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Contractors, consultants differ on heat-pump water-heater costs; advocates point to market strategies to lower prices

3847938 · May 15, 2025

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Summary

Contractors at the PSC hearing said heat-pump water heaters cost substantially more to buy and install than standard electric tanks, while consultants pointed to examples from other states showing costs can fall with coordinated market strategies including workforce development, targeted customer outreach and distributor stocking.

Contractors, utilities and consultants addressed the cost gap between standard electric water heaters and heat-pump hybrid water heaters, which came up repeatedly during the Public Service Commission working-group meeting.

Contractor Sean Maloney, president of HACC, told the commission the installed price difference is substantial. "We charge roughly about $2,000 to install ... standard electric water heater, give or take. And we charge somewhere between $4,500 and $5,000 for a heat pump hybrid water heater before rebates," Maloney said.

Consultants and policy advocates acknowledged the current price differentials but said empirical evidence from other jurisdictions shows that sustained market-transformation strategies can reduce both equipment and installation costs. Dylan Voorhees (OPC) and a consultant for Maryland Energy Efficiency Advocates described workforce development, distributor stocking, targeted customer recruitment (for example, oil- or propane-heated homes), and coordinated policy signals (building codes, appliance standards) as actions that can lower retail and installation costs over time.

Voorhees said jurisdictions have driven down costs in part by improving contractor training and certification and by aligning incentives with broader policy timelines, such as imposing new building-code or sales standards after a period of market preparation.

No formal commission decision was made. Stakeholders asked the commission to direct staff and utilities to consider market-characterization studies and targeted workforce investments as part of future program design.