Palo Alto, in a bid to phase out gas water heaters and reduce fossil fuel emissions, is making it easier for residents to install electric heat pumps.
The Palo Alto City Council on Oct. 3 approved the Advanced Hot Water Heat Pump Program, which aims to install 1,000 heat pump water heaters by the end of 2023.
The program comes as California cities move to meet the state’s ambitious goal of becoming carbon neutral by 2045. Palo Alto has an additional goal of reducing emissions 80% by 2030, using 1990 emission levels as a starting point.
Although the city previously offered rebates for heat pump water heaters, it did not address the hassle of organizing the installation. Other Bay Area cities have similar rebate programs for electric water heaters. Palo Alto’s new program offers a city-organized installation at a fixed cost to reduce the burden of finding contractors familiar with the technology, negotiating prices, and affording the heater.
“We are actually breaking new ground,” said Mayor Patrick Burt. “We have to learn from our experiences and adapt over this next year. We don’t know all the bugs that are going to be in here, that’s why we’re doing this on a pilot.”
Unlike gas-powered heaters which generate heat before each use, electric heat pumps pull heat from the air or ground and can be two to three times more energy efficient according to the Department of Energy. Since they draw heat out of the air, heat pumps can act as air purifiers and air conditioners as well, useful for California’s wildfires and heatwaves.
According to City Hall, 90% of the homes in Palo Alto have gas-powered water heaters. Overall, natural gas used in buildings contributed to about 35% of Palo Alto’s greenhouse gas emissions with homes accounting for about 18% according to a 2020 city report.
Although the new program is innovative in its design, the environmental impact of transitioning to heat pump water heaters is slight. A staff report estimates that the pilot program could decrease around 2% of the emissions needed to reach their 2030 goal. If the program expands after its pilot to convert all individual gas water heaters in Palo Alto, then it could reduce up to 5% of those emissions.
“It’s not revolutionary or anything, but we thought it was such a really nice finite step in the right direction,” said Mel Kronick, public commenter, and member of 350 Silicon Valley, a volunteer group for climate justice.
After his own heater stopped working, Kronick had to choose between buying a new gas heater or living without hot water for four months while searching for a more energy efficient one. While heat pump water heaters can be twice as efficient, they are also twice the initial cost as a conventional heater and less well-known amongst contractors. Without a plan to transition, Kronick opted for a readily available gas heater.
“I’m very willing to admit that I did the wrong thing, and in retrospect, I regret that,” said Kronick. He didn’t want others to face the same choice, so he joined 350 Silicon Valley’s efforts to educate residents on water heaters.
To purchase and install a heat pump water heater typically costs about $6,000.
With the program’s installation service, residents will pay $2,700, either entirely upfront or through a $1,500 initial payment followed by interest free monthly payments. The city also offers a $2,300 rebate to those who choose to self-install. Through the Inflation Reduction Act, residents could also claim a federal tax credit of up to $2,000, not to exceed the cost spent on the heater, starting in January. The city can offer a discounted price for the water heaters by financing through revenues the city has from the sale of cap-and-trade allowances and the Utility Department’s Electric Special Projects Reserve, which funds projects of significant impact that benefit electric ratepayers.
Some residents are concerned that Palo Alto’s electric grid doesn’t produce enough power to support all the new electric devices. While the city’s grid may not currently have the capacity to replace every water heater, it can support the pilot program. The mayor plans to improve the grid to withstand further electrification.
“It isn’t that we can’t do it, it’s that we can’t do it today,” said Debbie Mytels, a member of the Steering Committee for 350 Silicon Valley and Chair of Outreach at Fossil Free Buildings for Silicon Valley.
The program has a small scope, but also signifies the city’s commitment to its climate emissions goal. The week following this decision, the city council voted on an all-electric requirement for new buildings. Looking forward, the mayor hopes to expand the water heater program to commercial buildings.
“It’s a yes, and,” said David Coale, a board member of Carbon Free Palo Alto, an organization which worked on the program’s proposal. “There’s no silver bullet for this transition.”