Homeowners can get $2,000 to replace their water heaters — here's how to get paid

Oct 20, 2024

"Two to three times more energy efficient than a standard water heater."

Photo Credit: Instagram

Heating water is a power-hungry effort.

In total, about 20% of a home's energy use goes to — you guessed it — simply raising the temperature of water for comfortable use. Fortunately, cutting-edge heat pump water heater tech is much more efficient than traditional electric or gas units. And you don't need a pilot light.

What's more, a tax break on installation costs and other rebates are helping to make upgrading easy. The incentives can stack up to $2,000 or more.

Your budget should loosen up quite a bit after making the switch. Energy Star reports that a family of four could save up to $550 a year with heat pump water heaters when compared to traditional electric ones.

Utility, state, and municipal rebates made possible by the Inflation Reduction Act could land you another $300 to $1,000 after the purchase, on top of the 30% installation-related tax break, which is also coming through the IRA.

The units are highly efficient.

These types of heaters pull warm air from the surrounding ambient atmosphere and transfer it to a storage tank where it heats water. As hot air enters the system, cooler air leaves. It uses electricity to move the air, according to a U.S. Energy Department description. A video clip shared by Georgia Power illustrates how the heat is absorbed by a refrigerant, which is sent through a compressor to increase its temperature even more.

Energy Star adds that the heaters typically switch to "standard electric resistance heat" during periods of high demand. The units cost between $1,500 and $3,000, per the appliance rating program. Angie's List notes that electric and gas water heaters can cost as low as $600 and up to thousands of dollars, depending on the type.

"This process of moving heat instead of generating heat makes the heat pump water heater two to three times more energy efficient than a standard water heater," the narrator of the Georgia Power clip states.

Heat pump water heaters are another way to modernize your home with cost-saving tech while producing less heat-trapping air pollution. All of the IRA tax breaks and rebates, combined with superior and efficient function, are facilitating an opportune time to make the upgrade.

And the innovations keep coming. Massachusetts-based Cala has created what it touts as the world's first intelligent heat pump water heater.

The highly customizable, smart contraption can help homeowners drastically reduce energy costs without losing comfort, using predictive tech to operate when the area's energy is the cheapest and cleanest. The fascinating unit can analyze your hot water usage and make a game plan for future allocation, maximizing efficiency.

"A Cala heat pump water heater should be like the most amazing maid of honor or best man at a wedding," Cala CEO Michael Rigney told The Cool Down. When something goes wrong, they "take care of problems without bothering anybody."

Reining in the energy-hogging task of heating household water can reduce your home's overall air pollution output. Planet-warming fumes are linked by NASA to increased risks for a long list of environmental problems like floods, droughts, and even wildfires.

But you don't even have to view tech like heat pump water heaters as some altruistic option to save the planet. As illustrated above, they are smart choices for saving on energy bills on their own, and they will pay for themselves and then some, with Cala estimating lifetime savings of $2,132 over any existing natural gas water heater — and even more, at roughly $5,000 to $7,000, for replacing an electrical resistance, oil, or propane unit.

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