particular advantage over their gas counterparts when it comes to basic functionality. In contrast, consider mini splits. Contractors like to promote mini splits because they have several operational advantages over traditional air conditioners. They are much quieter and cheaper to operate, plus they do heating. It’s easy to sell these to their customers.

Heat pump water heaters are a different story. With our energy prices, they cost about the same to operate, though time-of-use rates can reduce those costs. The heat pumps are also less powerful than the gas versions. A heat pump water heater might take two hours to heat up a big tank of cold water, while a gas-powered one might take 45 minutes. Tanks do not empty often, and when they do two hours is usually a sufficiently fast refill interval. But some plumbers focus on the outlier cases. One that I spoke with described the “human car washes” (luxury bathrooms) that use inordinate amounts of hot water. He once had to install three heat pump water heaters in a high-end home to meet their water needs. His conclusion? “These appliances are not ready.”

But most of us don’t have homes or hot water demands like that. A 65- or even 80-gallon tank with a 2-hour refill time is more than enough for most households. Another contractor told me “I have installed a lot of 50-gallon heat pump water heaters and no one has run out of hot water.” Plumbers might be more confident recommending these if they understood the hot water needs of their customers. I wonder if our smart meters, with some intelligence, could provide information about when and how often the hot water heater is running. That would help contractors to confidently recommend a particular type and size of HPWH. But that brings me to …

5. The right heaters are not available. The heaters that people should be installing are (generally speaking) 15-amp heaters that are somewhat larger than the one they currently have installed. They will run efficiently and use less space in the electric panel without running short of hot water. However, the 15-amp heaters currently cost more and can require a long wait, plus stores tend to stock more of the smaller heaters. One option might be for local organizations to bulk purchase and store the larger 15-amp water heaters. Alternatively, customers can order them in advance. Installations cost less when materials are readily available at a good price.

6. Do contractor prices discriminate? My parents are seniors. Did the plumbers view them as an easy mark? Their gas water heater hadn’t broken yet. Did the workmen assume an eco-conscious consumer would pay whatever they asked? The published prices should help to reduce any predatory pricing (PCE and SVCE). “It is also essential that customers get multiple bids”, says Peninsula Clean Energy’s Reyes. (5)

If we are serious about reducing our building emissions -- and we should be -- then we have to quickly get to $4xxx prices for heat pump water heater installations in modest residences. We want our HVAC contractors and plumbers to feel confident about promoting these appliances. We want the right appliances to be available. We want faster installations. And the price must be right. How do we do this?

I asked Reyes whether, given the problems we are seeing, rebates are the right tool for juicing the HPWH market. “Well, there’s no perfect answer. An incentive is important to start the market. Educating contractors is also very important. We are partnering with BayREN for training and recommending contractors, and we recruited some local contractors to participate. An alternative would be what the Sacramento Municipal Utility District is doing, where the utility more directly manages the contractor base. There’s a lot involved in that, though, and we are still at the beginning.” He noted that Peninsula Clean Energy will be rolling out a zero-percent financing program for clean energy updates, up to $10,000 per household, which should help some families with the up front costs of electrification. They also continue to track and promote new technology that will bring costs down, such as the 120-volt HPWHs.

Will HPWH adoption mirror that of solar roofs and EVs? Those markets were primed with rebates and uptake grew quickly as prices came down and people gained confidence in the technology. Will the same happen with heat pumps? Reyes mulled it over. “Well, water heaters are in some ways more difficult than solar and EVs. Those benefited from a glamour factor, or at least a visibility factor. No one cares about or sees water heaters. In addition, buildings can be very different from one another, more so than roofs. So the economics of heat pump water heaters is harder. One thing that really helps is if these appliances run only when electricity is cheaper. We’ve seen people’s energy bills go down by about 25%. We’d really like to see that happening with electric heaters, and we are looking for technologies that support that.”

Peninsula Clean Energy is pursuing a number of angles to correct the HPWH market. Publishing the installation costs is a great step. I would also like to see BayREN paying more attention to the prices being charged and to stop promoting price gougers. I would like for city-certified installers to be allowed to bypass permits and fees, subject only to spot checks. I would like to see energy rates that boost the value of these appliances, so they are an easier sell. And I would like to see more competition in the market. SunWork’s imminent arrival in the area is going to be a big help, as will strong demand from residents working to reduce emissions.

Let’s do more to stop the price gouging. When you shop for a heat pump water heater, be informed, get several estimates, push back on high prices, and promote those contractors that provide good value. If you’ve got a heat pump water heater price story, please share it in the comments.

Notes and References
1. The Peninsula Clean Energy rebate will go down to $2000 after Sept 30.

2. An experienced installer noted a few possible improvements, such as the cold line having some insulation on the section near the tank.

3. An expansion tank is only required when a backflow preventer prohibits expansion elsewhere. This is not a common case and it applies regardless of the energy source for a water heater.

4. Hodge recommends this as part of a larger program that he refers to as “direct install” that would also include zero-interest on-bill financing.

5. Tom Kabat, an environmental commissioner for Menlo Park, recommends that potential customers take a photo or two of their gas tank, showing the top and bottom and location of all pipes, and send a note like this to three contractors: “I’m interested in replacing this working gas water heater with a 15-amp heat pump water heater the next size up in gallons. My main panel has space for the 240V 15-amp circuit and is 20 feet across the garage from the water heater. Please let me know if you are interested in making a bid under $4500. Thank you!”

6. If you have read this far and are interested in installing a heat pump water heater, I’d encourage you to get an estimate from Air & Plumbing Systems. They seem to have consistently fair rates and a lot of experience installing these appliances.

Current Climate Data (July 2021)
Global impacts, US impacts, CO2 metric, Climate dashboard (updated annually)

“Nearly 1 in 3 Americans live in a county hit by a weather disaster in the past three months, according to a new Washington Post analysis of federal disaster declarations…. The expanding reach of climate-fueled disasters, a trend that has been increasing at least since 2018, shows the extent to which a warming planet has already transformed Americans’ lives…. Americans’ growing sense of vulnerability is palpable. Craig Fugate, former head of the Federal Emergency Management Agency and Florida’s Emergency Management Division, has never known a summer as packed with crises as this one. The question, he wonders, is whether this calamitous season will mark a turning point in public opinion that finally forces political leaders to act. ‘If not,’ Fugate asked, ‘what will it take?’” Source: The Washington Post

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Comments

 +   6 people like this
Posted by Bruce+Karney, a resident of Old Mountain View,
on Sep 5, 2021 at 1:44 pm

Bruce+Karney is a registered user.

I really appreciate your detailed reporting on this real-life example. I know several of the people you quoted in the article and I respect their expertise. I also really liked your "Notes and references." Really, you did a great job researching this!


 +   4 people like this
Posted by marc665, a resident of Midtown,
on Sep 5, 2021 at 4:08 pm

marc665 is a registered user.

Have you thought about opening your own plumbing business and see if you can drive down the costs? It is very easy to sit on the side lines and complain about how everyone is running their own business. For example, open a store and stock the 15 amp heat pump models and see if you start a market for them. /marc


 +   3 people like this
Posted by Mike Balma, a resident of Cuesta Park,
on Sep 5, 2021 at 7:32 pm

Mike Balma is a registered user.

Great article. Thanks for mentioning nonprofit SunWork. Expanding on our success installing over 1000 solar systems in the Bay Area, SunWork just started our Early Adopter Program for people looking to move from a gas water heater to an efficient heat pump water heater. We follow several of the suggestions in the article to make heat pump water heater affordable. For example, we break out the cost of materials vs labor. We don't have an uplift on the cost of materials. Our pricing is transparent and consistent. We focus on the 15 Amp heat pump models. We do both the electrical work as well as the plumbing. We also collect the rebate directly to lower the out of pocket. The way we have structured the program, the cost before rebates is targeted to be $4700 including a $300 permit for an 80 gallon heat pump water heater. You can check out financial examples at our web site Web Link . We do have some qualification criteria for the program. We focus non emergency installations and only when the water heater is currently in the garage along with a service panel that has room for a 240V breaker. There are a couple additional criteria to streamline the process. As with our solar model, we have volunteers that help with the installations. This helps keep costs down and allows volunteers the opportunity to gain installation experience. Our next volunteer training is October 23. It's online. You can register at Web Link . With the planet heating up, every step to reduce our carbon footprint is important. We offer home owners and volunteers an opportunity to help the Bay Area move in that direction.


 +  Like this comment
Posted by Allen+Akin, a resident of Professorville,
on Sep 6, 2021 at 10:01 am

Allen+Akin is a registered user.

First I've heard that expansion tanks are required only when backflow preventers are present. (Every water-heater installation I've been involved with since 1988 either used an existing expansion tank or added one.) My current house was required to have backflow preventers, so perhaps plumbers nowadays just assume that possibility has to be covered. If your parents' house had been in Palo Alto, I might have wondered about the preferences of the inspector, too.


 +  Like this comment
Posted by Sherry Listgarten, a Almanac Online blogger,
on Sep 6, 2021 at 10:28 am

Sherry Listgarten is a registered user.

@Mike, thanks for providing all of that information. I am really excited about SunWork's help.

@Marc, yes, I understand that this blog can read like armchair plumbing, and I apologize if it does. FWIW, I think the right approach to getting the right equipment is (a) plumbers want to install the right equipment; and (b) they ask the existing supply stores to stock it. My hvac guy said he spent 30 minutes at Standard Plumbing Supply (or PACE, I forget, maybe both) trying to convince them that they need to stock 15-amp larger tanks. If others do that too, problem solved.

Thanks for the helpful/interesting comments.


 +   6 people like this
Posted by Joseph E. Davis, a resident of Woodside: Emerald Hills,
on Sep 6, 2021 at 10:33 am

Joseph E. Davis is a registered user.

It's expensive to install, costs the same to operate, has worse reheating performance, and requires installation and permitting hassle? Sounds wonderful and like something our local city councils should require [rolls eyes]


 +  Like this comment
Posted by Sherry Listgarten, a Almanac Online blogger,
on Sep 6, 2021 at 12:21 pm

Sherry Listgarten is a registered user.

@Joseph, thank you for weighing in on this.

Here is my version of your version :)

For most single-family homes:
- A HPWH is similar in cost to install and operate (with the rebate)
- It will save more money over its lifetime as gas prices go up relative to electricity
- It has the capacity and reheating performance needed
- It installs in a day
and as a bonus
- It is an important step in reducing our building emissions

I think that "most" is an important word. It's not "all". But it's also not "some". I think that we should quantify it.

Here is the way that I think about it. (1) I don't think global warming is going away in the next ten years (life of a water heater). Instead, it's going to get worse. (2) Because of that, I think gas and oil prices will go up relative to electricity prices. Banks and governments know that fuel switching is cheaper than adaptation, though at this point we have to do both. (3) Given a mostly equal choice between a gas appliance and an electric appliance, I will take electric *every time* from here on out. (4) In most cases, these hybrid water heaters meet that test, though we have to keep pushing on cost and installation time/complexity (cf this blog post), as well as understand the exceptions.

I expect that all of this would be a lot easier if our local energy providers would send a strong signal on energy pricing. I hope that they can do that, but I understand also that utilities have restrictions on pricing that are frustrating their efforts. Maybe you can help them out there :)


 +   3 people like this
Posted by Jennifer, a resident of another community,
on Sep 6, 2021 at 12:50 pm

Jennifer is a registered user.

Let's be honest. Electricity always has and always will be more expensive than gas. Our home in Palo Alto is all electric, and so is our home in Contra Costa County. It has nothing to do with anyone's political agenda, climate change, etc. and I would never cave into someone else's desire as to "gas or electricity" in my home. Unless you're making the mortgage payments and paying the property taxes. [Portion removed] We're all entitled to our views, but that's what voting is for. Democracy -- not trying to control others. Gas or electricity is a personal choice.


 +   4 people like this
Posted by Sherry Listgarten, a Almanac Online blogger,
on Sep 6, 2021 at 1:25 pm

Sherry Listgarten is a registered user.

> Let's be honest. Electricity always has and always will be more expensive than gas.

I don't really understand this comment. You mean on a per-unit-of-energy basis? Our homes don't use electricity or gas on their own, there's an appliance involved. Many electric appliances are already cheaper to operate than their gas counterparts.

> Gas or electricity is a personal choice.

I appreciate that this succinct statement is very "of the times".


 +  Like this comment
Posted by Mondoman, a resident of Green Acres,
on Sep 6, 2021 at 2:23 pm

Mondoman is a registered user.

Complicating the underlying wild swings in the price of gas on a decadal basis are the substantial political influences affecting especially the price of electricity. Because of that, I don't see any measure of global warming determining the relative cost of gas vs. electricity -- just politics. Perhaps an investment bank can develop gas vs. electricity futures hedges to sell people so they can have predictability on this.


 +  Like this comment
Posted by Marc Fontana, a resident of another community,
on Sep 6, 2021 at 4:21 pm

Marc Fontana is a registered user.

I look forward to replacing my gas water heater with an energy efficient electric one in the future, but it's not my most pressing goal. I've analyzed how much gas my 38 gallon gas water consumes annually and it isn't very much, about 5-7 therms per month and I wonder how much of that is keeping the pilot light lit. In contrast my gas heating furnace burned 2 to 3 times as much gas each Winter, I say 'burned' because two Winters ago, I shut it off and never turned it back ON. Instead, I use electric space heaters which I know aren't the most efficient way to heat, but my solar panels produce enough surplus energy that using them doesn't cost me anything. I'm all for going ALL electric but I think I'll wait until my gas water heater is past its warranty before I replace it. Hopefully, more affordable installations will be available by then, or I'll just do it myself. In the mean time, I look forward to installing a more efficient space heating appliance such as a mini-split. Here in the city of Santa Clara, the city rebate for a Heat Pump Water Heater is only available if you switch out an electric model. When will they see the light?


 +   4 people like this
Posted by eileen+, a resident of another community,
on Sep 6, 2021 at 8:54 pm

eileen+ is a registered user.

I am the elderly parent. Looks like SunWork is the way to go in light of our experience. Their business model looks great. We are so pleased with our HPWH and are now looking into a heat pump to replace our aging furnace. More importantly, we are trying to get our neighbors interested as well.


 +   1 person likes this
Posted by sequoiadean, a resident of Los Altos,
on Sep 8, 2021 at 10:44 am

sequoiadean is a registered user.

I had a heat pump water heater installed by a person you named in your article, and his fee was quite a bit less than what your parents were quoted. I am also fortunate that in Los Altos the permit fee is minimal, under $100. I got a great rebate from Silicon Valley Green Energy too. I am very happy to reduce my gas use in such a simple and cost effective way!


 +  Like this comment
Posted by Keith, a resident of Old Palo Alto,
on Sep 8, 2021 at 12:54 pm

Keith is a registered user.

@Marc We have a tankless gas water heater. It's much smaller than a water heater with a tank, and won't fall over in an earthquake (but also doesn't store an emergency water supply). The 2 of us use about 1 - 2 therms / month for water heating. As you point out, it's small compared to the furnace. Energy efficiency should be the primary goal, then "green" energy. Our "carbon free" electricity isn't actually carbon-free. Offsets (like planting forests that can burn down) are purchased using offsets. And, for solar to work at night, battery storage is needed.


 +   1 person likes this
Posted by fixate, a resident of Menlo Park: The Willows,
on Sep 8, 2021 at 12:55 pm

fixate is a registered user.

I keep seeing this sort of comment "any hum wouldn't be a problem". Just how much noise does this sort of water heater make? It's not enough to dismiss the noise as "negligible" or "it doesn't matter to me so let's not talk about it". We don't all have the luxury of a floor plan or building where we can isolate noise making appliances. For those us that are disturbed by the constant cycling, humming, whistling, and incessant background noise of transformers, fans, compressors, motors, etc. this is a real consideration and a solid advantage to existing gas appliances.


 +  Like this comment
Posted by Jesj, a resident of Barron Park,
on Sep 8, 2021 at 1:05 pm

Jesj is a registered user.

Hi Sherry, another great article. (We spoke earlier in year about your HP articles and electricity costs to help inform SV2 background.) I believe contractors add $ to the estimate because of our area (PA, Menlo, PV, etc.) In March 2020 my gas WH died, and couldn't wait for a HP to be installed. I priced gas WH at Home Depot, then arranged an install through Home Depot. The contractor came - estimate was $2900 (!). Last WH in 2008 was ~ $900 installed. When questioning the person giving the estimate, he quoted the price of the WH about $350 MORE than it's cost at HD. He disagreed, so we looked at HD web page - and he shrugged. I told him it was too much $ - he left and said his manager would call. On that call the manager asked "well how much do you want to pay?" I got him down to $2000 (!) How many people know to negotiate? People are in a jam with no hot water, and I am disappointed (and no longer naive) with HD and that contractor.


 +   3 people like this
Posted by Stepheny , a resident of Midtown,
on Sep 8, 2021 at 4:19 pm

Stepheny is a registered user.

Thank you for a thorough article on the costs of this Heat Pump Water Heater. I am now convinced more than ever not to go in this direction just to "feel good about doing my bit for the environment." Should my five year old 50 gallon gas water heater -- which was around $1000 with installation -- fail, I will likely still replace it with the traditional gas heater. Electricity does not heat water nearly as efficiently, let alone our problems with a reliable source of it. My hot water bill is negligible; I wash clothes in unheated water and have a high efficiency dishwasher. The cost of this type of heater, with labor, permits and the unit itself is staggering. It is a very poor return on investment, even with the rebate. It would take years to recoup the expense, even in a home with a higher usage. A better bang for the buck to curb gas emissions would be to curtail cars idling in parking lots while owners check their cell phones.


 +  Like this comment
Posted by Esther, a resident of Leland Manor/Garland Drive,
on Sep 8, 2021 at 9:07 pm

Esther is a registered user.

Our gas water heater died a year ago. I immediately contacted one of my green friends who contacted someone else who recommended a contractor who would put in a “bridge" heat pump water heater while ours was ordered, permitted and installed. The quote was $5,750 with permit and about $800 less if we skipped the City of Palo Alto permitting (which is why I'm not naming the contractor). We winced at the expense but we wanted hot water sooner rather than later so we didn't shop around. The “bridge" was installed promptly. The contractor ordered the new unit and obtained the City permit. “Our" water heater took maybe a couple of months to arrive but it didn't matter because we had hot water in the mean time. The contractor installed and later deinstalled the “bridge" heater and installed the new water heater. The new heater installation passed the City inspection and few months later we received our $1,200 rebate. We have plenty of hot water for our family of three and a cool garage during the hot summer days.


 +  Like this comment
Posted by Robert+Cronin, a resident of Menlo Park: The Willows,
on Sep 8, 2021 at 9:35 pm

Robert+Cronin is a registered user.

My experience with the rebate program: First, I did some research and learned that a 50 gallon HPWH costs $1700 or less at Home Depot. Then I contacted four plumbers on BayRen's approved list. Only two responded. The high bid was $6165. The quote did not itemize parts and labor, but I was told verbally that parts were $3000! The low bid was $5200, again without itemized parts and labor. The parts charge seems very high. I would expect that a plumber would not have to pay retail prices. Labor seems very high, considering that I had my house completely repiped for $5211, a much bigger job than connecting two pipes to a water heater. Electrical work was minimal, as I already had 240v wiring in the garage. At that point I said, "Forget it."


 +  Like this comment
Posted by Sherry Listgarten, a Almanac Online blogger,
on Sep 8, 2021 at 10:04 pm

Sherry Listgarten is a registered user.

Thanks for the comments! A couple of factual points...

- The local power providers do not purchase offsets for clean electricity. They do purchase resources that work at night, like wind, geothermal, hydro, and batteries.

- Tank water heaters are strapped so that they do not fall down in an earthquake.

- Typical hot water usage in this area is 10-15 therms/month. One-third of your annual use is a reasonable estimate. Although space heating uses much more in winter, it uses much less in other seasons.

- Heat pump water heaters in Palo Alto cost a few hundred dollars less to operate at today's rates. (Palo Alto has much lower rates than PG&E, though no time-of-use rates yet.) I expect that operational savings will improve further as time-of-use rates roll out and/or as people adopt solar roofs. I think it's also very likely that gas rates will increase relative to electricity over the life of the heater.

- I'd characterize the hum as being like a refrigerator or fan. But best if you can visit one yourself at a home near you.


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Posted by Sherry Listgarten, a Almanac Online blogger,
on Sep 8, 2021 at 10:32 pm

Sherry Listgarten is a registered user.

@Robert: Ugh, thanks for sharing, and yes, it's frustrating! Of the BayREN contractors, Air & Plumbing Systems seems to have pretty consistently fair prices, and soon SunWork will be up and running.

Some installation choices will run up the cost, like an expansion tank, rigid copper piping (very pricy these days), a mixing valve, etc. A contractor who wants to do a less expensive job usually has other options. For example, an hvac guy I spoke with who does these pretty quickly said he uses flexible stainless pipes, which are cheaper and easier to work with.

Re labor, in addition to placement/piping/strapping/testing there is often duct work, electrical work, condensation routing, capping off of gas, disposing of the old tank, maybe a return visit. I'd guess 8-10 hours for a vanilla installation by someone with experience doing these. On top of that there's a permit fee and time for processing that. So the city needs to reduce overhead and cost, but contractors also need to offer fairer pricing imo (as some already do). We shouldn't have people giving up like you had to.


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Posted by Raymond+, a resident of Monta Loma,
on Sep 8, 2021 at 10:34 pm

Raymond+ is a registered user.

Why mess around with marginal decreases in carbon emissions in a city that intends to increase its residential population by 40-50%? Mountain View is about GROWTH and therefore a larger impact on the planet. Keeping gas appliances diversifies our energy sources. This seems an important advantage given our experiences with energy markets in the past. Having more of our energy coming from electricity makes our allergy to nukes seem to be inadvisable.


 +   2 people like this
Posted by paulg, a resident of University South,
on Sep 9, 2021 at 10:42 am

paulg is a registered user.

Thank you Sherry for another thorough and thoughtful article. We live in an older house in downtown Palo Alto. Our water heater is in the (tiny) basement, accessible only via a ladder and small trapdoor. Our electrical panel is near capacity. I imagine that any heat pump installation there would be very expensive (although I have not checked this out). What I do know, is that I am getting old, and when our house is sold it is likely to be scraped. It seems to me a very expensive way to achieve clean energy goals. Mandating these devices in new construction makes a lot more sense than requiring retrofits.


 +   5 people like this
Posted by Menlo+Voter., a resident of Menlo Park: other,
on Sep 11, 2021 at 7:41 am

Menlo+Voter. is a registered user.

Sherry: your problem, like most people that know nothing about construction or the trades, is you assume the work was no big deal, a "vanilla installation". Clearly it wasn't or they wouldn't have put in 22 hours getting the work done. It is often much more complicated than the non-tradesperson assumes. I've been managing construction for over 28 years and dealing with the costs of "green" construction. It ALL costs more than conventional construction. Some of it has financial benefits that will eventually pay for the added expense, but much of it either doesn't or takes so long to pay for itself it's not an expense many are willing to bear. That's the reason there are government subsidies for a lot of it. Without them the cost is out of reach.


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Posted by NB, a resident of Barron Park,
on Sep 18, 2021 at 3:33 pm

NB is a registered user.

The last time I had my gas water heater replaced (2015) the unit itself was under warranty because it failed in under 10 years. Time in: 10:30, time out 13:35. 1 person, 3 hours @ $98/hr. So, total labor $294. BTW -- By 2015 Rheem had figured out that their heaters weren't lasting 10 years, and reduced their warranty period to 6 years. I wonder how long the warranty is on the HPHW, whether they tend to fail inside the warranty period, and how much the plumbers will be charging to do a like-for-like replacement.


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Posted by NB, a resident of Barron Park,
on Sep 18, 2021 at 3:37 pm

NB is a registered user.

Postscript to my previous comment: The gas water heater replacement before the 2015 one was in 2006, and cost a total of $390 in parts and labor because it needed upgraded earthquake strapping and modified overflow piping. The unit itself was under warranty, and so zero additional cost to me.


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Posted by Sherry Listgarten, a Almanac Online blogger,
on Sep 18, 2021 at 8:31 pm

Sherry Listgarten is a registered user.

@NB: You could look it up, but to save you the time, the warranty on Rheem hybrid water heaters is 10 years plus 1-year in-home labor. A friend of my talked with a Rheem rep who assured him the tank will go before the heat pump. So the $20 anode rod may be a good investment for another 10 years. I would expect replacement labor after that to be relatively low since the fittings are all in the right places and the electric work is done. Plus you don't have to worry about gas leaks.

A gas tank water heater these days costs, what, $1200 to buy and install, not including permit. The hybrid costs much more, say $4000 even with SunWork. The rebate and operating costs should make up most of the difference when we are aiming for widespread adoption. For now, a good number of people are happy to pay a little extra to reduce their home emissions by one-third.

Maybe your point is that Rheem needs to be designing water heaters to be maintainable? Sure thing.


 +  Like this comment
Posted by EPL, a resident of Menlo Park: The Willows,
on Sep 25, 2021 at 4:37 pm

EPL is a registered user.

Thanks for your post, Sherry! Our household switched from a very inefficient gas furnace to a heat pump some years ago and from a gas tank water heater to a heat pump water heater a couple of months ago. We are very happy with our changes. We are saving on our house heating, we don't use gas, and the electrical bill for all our use is roughly the same as before. I'd recommend anybody upgrading their heating system to look into a heat pump. They are silent, efficient, and don't move air around so they are good for people with allergies. Our experience with the Heat Pump Water Heater (HPWH) has also been very good, but there are some possible obstacles to the adoption of HPWH in California. I think the main two are (1) the need for a 220V/30A outlet, and (2) some noise. None of these were real issues in our case but they may be in some cases, and I believe we (CA in general, the BA Counties, and MPk in particular) have some influence to address them. We have Rheem Hybrid. The model comes in 30A and 15A, both 220V, but only the 30A is readily available. These hybrid units have a resistor and a heat pump. The 220V is needed for the resistor but not for the Heat Pump. We only use the unit in Heat Pump mode, which is *very* efficient. Heat Pumps have compressors, same setup as a refrigerator. Modrn refrigerators use linear / inverter compressors which are move efficient and quiet than the best HPWH in California (the Rheem / Ruud products). These two characteristics (220V outlet & noise) can complicate the installation of HPWH. Appliance manufacturers have better models available in other markets; if they were to bring them to California we would simplify the adoption of HPWH, and we (citizens, cities, counties) can help that happen.


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