Water heating is a large share of household energy use, which is why efficiency programmes target it.
Where the money is
Almost all of it goes to heat pump water heaters, because the efficiency step from resistance electric is a factor of three and that is what programmes are designed to buy.
Federal tax credits for qualifying heat pump units.
State programmes, substantial in several states and absent in others.
Utility rebates, often the simplest to obtain and paid directly.
Income-qualified programmes, which in several states cover most or all of an installation.
Gas storage and gas tankless units attract far less, and in some programmes nothing at all, since the policy direction is toward electrification.
What qualifies
A model on the programme's list, identified by manufacturer and model number.
A UEF above a stated threshold, which for heat pump units is set well above what resistance heaters achieve.
Installation by a licensed contractor, and for some programmes a participating one.
A permit and inspection.
Sometimes an electrical upgrade included in the same package, where a programme recognises that the panel is the barrier.
The disqualifiers
Buying the unit yourself and having it installed. Many programmes require purchase through a participating contractor.
Applying late — utility rebates frequently close within weeks of installation.
Missing documentation: the invoice with the model and serial number, the permit, and the AHRI or programme certificate where required.
Funds exhausted, since annual budgets close early in busy years.
Replacing a gas heater with gas, which in some programmes disqualifies even an efficient unit.
The panel question
A house converting from gas to a heat pump water heater needs a 240 V circuit and a panel position.
Where the panel is full or the service is tight, that cost can exceed the water heater. Several programmes now fund the electrical work alongside the appliance for exactly this reason, and it is worth asking about specifically rather than assuming the rebate covers only the tank.
Load management is also worth raising: a water heater is one of the best shedding candidates in a house, and a managed circuit can avoid a service upgrade entirely.
How to actually get them
Check before choosing the model, using the state energy office and the utility's programme pages.
Give the contractor the requirements in writing and ask them to confirm the proposed model qualifies.
Collect the paperwork at handover.
Submit promptly.
Timing
Thresholds and funding are set annually, and the year that counts is usually the year the unit is placed in service rather than quoted.
Where a household is replacing a heater that still works, that flexibility is worth using. Where the heater has already failed, the replacement happens on the day and the incentive is whatever is available then — which is another argument for planning a replacement rather than waiting for the leak.
The one to avoid
Choosing a resistance electric heater because it is cheapest on the shelf, in a house with a basement and an available incentive.
That decision costs three times as much to run for the next twelve years, and it forgoes money that was on the table.
Keep the records
A federal credit may need substantiating years later and a utility rebate can be audited.
One folder with the invoice showing model and serial numbers, the permit, the inspection record, the programme confirmation and the warranty registration covers all of it — and the warranty registration is the item most often forgotten, since it is usually the contractor's task and it is worth several years of coverage.
Efficiency is not the only lever
Where a household's water heating cost is high, the appliance is one of three things to look at.
The others are hot water use — flow rates at showers, and leaks — and distribution losses, which insulating the first several feet of pipe leaving the heater addresses for very little money.
Neither attracts a rebate, and both are cheaper than an appliance.