These rules will help California get closer to its target of 6 million heat pumps installed by 2030, according to the CEC. As of October, the state had achieved about 1.5 million heat pumps across 800,000 homes. The commission estimates that if 100,000 single-family homes are built per year for the next five years, the draft code will spur 1 million to 1.5 million heat-pump installations. (These systems often comprise more than one heat pump unit.)
But the ditched provision to replace residential ACs with heat pumps could do a lot more to close the gap, according to supporters. The coalition estimates that 500,000 ACs are replaced in California each year. In its 2023 proposal, the group calculated that 35 percent of the state’s AC units, or 1.9 million, were more than 14 years old and due for replacement.
Including the AC-specific proposal in the state energy code now would also help Californians get ahead of coming zero-emissions appliance standards, Vespa said. Starting in 2030, the state will effectively ban the sale of gas furnaces. Between now and then, residents who replace their AC with another AC, and then see their furnaces snuff it in 2030 or soon afterward, would end up needing to shell out for a new heat pump anyway, he said. “That’s the last thing you want.”
Replacing an AC with a heat pump instead of another AC has a modest premium, Vespa said: about $900 to $1,900 based on an NRDC analysis and a survey of contractors in the TECH Clean California program. That’s out of a median installation cost of $15,900, according to TECH program data from July 2021 to April 2024.
Federal incentives from the 2022 Inflation Reduction Act, including a 30 percent tax credit of up to $2,000 for qualifying heat pumps, could cover the extra expense. What’s more, residents who get heat pumps won’t have to invest in a future furnace replacement, Vespa said.
While the CEC initially supported the provision in the code for its ability to reduce carbon pollution, public comments and further analysis caused the commission to step back. The proposal may still be too expensive for consumers because of operating costs, according to CEC commissioner J. Andrew McAllister.
In a March 28 webinar, McAllister pointed to the increasing rates in the state for both fossil gas and electricity. Since the proposed rules would encourage the switch from gas to electric heating, consumers whose ACs fail would not only be asked to pay a “little more upfront” for a heat pump instead of an AC-only replacement but would also potentially see increased energy bills for the next five to 10 years “while the rate environment…equilibrates,” he said. “We believe it will, but…even if [switching to a heat pump is] cost-effective over the lifetime, that near-term timeframe is problematic.”
Rather than enshrine the provision in the state energy code, the CEC is considering adding it to the voluntary California Green Building Standards Code, which would mean local governments could implement the rule “where it is clearly cost-effective in that jurisdiction,” McAllister said. Some candidates he named were Glendale, Los Angeles, and Sacramento. Commissioners may also revisit the proposed rule in the next code revision cycle three years from now, he added.
Supporters say the CEC doesn’t need to delay though. Replacing an AC with a heat pump still leaves existing furnaces intact, giving homeowners the flexibility to choose their heating fuel: gas or electric.
Having an electric heating option would insulate them from gas price spikes and rate increases, which experts expect as demand declines and fewer customers are left to bear the costs of the gas system, Vespa said. “The beauty of this approach is no one’s taking anything away from you.”