Palo Alto homeowners can pocket an extra $500 off a heat pump water heater installation through October 31, stacking the limited-time bonus on top of the city's existing rebates that already cover most of the cost.

The City of Palo Alto announced the bonus on its official Nextdoor and X accounts on Wednesday, July 22, and Friday, July 24. Through the city's Electrify My Home program, residents can get a 65-gallon heat pump water heater installed for as little as $2,100, with the work completed within 48 hours.

The program's standard full-service installation runs $3,350 before incentives, according to the city's Electrify My Home page. Palo Alto Utilities already offers a $3,500 rebate for residents replacing a gas water heater with a qualifying heat pump model (NEEA Tier 3 or higher), plus up to $1,000 in site preparation credit for homes that need electrical or plumbing upgrades. The new $500 bonus stacks on top of those existing incentives.

For residents whose water heater dies unexpectedly, the city's emergency program connects homeowners with Larratt Bros., a local plumbing company, and can complete the switch within two business days, including weekends and holidays.

How heat pumps differ

Heat pump water heaters use electricity to move heat rather than generate it directly, producing two to three times as much heat per unit of energy compared to a conventional water heater, according to the city's program page. The city frames the program as part of its broader effort to electrify homes and reduce natural gas use.

Other ways to save

The city also runs a Refer a Neighbor promotion that gives new participants a $200 discount when referred by someone who already installed a heat pump water heater through the program. The referral must be on file at the time of the installation request.

The Electrify My Home program has expanded beyond water heaters to include full-service support for heat pump HVAC systems, induction ranges, cooktops, and electric clothes dryers. To participate, homeowners must switch at least their water heater or home heating system.

How to apply

Residents can visit paloalto.gov/WaterHeaterDiscount or call (650) 713-3411 to get started. The $500 bonus is available through Saturday, October 31, 2026, according to the city's social media posts. Additional discounts may be available for income-qualified households through the city's Residential Energy Assistance Program.