California’s drive to electrify buildings—and the upcoming 2030 ban on new gas boiler sales—will significantly impact multifamily apartments, commercial facilities, and commercial pool owners. While heat pumps can lower on-site emissions and potentially offer long-term climate benefits, many owners are bracing for higher upfront costs, rising electricity rates, and the challenges of retrofitting or installing new central hot-water systems. This post examines how these changes affect:
New multifamily developments
Existing commercial/multifamily buildings with aging boilers
Commercial pool facilities
Environmental Considerations
First, we wanted to verify the claim that heat pumps are indeed environmentally friendly by comparing their energetic efficiency to that of standard 98%-efficient condensing boiler. This comparison is essential for property owners considering the California solar mandate that promotes clean energy and the electrification solutions.
Condensing Boiler: On-site efficiency is around 98%.
Water to Water Heat Pump: If electricity comes from combined-cycle gas turbines operating at ~60% efficiency—with an additional ~5% loss—the net efficiency is around 55%. In contrast, a heat pump operating at an average COP (Coefficient of Performance) of 3 returns 165% of the BTU, compared with the 98% efficient condensing boiler.
System | Efficiency (%) | Energy Source |
Condensing Boiler | 98% | Natural Gas |
Water-to-Water Heat Pump | 165% (with a COP of 3) | Electricity (from the grid or renewable sources) |
The above confirms that heat water-to-water pumps are more efficient in generating heat and are a greener option for heating water, aligning with messages from green energy companies in California promoting sustainable solutions.
Cost of Operation Comparison
Multifamily Apartment Building Heat Requirements
A typical 60-unit, two-bedroom multifamily apartment building would need about 2,100 GPD (Gallons Per Day). Heating water from an approximate city water temperature of 50 °F to 140 °F translates to roughly 1.58 MMBtu of heat per day.
Using Condensing Gas Boiler (98% Efficiency)
Total heat demand: ~1.58 MMBtu/day
Required input: 1.58 MMBtu ÷ 0.98 ≈ 1.61 MMBtu/day
Therms needed: 1 therm ≈ 0.1 MMBtu → ~16.1 therms/day
Cost: At $2.00 per therm, the daily operating cost is about $32/day
Using Water-to-Water Heat Pump (COP of 3)
Electric resistance equivalent: (1.58 MMBtu/day) × (0.000293 kWh/Btu) ≈ 462 kWh/day
Adjusted for COP of 3: 462 kWh/day ÷ 3 ≈ 154 kWh/day
Cost: At $0.45/kWh, the daily cost is about $69/day
System | Cost Of Operation / Day |
Gas Boiler (1.5 MMBtu) | $32 |
Water-to-Water Heat Pump | $69 |
Under current utility rates, the Water-to-Water heat pump’s operational cost is roughly twice that of operating a high-efficiency gas boiler, prompting customers to look for help from California solar energy companies to reduce operation costs.
Commercial Pool Example
Consider a 374,000-gallon commercial pool with a 5,625 ft² surface area, heated to 82 °F during wintertime. Maintaining that temperature uses about 5,000 therms per winter month.
Using Condensing Gas Boiler
When relying on a 98% condensing gas boiler, at $2.00 per therm, that amounts to roughly $10,204 in monthly fuel costs.
Using Heat Water-to-Water Heat Pump (COP of 3)
Electric resistance conversion: 5,000 therms ≈ 146,500 kWh/month
Heat pump use (COP of 3): 146,500 kWh ÷ 3 ≈ 48,834 kWh/month
Cost: At $0.45/kWh, the monthly cost comes to approximately $21,975—over double the cost of the gas boiler.
These high operating costs have prompted some pool owners to consult solar companies in California and consider installing solar pool panels to reduce the size of water-to-water heat pump size and operational expenses.
Upfront Installation Costs for New Developments
Gas Boiler: A typical 60 two-bedroom apartment building needs a 1.5 MMBtu gas boiler for its domestic hot water needs. The boiler costs around $40,000; with installation, the total could be around $70,000.
Water-to-water Heat Pump System: A commercial heat pump skid (including the unit, storage, and a swing tank) could cost around $230,000, with installation totaling approximately $380,000.
System | Equipment Cost | Installation Cost | Total Cost |
Gas Boiler (1.5 MMBtu) | $40,000 | $30,000 | $70,000 |
Water-to-Water Heat Pump | $230,000 | $150,000 | $380,000 |
The huge upfront difference drives many developers to consult solar design build companies and consulting California solar installers to offset these high upfront costs through federal, state and local green energy incentives.
Additional Requirements:
Space Requirements - Our typical apartment building mechanical room would need to accommodate a large 1,500 gallons of hot-water storage, an additional 200-gallon swing tank, and a dedicated 200 A subpanel.
Local, state, and federal incentives - Navigating the myriad incentives available for the transition to heat pump systems is a challenge in itself. While federal incentives are relatively easy to identify through major energy agencies and national programs, state and local incentives are much harder to pin down. In fact, it took us over a month of diligent research to uncover the few state and local incentives currently available. This fragmented landscape further complicates the decision-making process for property owners, who must weigh these incentives against the higher upfront costs and logistical hurdles of installing heat pump systems. Ultimately, these incentives, while helpful, do not fully offset the significant costs of design, permitting, procurement, installation, and ongoing maintenance—and they are set to taper off as we get closer to 2030.
Engineering and Permitting: The complexity of the equipment and infrastructure requires expertise in electrical, mechanical, structural, and civil engineering. It is advisable to secure city permits and inspections when installing a heat pump water heater.
These factors show that the upfront cost of installing a heat pump system can be over five times that of a standard condensing boiler. The extensive engineering, permitting, specialized equipment, multiple trades, noise, and space requirements present significant challenges for anyone attempting to install a large commercial heat pump water heater.
Additional Considerations for Existing Building Retrofits
Electrical capacity upgrades: Between utilities fees and equipment cost these upgrades can exceed $100,000, prompting HOAs who cannot take advantage of ITC to forge relationships with EPC contractors who can take the tax credit and pass it over to the customer as a cost-effective solution.
Space constraints: Many mechanical rooms lack the space needed, requiring extensive replumbing and close work with green energy constructors who can combine solar thermal or PV with water heat pumps in compliance with Title 24 California requirements, while reducing heat pumps space requirements.
Permitting and engineering: Retrofitting necessitates EPC contractors to be knowledgeable in electrical, HVAC, control, mechanical engineering and have relationships with water-to-water heat pump manufactures before they can approach a project. EPCs with these skills and expertise are costly to hire.
Supply Chain - Water-to Water heat pump suppliers are not ready to size, quote, deliver systems, train or educate engineers and installers on their systems. If you call a water-to-water heat pump supplier, it will take you weeks and many meetings to get the system sized and quoted.
Grid Reliability & Demand Charges
As electrification ramps up, local grids may become overburdened, potentially raising electricity rates and lengthening heat pump payback times. Peak hot water demand coincides with electrical peak use charges which significantly increase monthly bills. The solution might be installing Microgrid battery storage systems offered by renewable energy companies, to help manage peak-time charges and reduce cost of operation.
Commercial Pool Heating
Maintaining an 82 °F pool year-round requires substantial and consistent heat, leading to high capital and operational costs for water to heat pumps.
Legislative Exception: Recognizing the need to keep recreational pools running and accessible to the public, legislators have created a pathway for commercial pool owners to continue using gas boilers past 2030. To qualify, pool owners must install a solar pool system with a total collector surface area equal to or greater than 65% of the pool’s surface area. A commercial pool solar system paired with the 30% federal tax credit appeals to many pool owners who would like to keep their energy bills under control.
Fortunately, the same path applies to existing pools that wish to continue using gas while saving on utility bills by heating pools using free natural sunshine and enjoying a 30% tax credit.
Given the high upfront cost of water-to-water heat pumps and their operating expenses, partnering with a solar energy contractor to install a solar pool system—along with qualifying for the 30% federal tax credit—looks like a no brainer compared with the alternative.
In Summary
As California continues its push toward electrification, multifamily developers face:
High initial costs for heat pump design, permitting, and installation.
Larger mechanical space is needed for equipment, potentially reducing rentable or sellable areas.
Increased complexity added to already challenging Title 24 requirements and local codes, compounded by the gas ban, renewable mandates and soaring electricity rates.
Uncertain electricity pricing: Developers are concerned about grid stability, operational costs, and additional maintenance over the 15-year lifespan of the equipment. the obvious solution would be to partner with a solar companies in California to design build microgrid and battery storage systems to mitigate California’s soaring electricity rates.
Reduced efficiency of heat pumps in ambient temperatures below 40 °F—a significant concern for properties located inland or in mountainous areas.
For existing commercial boiler owners, the 2030 ban triggers:
A rush to replace aging boilers with new gas units before the ban takes effect.
A parallel rush to adopt heat pumps while incentives still exist. That would create a rush on skilled trades like solar contractors, EPC contractors, solar companies in California etc. which would raise installation costs.
The need for major building modifications (electrical, piping, hot-water storage) in older properties. California HOAs, California Developers and existing building owners would no doubt face confusing times looking to hire the right solar energy companies in California that can design build and deliver integrated solar systems and water-to-water heat pumps.
Significant uncertainty regarding future electricity costs and reliability. The only way to ensure one’s electrical rate future would be to install Microgrid battery storage systems offered by renewable energy companies, to help manage peak-time charges and reduce the cost of operation.
Commercial pool owners have an alternative: by installing solar pool systems that comply with new codes, they can bypass the heat pump mandate. However, if a pool owner opts for a heat pump, they will encounter similar challenges like higher upfront costs, increase in utility bills due to demand charges which ultimately leads to an increase in operating expenses.
Final Word
Even though a well-designed heat pump system combined with on-site renewables can be an environmentally and economically sound choice, the return on investment still heavily favors high-efficiency gas boilers in today’s energy market. Ultimately, this transition places the cost of decarbonization squarely on property owners, who must bear the expenses of design, permitting, procurement, and installation for systems that are more expensive to buy, operate, and maintain. Additionally, these owners must contend with installation complexities, waning incentives, and an electricity grid that may not be prepared for increased demand.
California’s natural gas ban raises important questions about the practicality of widespread electrification. While policymakers may have felt pressured to act quickly, concerns around grid capacity, stable electricity pricing, equipment costs, and consistent support for those making the switch remain largely unaddressed. Until these issues are resolved, many commercial property owners will face serious financial and logistical hurdles as they prepare for a future without gas boilers.
for more information regarding water to water heat pump solutions, solar systems and microgrids feel free to contact us at Maktinta@gmail.com
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