How Rebates Can Help You Offset the Cost of a Water Heater Upgrade

The Home Efficiency Rebate

The Home Efficiency Rebate (HER) is a federally funded performance-based rebate that applies to certain whole home energy efficiency improvements.

Because the actual rebate is administered at the state level, the program is referred to in different ways. For example, Colorado, Georgia and Maine use HER, while Wisconsin uses HOMES. Some states, like Maryland, have their own brand name for this rebate.

The important thing to know is that all of these refer to the same pool of federal funding, with the rebates administered in your state of residence.

Here are key things you need to know about the Home Efficiency Rebate:

1. Simply buying a new water heater, even if it is a home improvement, does not qualify.
2. You may be able to include the new water heater if it is a component of an overhaul of your home’s overall energy system.
3. HER eligibility is partially income-based. Households with annual incomes that fall below 80% of the area’s median income (AMI) qualify for higher rebates than moderate income households (between 81% to 150% of AMI). Both options are capped at 80% of total project costs.
4. High income households (above 150% of AMI) can apply for this rebate, but states can impose restrictions as income levels rise.
5. HER also considers the overall energy efficiency improvements achieved by the new product, with different rebate tiers dependent upon the verifiable-modeled energy reduction.

The Home Electrification and Appliances Rebate (HEAR)

HEAR rebates are means-tested, and individual appliance purchases can qualify. The maximum coverage for a heat pump water heater for both low-income and moderate-income households is $1750, including purchase and installation costs.

Two important things to know about the HEAR rebate are:

1. Under current federal guidelines, HEAR restricts rebates to electric-to-electric appliance upgrades. A shift from a fossil-fuel-based appliance to an electric one, for example, does not qualify.
2. Your state must have a federally approved and fully implemented funding program in place, before you can apply for these rebates. Program availability varies widely across the country, but you can track your state’s progress at the Atlas Building Hub Home Energy Rebate Tracker.