Utility Incentives & Tax Credits

Take Advantage of Incredible Opportunities to Reduce System Costs by Over 50%!

We guide you through the entire process of securing these financing vehicles.

Utility Incentives & 0% On-Bill Financing (OBF) Loans

Major California Investor-Owned Utilities (IOUs)—including PG&E, SCE, and SDG&E—offer substantial rebates for replacing gas boilers with heat pumps:

  • Prescriptive Rebates: Fixed cash incentives per unit or per installed MBh/ton of heating capacity for qualifying air-source and water-source heat pumps.

  • Custom Performance Incentives: Customized cash payments based on calculated annual therms of natural gas displaced and kilowatt-hours (kWh) optimized.

Also, capital constraints no longer need to delay your facility's energy upgrades. California’s On-Bill Financing (OBF) program enables qualified commercial, industrial, and institutional customers to finance 100% of their remaining electrification project costs after rebates—at 0% interest.

How On-Bill Financing Works:

  • $0 Out-of-Pocket Expense: Finance equipment procurement, engineering, panel upgrades, and installation with zero initial down payment.

  • 0% Interest Rate: Unmatched financing terms funded directly through California utility ratepayer programs.

  • Cash-Flow Neutral or Positive: Monthly loan repayments are structured so that energy savings offset the monthly charge on your standard utility bill.

  • No Cap-Ex Friction: Because the loan is tied to the utility meter, it avoids traditional debt covenants and complex corporate capital expenditure approvals.

Example Financials:

Total Project Cost: $500,000

Minus Utility Rebates/Incentives: -200,000

Minus 30% Federal Tax Credit: -$90,000

Net Out-of-Pocket Financed at 0% OBF: $210,000 ($0 paid upfront)

Navigating utility incentive applications and OBF paperwork can be complex. We handle the entire incentive reservation, engineering review, and utility submission process from end to end.

Tax Credits

IRS Section 48E - Clean Electricity Investment Tax Credit (ITC) provides significant federal tax relief for commercial and industrial thermal electrification projects. Replacing fossil fuel boilers with high-efficiency Heat Pump Water Heater (HPWH) systems and Thermal Energy Storage (TES) allows facility owners to offset up to 30% to 50%+ of total project installation costs directly against their federal tax liability.

For commercial and industrial HPWH retrofits, the credit applies to the total installed capital expenditure, after utility incentives—including HPWHs, TES vessels, electrical panelboard upgrades, piping, and labor.

  • Base Credit (30%): Commercial projects qualify for a full 30% base credit provided they comply with federal Prevailing Wage and Apprenticeship (PWA) rules during construction.

Beyond the 30% base credit, Section 48E provides stackable bonus add-ons that can push your total federal tax credit up to 40%, 50%, or higher:

  • Domestic Content Bonus (+10%): Qualify for an additional 10% credit bonus by procuring heat pump equipment, thermal storage tanks, and steel components manufactured in the United States according to IRS domestic content thresholds.

  • Energy Community Bonus (+10%): Projects located in designated Energy Communities—areas with historical coal plant closures, brownfields, or high employment in fossil fuel industries—qualify for an extra 10% tax credit boost.

  • Low-Income Communities Bonus (+10%): Facilities serving low-income communities or federally recognized tribal lands can apply for allocated bonus credits of 10%, bringing total potential tax credits up to 50%+.

We have teamed up with Eide Bailly, a national tax advisory firm, to assist customers with Section 48E compliance.

MACRS 5-Year Accelerated Depreciation - In addition to the Section 48E ITC, commercial clean energy equipment qualifies for 5-year MACRS accelerated depreciation, allowing businesses to write off the majority of the asset value within the first five years, substantially reducing tax obligations and accelerating project ROI.

Grants & Carbon Credits

Commercial and industrial facility owners in California might be able to access state grants and carbon credit markets to fund Heat Pump Water Heater (HPWH) projects. By displacing natural gas combustion, your facility reduces greenhouse gas (GHG) emissions—potentially unlocking state clean energy grants, regional air district funding, and ongoing monetization through carbon credit markets.

Possible Grants

CPUC & CEC Industrial Decarbonization Grants - The California Public Utilities Commission (CPUC) and California Energy Commission (CEC) regularly release competitive grant solicitations aimed at replacing fossil fuel-fired boilers with high-efficiency electrification technologies. These grants focus heavily on high-load commercial and industrial applications, including food processing, manufacturing, hospitality, and agricultural facilities.

Regional Air Quality Management District (AQMD) Grants - Local air districts—such as the South Coast AQMD and San Joaquin Valley APCD—offer grant funding to reduce local NOx, PM2.5, and greenhouse gas emissions. Transitioning from gas-fired water heating to clean electric heat pumps removes onsite combustion emissions, making projects highly eligible for regional air quality grants.

Food Production Investment Program (FPIP) - For food and beverage manufacturers, state grant programs like FPIP provide direct capital funding for adopting cutting-edge, low-carbon technologies such as water-source heat pumps, thermal energy storage, and industrial waste heat recovery.

Replacing natural gas boilers with HPWH systems provides immediate, quantifiable carbon reductions. Facility owners can convert these reductions into financial assets through carbon offset and credit markets.

Possible Carbon Credits

Voluntary Carbon Offset Markets: Every metric ton of CO₂ equivalent (MTCO₂e) displaced by your heat pump system can be measured, verified, and registered as a carbon offset. Third-party credit buyers purchase these offsets to meet corporate sustainability goals, generating an ongoing annual revenue stream for your facility.

Low Carbon Fuel Standard (LCFS) & Microgrid Opportunities: For industrial facilities integrated with onsite solar, microgrids, or electric fleet operations, heat pump thermal loads can be monetized under specialized clean energy credit protocols.

Scope 1 Displaced Gas Measurement: Automated telemetry and smart controls track actual therms avoided in real time, simplifying verification and maximizing the financial value of generated credits.