Home electrification rebates in Palo Alto

Palo Alto wants its homes off natural gas. The city already supplies carbon neutral electricity, so every gas furnace, water heater and stove that switches to electric cuts real emissions. To speed that up, City of Palo Alto Utilities pays rebates on heat pump water heaters, heat pump heating and cooling, induction cooking and the electrical work that makes those swaps possible. It also runs a full-service program that handles the contractor and permits for you.

This page sets out the rebates as the city published them in October 2026, what a typical project costs through the city program and what happened to the state and federal money that used to stack on top. Amounts change at least once a year, so treat the numbers here as a starting point and confirm on the city's pages before you sign anything. For the basics of your utility account, see our guide to City of Palo Alto Utilities.

Two ways to use the city's program

The city offers two routes. Which one fits depends on how much of the project you want to manage yourself.

• Electrify My Home, full service. The city's program assigns an Electric Home Advisor, picks the equipment with you, pulls the permit, schedules the installer and applies the rebates. You pay a published price with the rebate already taken off. It covers heat pump water heaters, ducted heat pumps, ductless mini-splits, induction ranges and cooktops, electric dryers and panel work. Homeowners must switch the water heater, the heating system or both to take part.
• Choose your own contractor. You hire any licensed contractor and then claim rebates yourself through the city's online Rebate Hub. This route suits people who already have a trusted contractor or a more complicated house.

Either way, the program line for questions and emergency water heater swaps is (650) 713-3411. The city's Electrify My Home page starts with an address check and a short home profile.

Core appliance rebates for 2026

These amounts come from the city's Rebate Hub page as it read at the end of October 2026. The higher figure in the right column applies to income-eligible households, as defined by the city's Residential Energy Assistance Program.

The gas meter incentive rewards households that go all the way. Once nothing in the house burns gas, the city pays toward removing the meter, which also ends the fixed monthly gas charge.

Add-on rebates for panels, wiring and insulation

Older Palo Alto homes often have small electrical panels. A ranch house from the 1950s or an Eichler may have 100 amp service or less, which is tight for a heat pump, an induction range and an electric car charger at once. The city pays add-on rebates for that supporting work, but only alongside a core appliance rebate. Stand-alone panel jobs do not qualify.

• Electrical panel upgrade: $1,000, or $2,000 for income-eligible households. The new panel must not exceed 200 amps.
• Attic or roof insulation: $0.75 per square foot, up to $1,000. Insulation must reach R-30 in attics or R-19 for Eichlers and other flat-roof homes.
• Wiring, circuit splitters and subpanels: $1,000 per circuit for heat pump water heater projects and $500 per circuit or device for other projects. The city caps these at one prewiring rebate per appliance, one subpanel per household and two circuit splitters per household.
• Permit fees: up to $662 per eligible permit for stand-alone heat pump water heater, heat pump and induction permits. A panel upgrade permit rebate of up to $1,000 is limited to income-eligible residents.

Circuit splitters and smart panels are worth asking about before you assume you need a bigger service. They let two large loads share one circuit, which can avoid a costly upgrade from the utility side.

What Electrify My Home costs

For the full-service route the city publishes installed prices with the rebate already applied. These were effective February 2026. They include equipment, materials and a one-year warranty. Site conditions can change the total and the city says rates may change annually.

Compare these with quotes from your own contractor after subtracting the rebates you would claim. The program price is a useful benchmark even if you end up going another way.

The extra $500 for heat pump water heaters

In 2026 the city added a limited-time bonus of $500 on heat pump water heater projects. According to the city's announcement, published July 1, 2026, the offer ran from July 1 through October 31, 2026. It applied automatically and stacked with the regular rebate. It covered full-service projects, emergency replacements and self-managed projects through the Rebate Hub, as long as a signed contract or rebate reservation was in place by October 31.

That window closes today, October 31, 2026. The city's water heater page still advertised the bonus without an end date when we checked, so ask the program whether any extension applies before you count on it. The base $3,500 rebate for replacing a gas unit is the figure to plan around.

When a water heater fails

Most people replace a water heater only when it leaks. The city runs an emergency path so you are not forced back into gas. Call (650) 713-3411 and ask about the Emergency Replacement and Fast service. The city's page says a switch can be finished within 48 hours in many cases. If your tank is more than ten years old, it is worth planning now while you still have time to compare options.

How to apply and what to keep

The Rebate Hub runs on a separate site linked from the city's page. The city's FAQ lists these rules:

1. Have active city service. You need City of Palo Alto electric and gas service and a utility account number. Owners without an account in their name can use a tenant's account number or email utilityprograms@paloalto.gov.
2. Get the permit and pass final inspection. Most heat pump and water heater swaps need a building permit. Our building permits guide explains the city's permit portal.
3. Apply within 90 days of the final inspection.
4. Apply separately for each appliance. A combined system that heats both water and the house can qualify for both rebates, but each needs its own application.

Keep the invoice, equipment model numbers, the permit number and before and after photos. Rebate programs often ask for proof of the old gas appliance, so photograph it before the installer hauls it away.

Renters

Tenants cannot usually replace a furnace or water heater, but the city keeps a separate page on electrification options for renters, such as portable induction cooktops. The $50 portable induction rebate is one of the few that works without a landlord's help. Our renting guide covers the rest of the tenant picture.

State programs in 2026

The biggest state program for heat pumps was HEEHRA, the Home Electrification and Appliance Rebates program, funded by the federal Inflation Reduction Act and run by the California Energy Commission through TECH Clean California contractors. It offered income-qualified homeowners up to $8,000 for a heat pump if household income was below 80 percent of area median income and up to $4,000 between 80 and 150 percent.

That money is spoken for. TECH Clean California's HEEHRA page says single-family rebates were fully reserved statewide as of February 24, 2026 and multifamily rebates as of September 1, 2026. It is no longer accepting new reservations. The Energy Commission says it is designing a second phase with $152 million in rebates and will announce availability later. It also warns that bad actors are calling homeowners and falsely claiming to offer these rebates. Do not give financial information to anyone who calls you about them.

The Energy Commission also lists HOMES, a whole-house efficiency rebate program under the same federal law. Check its page for current status before planning around it.

Federal tax credits have ended

Until 2025 many Palo Alto projects stacked a federal tax credit on top of the city rebate. That is over for new work. The IRS says the Energy Efficient Home Improvement Credit, which paid up to $3,200 a year toward heat pumps, insulation and panels, covered improvements made through December 31, 2025. The Residential Clean Energy Credit, worth 30 percent of solar, battery and geothermal costs, is not available for property placed in service after December 31, 2025. The city's own solar page says the same.

If your project was finished in 2025, you may still be able to claim the credit on your 2025 return. Talk to a tax adviser. For anything installed in 2026, the city rebate is now the main incentive. Our solar and batteries guide covers what that change means for rooftop systems.

Frequently asked questions