In the fall of 2021, the Northwest Energy Efficiency Alliance (NEEA) contracted with ILLUME Advising and Lieberman Research to conduct a two-phased study to better understand price sensitivity of Northwest homeowners regarding efficient water heaters for both natural gas and electric fuel types. The study also explored scenarios under which consumers would consider alternative approaches to meeting domestic hot water needs, such as water heater leasing arrangements, or “pay for service” programs. This report leads with the Phase 2 quantitative research findings with the Phase 1 qualitative research available in the appendix of the report.
Phase 1 of the study qualitatively explored the importance of hot water in homeowners’ daily lives and determined that it is so important to them that “if [their] house did not have it, [they] would not have purchased” the house. In addition, the study found that when considering alternatives to traditional purchases, homeowners are open to familiar options such as financing but prefer to own the unit outright. Phase 2’s quantitative findings indicate that homeowners are willing to pay between $1,350 and $1,500 for an efficient heat pump water heater (HPWH) and even at this higher price point they regard efficient HPWHs to be more desirable than a standard electric unit. However, findings indicate that costs above this threshold will require some sort of incentive or tax credit for homeowners to consider purchasing a HPWH. Both studies confirm that water heater financing has more potential than leasing agreements and “pay for service” programs.