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“It’s definitely a huge hurdle,” says Rachel Kuykendall, senior program manager at Sonoma Clean Power, a Northern California utility. Last April, Sonoma Clean Power added heat pump water heaters to its GridSavvy program, which gives customers a $5 credit on their monthly bill if they allow the utility to control household devices such as smart thermostats and electric vehicle chargers to maximize the use of renewable energy and balance the grid.

Later this year, the utility will roll out a 0% interest loan program that can be tapped to finance electrical panel upgrades. So far, 100 water heaters are among the 969 devices currently controlled by GridSavvy.

Inefficient conventional electric water heaters—which use an electric heating element—are common in other regions of the U.S. That means those homes already have electrical panels capable of powering heat pumps, making a switch cheaper and quicker, according to Amruta Khanolkar, a project manager at the New Buildings Institute in Portland, Oregon.

She says that later this year three big makers of heat pump water heaters, General Electric Co., Rheem Manufacturing Co., and A.O. Smith Corp., are expected to introduce versions that can be plugged into standard 120-volt panels, eliminating the need for expensive electrical upgrades. (The trade-off is that such water heaters may not be suitable for colder climates.)

“We’re currently in a climate emergency and in a pandemic where people are working from home and using more energy for water heating,” says Khanolkar, who manages the Advanced Water Heating Initiative, a coalition of manufacturers, utilities, and government agencies. “The residential sector is now even more critical for decarbonization.”