Considerations for Equity in HPWH Programs

Financial Savings

Energy costs disproportionately impact low-income households, which spend almost nine percent of their incomes on energy costs but they are also underserved by efficiency programs. This is nearly three times more than the national average (DOE). Reducing energy costs allows low-income households to spend their money on other important necessities, like housing, groceries, and health, and reduces reliance on energy assistance programs. Electric resistance water heaters are among the common and most expensive types of water heaters to operate. HPWHs are more expensive up front but can save a family of four $550 a year on average, a significant sum. Outfitting low-income households with HPWHs can create a meaningful difference in energy burden, while also reducing grid impacts. 

Air Quality

Research shows that low-income and racial minority segments of the population are disproportionately exposed to air pollution, which has tangible negative health impacts. Because HPWHs do not use combustion to create heat and do not rely on fossil fuels, they do not emit combustion byproducts like NOx, CO, CO2, methane, and volatile organic compounds. Installing HPWHs in place of fuel-based units may have a positive impact on both indoor and outdoor air quality. 

Another way to engage in equity is to ensure that all educational materials are translated into the languages of a utility’s customer base, and to provide comprehensive education following installations. Teaching customers what to expect after a HPWH installation, including sound levels, costs, proper unit settings, and capacity, will ensure that customers feel empowered in their energy saving choices and make them happy to share their experiences with others. 

Federal and State Incentives

Through the introduction of the Inflation Reduction Act, low-income customers are also eligible for rebates and tax credits towards the installation of a HPWH. Inflation Reduction Act Rebates are expected to be available in mid-2024. Households earning under 80 percent of Area Median Income will qualify for electrification rebates that cover 100% of HPWH costs, up to $1,750. Households earning between 80 and 150 percent of Area Median Income will be eligible for rebates that cover 50 percent of HPWH costs, up to $1,750. Tax credits offer an additional 30 percent of the project cost, up to $2000, but it is important to keep in mind that many low-income customers fall below the federal income tax threshold and therefore are unable to take advantage of the tax credits. 

For additional opportunities to engage in equitable outreach in efficiency programs, visit ENERGY STAR’s Inclusive Utility Investment page, and consider reaching out to your local Weatherization Assistance Program, Community Action Agency, and State Energy Office.

*AMI stands for Area Median Income, which is measured per census tract

*Customers can qualify for both rebates and Federal Tax Credits, if eligible

Success Story

Efficiency Maine has developed one of the most successful HPWH programs in the country, and focus on equity and serving low-income customers is an important part of their mission. Efficiency Maine offers free HPWHs to customers who meet low-income and space requirements. Efficiency Maine utilizes a network of contractors that are able to provide this service for a low or flat fee, and Efficiency Maine pays the contractors directly. In response to signing up for participating, contractors are offered installation jobs in their area. Efficiency Maine supports the installation of over 1,000 units through this initiative each year. Through the efforts of the broader Efficiency Maine program, sixty percent of water heater sales in Maine are now HPWHs, which is thirty times the national average. To date, Efficiency Maine has rebated over 50,000 HPWHs, with roughly one out of every ten sold in the US in 2020, installed in Maine. Efficiency Maine targets their message around the idea of “lots of hot water, lots of savings,” appealing to fundamental customer concerns about adopting a growing technology.

ENERGY STAR Tools, Resources, Partnerships

ENERGY STAR is the host of an industry alliance called the ENERGY STAR Manufacturers Action Council (ESMAC), where HPWH manufacturers meet monthly to work on initiatives to support the growth of HPWHs. ESMAC has extensive experience providing input, feedback, and workforce training to programs as they set out to encourage or improve upon residential HPWH programs. This resource is available to all ENERGY STAR partners, and we look forward to supporting your program efforts. For additional information please contact midstreamdistributor@energystar.gov

In addition to serving as a sounding board and professional training corps, ESMAC offers a list of additional program elements to consider when developing a program. These recommendations include:

• Establishing Goals: Utilities should set a goal of market transformation for at least ten percent of eligible households in the region.
• Data Collection: Forms should be as minimal as possible and offered in a digital format if possible. Determining eligibility should be easy for customers (i.e. providing a zip code or home address). Retailers or contractors should be able to assist customers in filling out forms. Provide market actors with simple, turnkey data reporting and payment solutions.
• Marketing: Utilities should offer co-brandable resources for retailers or distributors to use to educate customers on programs. Retailers and distributors generally have their own marketing budgets, so offering these resources allows for message expansion beyond direct marketing by utilities. Utilities should also engage in their own marketing through consumer messaging and education. Marketing should be on a consistent basis to enhance customer knowledge of HPWH technology.
• Offers: Consider including periodic "limited time offers" to drive customer demand and engagement throughout the supply chain.
• Scale: HPWH programs work best when at least thirty percent of the utility’s territory is eligible to participate in them. This allows distributors to broadly market the program and prevents confusion for customers who are unsure of eligibility. Creating synchronous programs with other nearby utilities grows impact through consistent messaging overlap. The most successful examples for HPWH market transformation thus far are in areas with statewide programs, such as Efficiency Maine, TECH Clean California, and Mass Save. Upcoming state incentive programs through the High-Efficiency Electric Home Rebate Act (HEEHRA) and Home Energy Performance-Based, Whole-House Rebates (HOMES) through the Inflation Reduction Act should provide additional opportunities for utilities to collaborate.
• Education: Because HPWHs are an emerging technology, education is required to prepare both customers and installers to use HPWHs. Utility programs should engage in contractor training to ensure that contractors are familiar with the benefits and important installation tactics of HPWHs. When a customer contacts a contractor about a HPWH, we want contractors to enthusiastically agree instead of trying to steer customers in another direction. 
• For installers, consider offering meaningful SPIFs (Sales Performance Incentive Funds) to individuals rather than companies and pay plumbing contractors for installations.
• Create a reliable sales pipeline for HPWHs for trade allies by generating leads or sales to spark HPWH interest.

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