City of Palo Alto Utilities offers a Heat Pump HVAC rebate of $2,500, or $5,000 for income-eligible residents, when a heat pump replaces a gas or fossil fuel heater. Add-on rebates cover a qualifying panel upgrade ($1,000, or $2,000 income-eligible) and $500 per qualifying circuit or device. Applications are due within 90 days of final inspection.
Who qualifies
The CPAU Heat Pump HVAC rebate is for City of Palo Alto Utilities residential customers. The key rule is simple: the new heat pump must replace a gas or fossil fuel home heater. Replacing an existing electric heat pump or adding cooling to a home that already heats electrically doesn’t qualify for the core rebate.
If you live in Menlo Park, East Palo Alto, Mountain View, Los Altos or on the Stanford campus, you aren’t a CPAU customer, and different programs apply. See our service area pages for notes on each.
Rebate amounts (as published on the City of Palo Alto Rebate Hub)
| Rebate | Standard | Income-eligible | Key rule |
|---|---|---|---|
| Heat Pump HVAC (core) | $2,500 | $5,000 | Must replace a gas or fossil fuel heater |
| Electrical panel upgrade (add-on) | $1,000 | $2,000 | Paired with a core rebate; new panel 200 amps or less |
| Panel upgrade permit fee (add-on) | Not offered | $1,000 | Income-eligible only |
| Prewiring, circuit splitter/pauser, subpanel (add-on) | $500 each | $500 each | Must serve the new heat pump; limits apply |
Rebates change. We confirm the current numbers with CPAU before you sign a contract.
How add-ons work
Add-on rebates are not available for standalone projects. They must be paired with a core rebate like Heat Pump HVAC. The wiring add-on is limited to one subpanel rebate and two circuit splitter or pauser rebates per household. If you also replace a gas water heater with a heat pump water heater, that has its own core rebate and separate application.
The steps
- Get an assessment. We confirm the existing heater is gas, check the panel, and design the system.
- Permit. Most single-family heat pump projects can use the City’s instant permit.
- Install and inspect. The project must pass final inspection.
- Apply within 90 days of final inspection. This is the deadline people miss most often.
Instant rebates at the point of sale
CPAU lets you receive the rebate at the point of sale when you use a contractor listed as a CPAU Instant Rebate Partner in the City’s Contractor Directory. That means the rebate comes off your invoice instead of arriving later. Ask any contractor whether they participate.
Tips to get the most out of it
- Plan the panel early. If your panel needs work, pairing it with the heat pump unlocks the add-on rebate.
- Consider load management first. A circuit splitter or pauser may avoid a panel upgrade entirely, and it has its own add-on rebate.
- Do the water heater too. Combining a heat pump water heater with a heat pump HVAC project can mean two core rebates and one round of electrical work.
- Keep paperwork. Save the permit, final inspection record, invoice and equipment specs.
Ready to plan yours? See heat pump installation in Palo Alto or call us at 650-460-3483.