Austin Energy offers $800 heat‑pump water‑heater rebates, expands pilots as participation lags

Hammad Chaudhry, director of energy efficiency at Austin Energy, briefed the Resource Management Commission on heat‑pump water‑heater rebates and the utility’s Home Energy Savings (HES) program.

Heat‑pump water‑heater rebates and pilots

Chaudhry said Austin Energy currently offers an average rebate of $800 per heat‑pump water‑heater unit across several channels (residential, commercial and instant‑savings programs) and is working to expand incentives in the new‑construction market. He said Austin Energy piloted 12 Wi‑Fi‑enabled heat‑pump water heaters with Habitat for Humanity in 2025 and plans a 2026 pilot with a low‑to‑moderate‑income builder (Drowsy Willow) covering about 30 homes.

Chaudhry described barriers to adoption: higher first costs for heat‑pump water heaters compared with conventional electric resistance or gas tankless units; retrofit size and closet‑space constraints; the need to run dedicated 240‑volt circuits in some retrofits; and customer preference for like‑for‑like replacements when a water heater fails. He said the units are energy efficient and being paired with smart controls when possible to allow future demand response participation.

Commissioners pressed on the scale and effectiveness of the $800 rebate. Commissioner Silverstein asked whether Austin Energy had studied sharing incentive costs with Austin Water because tankless systems can waste water waiting for hot water. Chaudhry said he will take that question back to the team and analyze water‑energy interactions.

Home Energy Savings program: declining pipeline and proposed fixes

Chaudhry also briefed commissioners on Austin Energy’s Home Energy Savings program, which takes a whole‑house approach (air sealing, HVAC tune‑ups or replacement, duct repair, insulation and other measures). The program currently offers roughly $2,600 in average incentives and a low‑interest loan option with a subsidized rate as low as 1.99 percent; loans require demonstrated energy savings (Chaudhry said the program requires about 15% energy savings for certain loan products).

Chaudhry said participation has fallen from highs of roughly 500 homes per year in earlier years to low hundreds recently, driven by market‑wide increases in project costs (the program now sees average project costs near $18,000 and some as high as $30,000), the loss of partner incentives in other programs, and more stringent program and equipment standards. Austin Energy said it has therefore undertaken a contractor focus group, reduced some participation barriers, added in‑home scoping assessments and offered contractor training and partial reimbursement of certification costs.

Planned next steps

- Hire an EM&V (evaluation, measurement and verification) consultant to benchmark the program, refine savings protocols and advise on incentive strategy. - Explore a lighter “HES‑light” track that lowers the minimum required measure set (for example, a two‑measure bundle such as air sealing plus attic insulation) to reduce customer copays and increase participation while preserving demonstrable energy savings. - Continue and expand new‑construction pilots and examine how the new electric‑ready building code may affect adoption over time.

What commissioners asked for and the commission’s sense

Commissioners asked Austin Energy to track pilot metrics (costs, market uptake, expected savings), to explore pairing water‑savings incentives with heat‑pump water heaters, to provide clearer metrics on what success for the pilot would look like, and to report back as EM&V work proceeds. Vice Chair Robbins urged caution on automatic enrollment approaches for customer assistance programs and asked the utility to analyze targeting and verification options that avoid large erroneous enrollments.

Ending: Chaudhry said the utility will follow up with the commission on program evaluation plans, contractor outreach results, and pilot metrics.