Proposed rule change could supercharge sales of heat-pump water heaters

This story was first published by Grist.

The Biden administration has proposed a new energy-efficiency rule for residential water heaters, a move that would jump-start the adoption of energy-saving heat-pump water heaters and significantly reduce carbon emissions from U.S. homes.

The federal Department of Energy says the proposal would eliminate more than 500 million metric tons of carbon emissions over 30 years — equal to the combined annual emissions of 63 million U.S. homes. Overall, the agency says the new standards would save consumers more than $11 billion in annual energy costs and shrink energy use from water heaters in homes by 21 percent.

These actions ​“improve outdated efficiency standards for common household appliances, which is essential to slashing utility bills for American families and cutting harmful carbon emissions,” said Secretary of Energy Jennifer Granholm in a statement last Friday.

The rule would effectively require all households using traditional electric water heaters to switch to heat-pump water heaters once their old appliance reaches the end of its life. The proposal also includes new standards for gas-fired water heaters that would require technology improvements to cut down on their energy use. If finalized, the new rule would go into effect in 2029.

Heat-pump water heaters are two to three times more energy efficient than traditional electric resistance models. They work by pulling heat from the air outside to warm up water in a storage tank, instead of directly generating heat.

Yet despite the potential energy and cost savings, only 1 percent of U.S. households currently use heat-pump water heaters. A recent analysis by the nonprofit Rewiring America found that in order for the U.S. to reach net-zero emissions by 2050, households would need to purchase 200,000 more heat pump water heaters than usual over the next three years. Those extra units sold would help the sector reach a crucial tipping point called ​“market acceleration,” where sales will start to grow sustainably on their own.

While the rule will not go into effect for at least six years, the Biden administration has already made efforts to boost sales of heat pumps through the 2022 Inflation Reduction Act, President Joe Biden’s signature climate spending law. Heat pump water heaters — as well as other electric household appliances like induction stoves — are eligible for rebates and tax credits under the law.

Water heating accounts for about 13 percent of both home energy use and utility costs in the U.S. The DOE says replacing traditional electric water heaters with heat pump alternatives would save households about $1,900 over the life of an appliance.

The agency last updated residential water heater standards in 2010. Last year, the department proposed updated water heater standards for commercial buildings for the first time in over 20 years.

Several water heater manufacturers, environmental organizations, and consumer advocacy groups welcomed the new standards in a joint statement on Friday, highlighting both climate benefits and cost savings for consumers.

“Although long overdue, the efficiency standards proposed by DOE will deliver significant savings for consumers over the life of the water heater,” said Susan Weinstock, CEO of the Consumer Federation of America, a consumer advocacy nonprofit. ​“We urge the Department to move with all due speed to finalize these much-needed standards that do away with inefficient, energy-wasting water heaters so that consumers will pay less on their energy bills.”