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City of Palo Alto Utilities Heat Pump Rebates (2026)

In Palo Alto, the City's own utility (CPAU) supplies electricity and gas, so CPAU's rebates apply, not PG&E's. As of October 2026, it pays $2,500 for a heat pump that replaces gas heat ($5,000 for income-eligible homes) and $3,500 for a heat pump water heater that replaces a gas one. Reserve the rebate before work starts.

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What Palo Alto Utilities Pays For

Rebate Hub amounts as of October 2026, from paloalto.gov. Rebates are first-come, first-served while funds last.

  • Heat pump replacing gas heat

    Up to $2,500, or $5,000 for income-eligible households, for a heat pump that replaces gas, propane, oil or wood heat. See heat pump installation.

  • Heat pump water heaters

    Up to $3,500 for replacing a gas water heater and $500 for replacing an electric one. See heat pump water heaters.

  • Panel upgrade add-on

    Up to $1,000, or $2,000 income-eligible, for a new panel of 200 amps or less, applied for with a core rebate such as a heat pump.

  • Wiring and circuit add-ons

    Up to $1,000 per circuit on heat pump water heater projects and $500 per circuit or device otherwise.

  • Permit fee add-on

    Up to $662 per eligible standalone permit.

  • Full-service option

    The City's Electrify My Home service, managed by the City, installs a 65-gallon heat pump water heater for $3,350, rebate included.

Will You Qualify?

CPAU's main conditions, as of October 2026.

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  • You're a CPAU residential customer in Palo Alto

    With CPAU electric and gas service at the home.

  • You own the home

    The applicant must be the property owner. A landlord can apply using the tenant's account number.

  • Your heat is gas, propane, oil or wood

    The heat pump rebate is for replacing fossil-fuel heat. Replacing electric heaters or a fireplace isn't eligible.

  • The equipment qualifies

    Heat pumps: SEER2 14.3 and HSPF2 7.2 or better, all-electric (no dual-fuel). Water heaters: NEEA Tier 3 or higher.

  • You reserve before installing

    With photos of the old unit and its nameplate.

  • One of each per account

    One heat pump water heater and one heat pump HVAC rebate per utility account.

Palo Alto Utilities Rebates at a Glance (October 2026)

Rebate Hub amounts as of October 2026, from the City of Palo Alto Utilities Rebate Hub page. Income-eligible amounts are for households in CPAU’s Residential Energy Assistance Program (REAP); check its income limits with CPAU.

Measure Standard Income-eligible Limits
Heat pump replacing gas, propane, oil or wood heat Up to $2,500 Up to $5,000 SEER2 14.3 and HSPF2 7.2 or better; no dual-fuel
Heat pump water heater replacing gas Up to $3,500 — NEEA Tier 3 or higher
Heat pump water heater replacing electric resistance Up to $500 — NEEA Tier 3 or higher
Electrical panel upgrade (add-on) Up to $1,000 Up to $2,000 New panel 200 A or less
Prewiring, circuit splitter or pauser, subpanel (add-on) $1,000 per circuit on water heater projects; $500 per circuit or device otherwise — 1 circuit per appliance, 1 subpanel, 2 pausers per home
Permit fee (add-on) Up to $662 per eligible standalone permit $1,000 for a REAP panel-upgrade permit —
Gas meter removal (full electrification) $2,500 — Taxable; W-9 required

Add-ons are applied for together with a core rebate, such as a heat pump or heat pump water heater, and the add-on work must be done within six months of that installation. Each rebate can cover up to 100% of the measure’s installed cost. A limited-time $500 bonus applied to heat pump water heaters reserved or contracted from July 1 through October 31, 2026.

Electrify My Home: The City’s Full-Service Option

Besides rebates, CPAU runs Electrify My Home, a City-managed service with fixed prices that already include the rebate (effective February 2026). Its heat pump water heater program installs a 65-gallon, 240-volt heat pump water heater for $3,350. A ducted 3-ton heat pump is $9,800 and a 4-ton is $11,700, and a project must include a water heater or heating switch. An Emergency Replacement & Fast option installs a heat pump water heater within two business days; see the City’s heat pump water heater page for its current price.

Electrify My Home is the City’s own program: the City manages the project and arranges the installation, so it isn’t a way to hire CPI. If you’d rather choose your own contractor, CPAU’s “Choose Your Own Contractor” path is the Rebate Hub, and that’s where we fit in.

The Rules That Trip People Up

  • Reserve first. A reservation is required before installation. It’s guaranteed for 120 days; if rebate levels change, the amount is based on the installation date.
  • Two deadlines. Final documents are due within 90 days of the final inspection, and CPAU’s rules also limit rebates to applications submitted within six months of installation. Whichever comes first applies.
  • Only fossil-fuel heat counts. Replacing electric baseboard or wall heaters with a heat pump earns no heating rebate.
  • The capped gas line. CPAU wants installation photos that include the capped gas line, plus an itemized invoice with the contractor’s CSLB number and a permit with a final inspection.
  • Owners apply. The applicant must be the property owner.
  • No thermostat or AC-only rebate. We found no CPAU rebate for an air conditioner alone, a gas furnace, duct sealing or a smart thermostat.

Stacking With Other Programs

CPAU’s rebates stack, but the total of City, regional, state and federal rebates can’t exceed the installed cost. There’s little else open in 2026: the federal 25C tax credit ended for installs after December 31, 2025, statewide TECH Clean California and HEEHRA single-family funds are fully reserved, California Energy-Smart Homes is limited to PG&E, SCE and SDG&E electric territory, and BayREN’s EASE Home is for PG&E customers. CPAU links to the state’s GoGreen Home Energy Financing, and we offer 0% financing for 12 months.

The Bay Area Air District’s adopted Rule 9-6 date for typical household gas water heaters is January 1, 2027, covering units manufactured after that date at sale or replacement. The Air District Board votes on November 4, 2026 on amendments that may change it.

How We Help

We install qualifying heat pumps and heat pump water heaters, pull the permit and give you what CPAU’s final application asks for: the itemized invoice with our license number, model numbers, photos and the permit details. You make the reservation and submit the claim in the Rebate Hub. See our HVAC rebates guide for programs in nearby cities.

Sources

Checked October 27, 2026.

What the Equipment Costs Before Rebates

Typical installed prices in the South Bay, before any rebate. Each job is quoted as a fixed price before we start.

Typical palo alto utilities rebates prices in San Jose, installed, in US dollars. Checked October 2026.
ServiceTypical San Jose price (USD)
Ducted heat pump system$8,000–$25,000
Ductless mini-split, single zone$3,000–$8,000
Ductless mini-split, multi-zone$9,000–$15,000
Heat pump water heater$2,500–$6,000+
Inspection feeWaived for service plan members$59

What affects the price

  • What you're replacing. Only fossil-fuel heat earns the heat pump rebate; a gas water heater earns far more than an electric one.
  • Income. Income-eligible households (through CPAU's REAP) get higher heat pump and panel rebates.
  • Add-ons. Panel, wiring and permit-fee add-ons can lower the net cost.
  • Comparing quotes. Electrify My Home prices already include the rebate; our prices here are before it.

Most repairs are quoted as a fixed price before we start. Ranges are typical for San Jose and the South Bay and don't include current specials.

Read the heat pump installation cost guide →

How to Claim a CPAU Rebate With CPI

  1. Quote qualifying equipment

    We confirm what you're replacing and quote equipment that meets CPAU's specs.

  2. You reserve the rebate

    Before installation, in CPAU's Rebate Hub, with photos of the old unit and its nameplate. The reservation holds for 120 days.

  3. Permit and install

    We pull the permit, install the system, cap the gas line and photograph the work.

  4. Final inspection

    The permit final starts CPAU's 90-day deadline for your final documents.

  5. You submit the claim

    We give you the itemized invoice with our CSLB license number, model numbers, photos including the capped gas line, and the permit details.

Palo Alto Utilities and Permits

How it works in Palo Alto, as of October 2026.

  • One utility for electricity and gas

    CPAU serves Palo Alto homes for both, so PG&E programs don't apply. Neighboring SVCE cities use SVCE Home Rebates.

  • Two ways to use the program

    Electrify My Home is City-managed at fixed prices; the Rebate Hub is for homeowners who choose their own contractor.

  • Faster permits

    Palo Alto offers an over-the-counter mechanical, electrical and plumbing permit and an instant permit for heat pump space conditioning by C-20 contractors.

  • Program contact

    CPAU's electrification team: switch@paloalto.gov or (650) 713-3411.

Neighborhoods we serve: Downtown San Jose · Willow Glen · East San Jose · South San Jose · Evergreen · Cambrian Park · West San Jose · Berryessa · North San Jose · Blossom Valley

Current Specials

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What Our Customers Say

Google 4.9 from 130+ reviews: read more →See photos of our work →

  • Our new heat pump system has just been installed and we are very pleased with CPI and the new equipment. We are especially grateful for the knowledgeable and hard-working technician Bunhak, who worked throughout our recent heatwave to finish the job. We would highly recommend CPI for any HVAC installation or maintenance.

    Linda G.Google review

  • CPI and Alex were extremely helpful when our local church’s water heater kept malfunctioning and needed replacing. From the initial diagnosis, explanation and recommendation of replacement, we always felt that our needs were being tailored to. Not only were they extremely kind, knowledgeable and professional, but they also were diligent and efficient during their time.

    We’re truly grateful for their excellent work and would highly recommend CPI to anyone in need of plumbing or heating services, especially for those in larger community buildings like churches like ours.

    Stephen S.Google review

  • CPI Service is a great company to use for HVAC too! Our A/C stopped working during the recent heatwave & another company wanted to replace our whole unit. Then we called CPI & they found it didn’t need to be replaced, they fixed it that day! I really appreciate a company that responds quickly, is very professional & reasonably priced!!! I’ll be using them for sure in the future.

    Jaycee V.Google review

Palo Alto Utilities Rebates FAQs

Are Palo Alto heat pump rebates still available?

Yes. As of October 27, 2026, CPAU's rebates are open, first-come, first-served while funds last, with no end date published.

How much is the Palo Alto heat pump rebate?

As of October 2026, up to $2,500 for a heat pump that replaces gas, propane, oil or wood heat, or $5,000 for income-eligible households. A heat pump water heater replacing gas earns up to $3,500.

Do I need to reserve the rebate before installing?

Yes. Reserve in CPAU's Rebate Hub before the work starts, with photos of the old unit and its nameplate. The reservation is guaranteed for 120 days.

What is the deadline after installation?

Final documents are due within 90 days of passing the final inspection, and CPAU's rules also limit rebates to applications submitted within six months of installation. Meet whichever comes first.

Can I combine CPAU rebates with other programs?

Yes, but CPAU's rebate plus all other regional, state and federal rebates can't exceed the installed cost. The federal 25C credit ended for installs after 2025, and statewide heat pump funds are fully reserved.

Do renters qualify?

The applicant must be the property owner. A landlord can apply using the tenant's CPAU account number.

Helpful Guides

Serving San Jose and the South Bay

Our shop is at 2880 Aiello Dr in San Jose. We provide palo alto utilities rebates across the city and nearby South Bay and Peninsula communities. See our full service area.

Content and prices reviewed October 2026.

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