ArticleNational Innovation Prize Accelerates Research and Design for Efficient, Small Space Water Heating
Residential
Winning Solution Engineered to Bring New Choices, Energy Savings to More Homes
PORTLAND, Ore. — Mar. 11, 2026 — A new, innovative contest is underway to help millions of U.S. families lower energy use and costs, at a time when electricity demand is significantly increasing nationwide.
The Hot Water Innovation Prize, run by the Northwest Energy Efficiency Alliance (NEEA) and a national coalition of energy efficiency organizations including the American Council for an Energy-Efficient Economy (ACEEE), is supporting manufacturers working to develop a smaller version of heat pump water heaters. Heat pump water heaters use a fraction of the energy traditional resistance water heaters use, but existing models are often too large for smaller homes including condominiums, apartments, and manufactured homes.
The Hot Water Innovation Prize accelerates the future of efficient water heating, by advancing options for ready-to-install, split system heat pumps for small spaces. The Prize makes high efficiency water heating a practical choice for even more consumers, expanding options for households and buildings nationwide.”
Becca Yates | Executive Director
Northwest Energy Efficiency Alliance
NEEA works to accelerate the adoption of heat pump water heaters through its Hot Water Solutions initiative. Based on analyzing residential energy data from the U.S. Energy Information Administration, NEEA estimates that more than 2 million homes nationwide could benefit from compact, split system heat pump water heaters every year. By separating the indoor storage tank from a small outdoor compressor, these systems can fit where traditional units cannot, like under a kitchen cabinet or in a closet.
Seeing this potential opportunity to provide consumers with more flexible options for efficient water heating, NEEA has convened a national coalition supporting this effort to lay the groundwork for broad adoption of the new water heaters by promoting and planning demonstrations of the winning products. The coalition includes:
- Advanced Water Heating Initiative
- American Council for an Energy-Efficient Economy
- Bonneville Power Administration
- Ecotope
- Efficiency Vermont
- Green Building Institute
- Midwest Energy Efficiency Alliance
- New Buildings Institute
- Northeast Energy Efficiency Partnership
- South-central Partnership for Energy Efficiency as a Resource
- Southwest Energy Efficiency Project
- Vermont Energy Investment Corporation
This contest will help bring innovations that make high-efficiency water heating practical for even more households. By supporting the development of efficient new products that work in very small spaces, we can open the door for more people to lower their monthly bills and reduce pollution.”
Matt Malinowski | Buildings Program Director
ACEEE
Catalyzing Innovation: How the Contest Works
After initial qualification and project plan submission, manufacturer teams participating in the contest receive $30,000 to help advance their designs into product prototypes. These prototypes are now being lab tested, evaluated, and judged by a panel of experts. Up to two winners will be announced in late 2026 or early 2027. Winners will receive $175,000 to support research and development for the prototype product.
Unlike traditional research and product development, the contest model brings utilities, manufacturers, and testing laboratories together from the start. This shortens the timeline of adoption by aligning product design with real-world installation challenges, helps validate performance faster, and allows for early planning for future efficiency programs.
Utilities, energy-efficiency organizations, and other partners interested in supporting demonstration, deployment, and market education of the new heat pump water heaters can learn more at HotWaterInnovationPrize.com.
About the Northwest Energy Efficiency Alliance
The Northwest Energy Efficiency Alliance (NEEA) is an alliance of more than 140 utilities and energy efficiency organizations working on behalf of over 14.5 million energy consumers across the four Northwest states.
Since 1996, NEEA has taken a market-driven approach to energy efficiency that is grounded in data, collaboration, and rigorous evaluation. NEEA works to transform markets by filling information gaps and identifying and removing barriers so that the market can align around evolving electric and natural gas energy efficiency needs. For more information, visit neea.org.
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