Workers look at a switchboard during the installation of a heat pump at a home in Windsor in February. The Bay Area Air Quality Management Area requires the installation of heat pumps instead of natural gas stoves and electric water heaters instead of gas water heaters in the coming years.
Last week, Bay Area regulators voted to phase out gas stoves and water heaters over the next few years, despite serious concerns about increasing the financial burden on the area’s residents, who are already saddled with an extremely high cost of living.
The new rules prohibit the sale or installation of water heaters and stoves that emit nitrogen oxides after 2027 and 2029, respectively. In practice, this means that existing homes must be converted to electric water heaters and heat pumps when their gas appliances reach the end of their life – the only ones that meet the zero-NOx standard. The regulation also applies to new buildings.
Electric water heaters and heat pumps are generally more expensive than gas water heaters. Those living in older homes may face additional costs such as electrical panel upgrades, plumbing, rewiring or permits, although federal, state and local offers thousands of dollars in rebates and tax credits to offset some difference in cost.
According to various studies and data collected from completed projects, the cost of installing a heat pump can vary widely, from $7,000 to over $20,000. Electric water heaters can cost anywhere from $2,000 to $7,000.
Bay Area Air Quality Management District officials, the agency that adopted the zero-nitrogen oxide rule, presented average compliance costs at last week’s approval hearing: $8,030 for heat pumps and $2,820 for electric water heaters.
Estimates are from a 2021 study published by the Lawrence Berkeley National Laboratory, which collected total cost data for 1,739 projects in 15 states, including California, adjusted for the 2019 dollar exchange rate.
The same study also published average installation costs for gas appliances: $5,096 for a gas stove and $1,972 for a gas water heater.
Some individuals and groups dispute these figures based on their own experience or citing regional data showing that heat pumps and electric water heaters are much more expensive to install.
“Every time you do a national survey, the total numbers are lower [compared to California] because you are averaging everything from San Francisco to ‘low cost cities,’” said Francis Dietz, vice president of communications public air conditioning. Cases of the Institute of Heating and Cold.
As part of the approval process, BAAQMD prepared a socio-economic impact analysis that included higher cost estimates from the 2019 Energy and Environmental Economics (E3) study, which was specifically for California: from $20,000, depending on type, with water heaters with a heat pump ranging from $3,000 to $4,700.
According to E3 research, a gas stove in an existing home costs $2,000 to $2,600, while a new gas stove costs $3,700 to $5,700.
BAAQMD did not present the cost of heat pumps and heat pump water heaters in the E3 study at the new rule approval hearing, although this was part of the socio-economic analysis.
When asked why the Aviation District did not provide data from the E3 study, the agency replied that the presentation at the committee hearing “provides an overview of more than 1,000 pages of material related to the proposed rulemaking and does not purport to be exhaustive” and that “in time During the rulemaking process, airport staff reviewed important additional information and provided it to board members for consideration and consideration in their decision making.” thousands of projects”, which was reflected in the socio-economic analysis.
BAAQMD also referred to the agency’s response to the report with comments. The response states that even when using data from Lawrence Berkeley National Laboratory, BAAQMD did not account for potential costs due to inflation. “This may be another reason why staff cost estimates are generally lower than those provided during the comment period,” the agency said.
The E3 study assumed that pre-1978 homes would need to upgrade to 200 amp panels when switching to heat pumps and water heaters, and estimated a cost of $4,256 for single-family homes and $2,744 for low-rise apartment buildings.
BAAQMD averages the two costs and then spreads them between space heating and hot water heating to arrive at the panel retrofit estimate presented at last week’s approval hearing: $2,630 for space heating, according to public information officer Erin Demerritt, $960 to hot water.
The Bay Area Regional Power Network, which includes nine Bay Area counties, has helped fund more than 1,000 projects, according to Jeffrey Liang, Project Manager for Single Family Projects. BayREN collected data on the average cost of completed projects: 298 central heat pumps cost between $12,000 and $13,000 on average, 133 ductless heat pumps cost between $10,000 and $12,000 on average, and 1,243 heat pump water heaters cost an average of $7,000 dollars, Liang said.
Costs are net of discounts, including labor fees and licenses, Liang said, and 11 percent of projects using BayREN funds have also completed panel upgrades.
Matt Shedd, owner of Blue Rock Home, a contractor who works with BayREN, said not all homes with less than 200 amps may need to upgrade electrical panels, depending on their power consumption and the efficiency of their appliances.
The data showing the highest costs comes from Tech CLEAN California, a state organization that also offers rebates for appliance conversions.
Of the 9,895 heat pumps installed with Tech CLEAN funds, the average total project cost before incentive was $18,842 and the average total award was $3,433. For 1,334 Tech CLEAN-funded heat pump water heaters, the average total project cost was $7,054 and the average total award was $3,617.
The Tech CLEAN data comes closest to what Redwood City resident Kent Holubar experienced when he installed a heat pump last summer. Golubar shared with The Chronicle that Mitsubishi’s Holubar heat pump installation cost $17,875 plus an additional $1,865 for permits, bringing the total cost to $19,740.
Golubar wanted to upgrade for a long time and was able to use part of his mother’s inheritance to make it happen after her death. But after the installation, Golubar got a nasty surprise: Because of the efficiency of the air conditioning, Golubar said his 1953 home was worth $10,000 more than it was estimated before the heat pump was installed — adding more property taxes every year, Golubar said.
To facilitate the transition from natural gas to electricity, there are significant discounts and tax incentives. At the federal level, the Inflation Reduction Act, passed last summer, funded a 30 percent tax credit on the cost of heat pumps and heat pump water heaters, up to $2,000 a year. By 2024, Californians should be able to receive tax credits of up to $8,000 based on family income and up to $14,000 for households earning less than 150 percent of the regional median income.
BayREN is offering a $1,000 rebate on heat pump water heaters and $1,000 on heat pump HVAC systems; there are also discounts if insulation or plumbing is required. Tech CLEAN incentives for single-family homes temporarily suspended due to higher-than-expected demand; promotions are available for multi-family buildings.
Golden State Rebates, a government program funded by utility consumers, is offering a $500 rebate when you upgrade from a gas water heater to a heat pump water heater. Various public choice aggregators and local jurisdictions also offer discounts on heat pumps and heat pump water heaters.
Residents looking to switch can receive guidance through a free consultation with BayREN or by speaking with an expert at the state-sponsored “The Switch Is On” event.
The BAAQMD voted to effectively ban gas stoves and water heaters to reduce outdoor air pollution, though its board members and many of the commentators who supported the motion also hailed the move as important to the state’s climate goals to move away from fossil fuels.
Golubar, who also installed solar panels last summer, said he decided to switch to electricity to save on utility bills and consider the environmental impact.
“If someone like me with the money and the ability to do this doesn’t do it, it’s a missed opportunity to do something good for the climate,” Golubar said.
Claire Hao is a Hearst Climate and Environment Fellow and will join the San Francisco Chronicle in 2022. She previously interned at the newsrooms of Bloomberg Law and the Chicago Tribune, as well as on the editorial staff of The Washington Post. A 2022 graduate of the University of Michigan, she is the editor-in-chief of The Michigan Daily, her college’s 2021 newspaper.