What it costs, what's permitted, and what to ask before you hire.
Last verified: 2026-05-31 · Well-sourced
Incentive snapshot
Section 25C Energy Efficient Home Improvement Credit (heat pumps)
Expired Dec 31, 2025. For 2023–2025: up to $2,000/yr (30% of project cost, capped) for qualifying heat pumps and heat pump water heaters. EXPIRED: This federal credit ended Dec 31, 2025 under the One Big Beautiful Bill Act (Public Law 119-21, signed July 4, 2025). Installations completed in 2026 or later do not qualify, regardless of when payment was made. For installations completed during 2023–2025, the credit applied to U.S. primary residences with heat pumps or heat pump water heaters that met or exceeded the highest CEE efficiency tier in effect at the start of the install year; starting 2025, the manufacturer's Qualified Manufacturer Identification Number (QMID) was required on the tax return. Homeowners with eligible 2025 installations may still claim the credit on their 2025 federal tax return. Verify with a qualified tax professional.
California Home Electrification and Appliance Rebates (HEEHRA) — single-family
When available, up to $8,000 (households below 80% AMI) or $4,000 (80–150% AMI) for a qualifying heat pump HVAC system, with additional rebates for heat pump water heaters, electrical panel upgrades, and wiring inside the per-household envelope. Phase I single-family funds are currently fully reserved (waitlist active). PROGRAM STATUS: Single-family Phase I is FULLY RESERVED statewide as of 2026-02-24 — new single-family applications are not being accepted and a waitlist is in place. Multifamily applications remain open. Phase II is under development pending DOE approval. HEEHRA is California's implementation of the federal IRA Home Electrification and Appliance Rebates program, administered by the California Energy Commission (CEC) with single-family implementation through TECH Clean California. When open, eligibility requires income-qualified single-family homeowners (or landlords with income-qualified tenants) at or below 150% of Area Median Income; income tiers determine rebate amount (below 80% AMI vs 80–150% AMI). Projects must obtain an approved reservation before installation; rebates only apply to heat pumps installed after the reservation is approved. Income verification is required before a contractor can submit a reservation. Replacement of an existing non-heat-pump space heating system is required for the HVAC rebate. Homeowners should check techcleanca.com and the CEC IRA rebate page for re-opening announcements before signing a contract.
TECH Clean California — heat pump water heater incentive (single-family, market-rate)
Currently unavailable: single-family heat pump water heater incentives are fully reserved as of 2026-05-30. Service-area-specific funds were fully reserved between May 2024 and February 2025; the November 2025 round is also fully reserved. Historical incentive amounts varied by utility service territory and customer income tier — verify against techcleanca.com for re-opening announcements. PROGRAM STATUS: Single-family heat pump water heater incentives are FULLY RESERVED as of 2025-11-14 — new single-family reservations are not being accepted. Service-area-specific incentives were fully reserved between May 2024 and February 2025; subsequent rounds have also exhausted. TECH Clean California is a statewide CEC initiative administered by Energy Solutions under CPUC oversight. When open, single-family eligibility requires the homeowner to be a customer of a participating California utility, the installation to use an enrolled TECH contractor, and the project to obtain a reservation before installation. Specific dollar amounts varied by service territory. Homeowners should not assume an incentive is available; verify current reservation status with techcleanca.com before signing a contract. Income-qualified homeowners may be routed to HEEHRA instead (also currently fully reserved for single-family).
California Equitable Building Decarbonization (EBD) Direct Install Program
No-cost direct-install upgrades for income-qualified households — homeowner does not pay out-of-pocket for covered measures. Measures may include heat pump HVAC, heat pump water heater, induction stove, electrical panel upgrade, and weatherization, subject to a per-household scope set by the regional implementer. Administered by the California Energy Commission (CEC) as the statewide Equitable Building Decarbonization Direct Install Program, with delivery through regional implementers and a separate Tribal Direct Install track. Targets low- and moderate-income households in low-income communities; specific AMI thresholds and per-region eligibility rules are set by the regional implementer rather than statewide. Both single-family homeowners and renters in eligible buildings may qualify, though scope and contractor selection are determined by the implementer (homeowners do not freely choose contractors). The program is funded through California IRA HOMES funding (60% allocation to Direct Install, approximately $130.3M) plus state appropriations. Direct Install retrofits began rolling out in summer 2025. Homeowners interested in EBD should contact the CEC at equitablebuildingdecarb@energy.ca.gov or watch for their regional implementer's launch announcement; the program does not accept open online applications the way TECH or HEEHRA do.
SDG&E Energy Savings Assistance Program (ESA) — income-qualified no-cost upgrades
No-cost (program-funded) upgrades for eligible households. ESA Basic Plus measures include attic insulation, envelope and air sealing, duct sealing, heat pump water heaters, water heater repair/replacement, gas furnace repair/replacement, refrigerator, clothes washer/dryer, room AC, whole house fans, and smart thermostats. As of 2026-05-30 the program is actively accepting applications. Eligibility is income-based; effective July 1, 2025 through May 31, 2026, ESA income limits run up to 250% of the Federal Poverty Guidelines (approximately $80,375 maximum combined annual income for a family of four). Categorical eligibility is available via Medi-Cal, CalFresh, SSI, CalWORKs, LIHEAP, and similar assistance programs. Both homeowners and renters in buildings with four or fewer units may qualify (renters may need landlord permission for some measures). Verify current thresholds and the qualifying-measure list at the program page before applying.
Golden State Rebates — Heat Pump Water Heater (SDG&E-served homes)
Up to $500 instant rebate (currently listed on SDG&E's residential rebates index as of 2026-05-30; the multi-IOU Golden State Rebates HPWH category has been paused at other IOUs at various points — verify current status before purchase) As of 2026-05-30 the $500 heat pump water heater rebate appears on SDG&E's residential rebates index. Golden State Rebates is a multi-IOU statewide instant-rebate program operated by CLEAResult on behalf of PG&E, SCE, SDG&E, and SoCalGas; the program is scheduled to sunset June 30, 2026 or earlier if state funds run out. Pacific Gas & Electric and Southern California Edison records currently note that the multi-IOU HPWH category is temporarily unavailable in their territories; the apparent SDG&E listing may reflect a utility-specific budget allocation or a stale page state — verify current category status and qualifying-product list at goldenstaterebates.com and at sdge.com/rebates before purchasing. Equipment must meet specified UEF and tank-size requirements (e.g., 45-55 gallon heat pump water heaters with UEF >= 3.30 when replacing an electric water heater).
$3,000–$6,500 — Installed cost for a single-family SoCal home replacing a gas or electric tank water heater with an ENERGY STAR-rated 50–80 gal heat pump water heater, mid-range equipment, pre-incentive. Range covers 120V plug-in retrofits at the low end and 240V dedicated-circuit installs with minor plumbing rework at the high end. Excludes service-panel upgrade.
As of 2026-05-30, SDG&E's default residential plan is TOU-DR1, a three-period time-of-use plan with on-peak / off-peak / super off-peak windows and a 4-9 PM peak. TOU-DR2 offers a simpler two-period structure with the same 4-9 PM peak. Households with EVs, batteries, or heat pumps may benefit from TOU-ELEC (designed for electrified homes), or from EV-specific plans: EV-TOU-5 (whole-house TOU with the lowest overnight pricing for home charging and the Solar Billing Plan) and EV-TOU (a separate-meter option). TOU-DR-P and EV-TOU-5-P are event-based variants that add Reduce Your Use events (up to 18/year) with a $1.16/kWh event adder during 4-9 PM. Plans require 12-month commitments; homeowners should verify the current default and rate cards on the SDG&E pricing plans page before assuming a peak window or rate.