New report from ACEEE examines benefits of electric pump water heaters

A new report from the American Council for an Energy-Efficient Economy (ACEEE) and New Buildings Institute (NBI) finds that electric water heaters in multifamily buildings cause less than half the greenhouse gas emissions of gas-fired products.

The report shows that converting gas-fired water heaters to electric heat pump water heaters (HPWHs) would cut the greenhouse gas emissions the equipment is responsible for by an average of 58 percent.

It calls on policymakers to ramp up efforts to help building owners replace old equipment. However, the report points out that these replacements are costly and will likely remain limited unless policymakers act and incentivize building owners to invest in these technologies.

“Gas water heaters are the biggest energy users in multifamily buildings, but most owners don’t have the incentive to switch to a more efficient electric option,” Amruta Khanolkar, senior project manager at NBI and report co-author, said.

The report found that replacing all the gas water heaters in multifamily buildings with electric heat pumps would save 175 trillion British thermal units per year of energy. That would reduce greenhouse gas emissions by the equivalent of the carbon generated by 1.4 million passenger vehicles.

“We need to get this critical carbon-cutting technology into millions of buildings. We need new utility programs, tax incentives, and training for contractors to install these water heaters and quickly. Today’s natural gas prices are a reminder that relying on energy with big cost fluctuations can be a real risk for those paying the utility bills,” Hannah Bastian, research analyst at ACEEE and fellow co-author, said.

Heat pump water heaters can also shift electricity consumption from hours of peak demand to times of low demand. They essentially serve as thermal batteries. In multifamily buildings, they could potentially store 3.5 terawatt hours of energy.

The report cited the pending Build Back Better bill as a step in the right direction, as it would provide rebates and larger tax credits for HPWHs (as well as for other efficient equipment). Yet more federal, state, and local policy initiatives will be necessary. While many utilities offer incentives for building or unit owners to install heat pump hot water heaters, few are designed specifically for multifamily buildings.

Ultimately, the report recommends that utilities create new programs to incentivize the adoption of electric HPWHs and consider electricity rate schemes that incentivize heating water when power is abundant on the grid. It also calls for states and utility regulators to enable utility programs that incentivize electrification. In addition, it calls upon federal and state governments to offer or expand tax credits. Further, it says that utilities should help train contractors to install electric HPWHs, and manufacturers should research and develop increasingly efficient models.