BayREN’s cleaner, more energy efficient electric water heating program winds down

A BayREN program aimed at expanding access to cleaner and more energy efficient electric water heating technologies has ended after a successful five-year run.

Launched in May 2020, BayREN’s Regional Heat Pump Water Heater (HPWH) Contractor Incentive Program officially concluded in March. Developed with support from the Bay Area Air Quality Management District’s (BAAQMD) Climate Protection Program, the initiative provided $1,000 incentives directly to contractors installing HPWHs in eligible Bay Area homes, creating momentum for the region’s transition away from gas appliances.

The program was designed to jumpstart the HPWH market in the Bay Area by supporting contractors and expanding access to electric water heating technologies. Since its inception, the program incentivized 1,500 HPWHs and enrolled more than 200 contractors.

“The BayREN HPWH Contractor Incentive Program brought funding together to directly support contractors with a stable $1,000 per HPWH installed to replace a gas water heater, creating real market development,” said Jennifer West, the program manager. “In the end, this steady stream of incentives meant more HPWHs installed, even as TECH incentives stopped and started several times. The Bay Area was a fertile ground for market development for this super-efficient technology.” 

The program was made possible through collaboration with three Community Choice Aggregators (MCE, Ava Community Energy, and CleanPowerSF) and one municipal utility (Silicon Valley Power), covering communities across Marin, Napa, Solano, Contra Costa, Alameda, and San Francisco counties, as well as the City of Santa Clara.

The program generated regional excitement and demand that aligned with broader policy shifts—such as BAAQMD’s 2023 rule to end the sale of gas water heaters in residential installations by 2027.

The program highlighted valuable lessons that can inform future electrification efforts. Among the key challenges:

• High upfront costs continue to make HPWHs less accessible for some households compared to gas replacements.
• Installation barriers such as limited space, electrical panel constraints, and noise concerns require more tailored solutions.
• Permitting requirements—while important for safety—posed hurdles for contractors.
• Contractor readiness remains a factor, as many are still getting up to speed on emerging technologies.

Despite these challenges, the program succeeded in creating a regional ecosystem of partners, including manufacturers, distributors, cities, workforce training groups, and advocacy organizations like the Advanced Water Heating Initiative (AWHI) and the Building Decarbonization Coalition (BDC). It also served as a model for the statewide TECH Clean California initiative, which adopted a similar contractor-facing approach and saw higher uptake in the Bay Area thanks to the early market seeding.

The program’s legacy continues. BayREN’s HPWH Contractor Incentive Program helped establish a strong foundation for regional electrification and contractor engagement—momentum that continues to inform and inspire related efforts across the Bay Area.

BayREN is proud to have supported this pivotal period of electrification and market development and looks forward to applying the insights gained to future regional programs advancing home energy efficiency, comfort, and climate resilience.