Part 1 in this article series explored four zoning code strategies to accelerate heat pump adoption. Part 3 looks at changes to make at the state level.
Permit reform is the hot topic in climate policy: the time, expertise, and money required to navigate permits leads to increased costs, timelines, and even cancellations for projects including housing, transit, transmission lines, and renewable energy generation. But permitting processes don’t just affect big infrastructure. They can impact the experience of contractors and building owners attempting to install nonpolluting home appliances like heat pumps.
Cumbersome permitting processes may prove a barrier to implementing the Bay Area Air District rules phasing out the sale of gas equipment. Regional organizations are taking the issue seriously: the Bay Area Regional Energy Network — BayREN — recently held a heat pump water heater permitting workshop, and some of the Bay Area’s Community Choice Aggregators and counties are leading initiatives and pilot projects to simplify electrification permitting in their jurisdictions.
It’s time to help our building departments modernize permitting for the clean heating transition and to help contractors and building owners avoid unnecessary costs, delays, and negative customer experiences associated with business-as-usual permitting and inspections.
The Elephant in the Room
Why worry about heat pump permitting and inspections when contractors in the Bay Area usually do not pull permits for space and water heating equipment?
Consider water heaters. Most water heaters in the Bay Area are gas-fired, and every year about 8% of them fail after 10 to 12 years in service. But according to city permitting data around the Bay Area, far fewer than 8% of households pull water heater permits each year.
Permit Compliance Rates for Heat Pump Water Heaters, 2023
| 8.3% of Water Heaters Replaced Per Year | |||||
| City | Replacement Rate (High End) | Replacement Rate (Low End) | Permits Issued for Water Heaters | Permit Compliance Rate (High End) | Permit Compliance Rate (Low End) |
| San José | 28,816 | 16,273 | 1,959 | 12% | 7% |
| Palo Alto | 2,409 | 1,403 | 416 | 30% | 17% |
| Richmond | 3,004 | 2,084 | 100 | 5% | 3% |
| Oakland | 13,126 | 7,462 | 1,124 | 15% | 9% |
| Antioch | 3,163 | 2,063 | 150 | 7% | 5% |
| San Mateo | 3,311 | 1,884 | 175 | 9% | 5% |
Source: SPUR research
Note: Low-end estimates count all units in the city. High-end estimates count only single-family units and duplexes.
The City of Davis addressed the permit compliance issue by passing a “time-of-sale” ordinance requiring homeowners to verify home heating, ventilation, and air conditioning (HVAC) permits before transferring home titles. The program achieved its goal: only 5% of resale inspections found unpermitted HVAC installations. However, inspectors found no difference in the energy efficiency of permitted and unpermitted HVACs (mirroring findings of a statewide California Public Utilities Commission report). So although permits may be ensuring safety, they may not be adding much to energy efficiency.
Many heat pumps are installed with the help of incentive programs that require contractors to obtain a permit. But as adoption of heat pumps trends up, many, if not most, will be installed without incentives, and without permits, absent any efforts to simplify the permitting process. Most replacements occur when old appliances fail, and homeowners want fast solutions when they have no hot water or heating.
If cities want contractors to seek permits for heat pumps, something needs to change. There’s evidence that simplified permitting can lead to higher compliance. In 2016, for example, the City of San José transitioned to a more simplified permitting system for rooftop solar projects and saw a 600% increase in approved permits within the first year of implementation.
Where Permitting Goes Wrong
Permitting complexity can add to “soft costs” for heat pumps. It can burn up contractor hours and worsen workforce shortages by limiting jobs to those familiar with multijurisdictional rules. Moreover, cumbersome permitting can lead to a bad customer experience, particularly when compared with relatively easy permitting for gas equipment. These challenges may decrease interest in and adoption of heat pumps.
Perhaps the thorniest permitting issue is jurisdictional variance across the Bay Area. Each of the area’s 101 cities interprets and applies state building codes differently. The BayREN and TECH Clean California TECH Permitting Pilot for residential heat pump water heater conversions cited varying rules and the lack of a standardized permitting process (along with building departments’ lack of familiarity with heat pump technology) as the top challenges facing contractors statewide. Learning each jurisdiction’s permitting process is cumbersome for contractors and is especially difficult for newer entrants to the workforce.
Furthermore, each municipality may require different paperwork. Some municipalities require plan submittals, which can vary in complexity and which in some cases can seem trivial when contractors are performing simple replacement installations, often in the same location as the old appliance. Additionally, some jurisdictions require contractors to submit forms (CFR1, CFR2) to show they are meeting the state’s CalGreen efficiency standards — even though gas appliance-to-heat pump retrofits always improve buildings’ energy efficiency.
Yet another challenge: homeowners seeking to electrify might need to obtain multiple types of permits, including mechanical, electrical, and plumbing permits. For heat pump water heaters, municipalities often require both electrical and plumbing permits. Again, this application complexity limits the number of contractors qualified to do the work. (California’s Contractors State License Board has issued letters clarifying that plumbers can install the electric circuit to a heat pump water heater, but some jurisdictions and some plumbers are unaware of this development.)
Issuing permits and scheduling inspections can be time-consuming. The BayREN-TECH Clean California TECH Permitting Pilot found that more than half of California’s jurisdictions took an average of 5.9 days to issue heat pump water heater permits statewide, though nearly half of jurisdictions issued most permits within a day. Post-installation inspections can be a time suck because in some cities contractors may end up waiting on-site for the inspector to arrive within a four-hour window. SPUR interviews found that contractors' experiences with inspectors can be unpredictable — even within one jurisdiction. Inspectors may treat code compliance differently, and some may have limited experience with heat pump technologies.
Municipal Action to Reform Permitting
Municipal action to reform permitting starts with building departments, but Silicon Valley Clean Energy (SVCE) found that building officials often don’t see permitting as a problem. Moreover, it found that these officials are unmotivated to prepare for the coming flood of heat pump permits. Installations of heat pump water heaters will increase more than twenty-fold nationally by 2029—and presumably will increase at least that much in the Bay Area.
SVCE’s permit modernization program is responding to this risk of inertia by providing resources and guidance to its member agencies. BayREN has also developed resources such as an electrical load estimator tool and a building code assistance sheet to help contractors navigate permit requirements. San Mateo County recently issued a request for proposals to develop and implement a countywide permit simplification pilot for heat pump water heaters.
SPUR’s work with stakeholders identified a number of actions municipalities can take to prepare their permitting systems for the clean heating transition — and, likely, improve permit compliance:
- Allow for one multi-trade permit (electrical, plumbing, mechanical, and building) to reduce the permit approval timeline and increase code compliance.
- Reduce or eliminate plan check requirements where possible and instead use simple checklists for code compliance. For relatively simple installations, pre-approve permits and allow inspectors to simply check whether the installation is code-compliant.
- Adopt simplified permitting portals that enable on-demand permits for certain installation types, like same-location water heater replacements. Some Bay Area cities have already adopted such portals for heat pump water heaters. There’s room for innovation here: SolarAPP+ provides an instant permitting solution for rooftop solar and home batteries, and Symbium is rolling out digital permitting solutions for municipalities.
- Make requirements to complete the permitting process transparent.
- Re-assess fee structures for heat pump permits, explore options for reducing fees, and aim for greater parity between gas and electric fee structures. Reductions in fees for heat pumps will also require building departments to implement other simplifying recommendations that help reduce costs of providing permit and inspection services for heat pumps.
- Eliminate CF1R and CF2R forms (calculations to determine compliance with the energy efficiency standards set forth in Title 24, Part 6 of the California Building Standards Code) when permit applications are for gas appliance-to-heat pump heating retrofits.
- Allow qualifying contractors to self-certify their work — subject to spot inspections from municipal inspectors. Or use a certification program that offers a pathway to skip much of the permitting and inspection process for certain heat pump retrofits.
- Provide inspection options that don’t keep contractors waiting around. These options include regional inspection coordination programs (for example, scheduling a batch of a contractor’s inspections in a city in a short time frame), virtual inspections, or inspections conducted with the building owner.
- Create assurances that inspections address only the new heat pump device and not previous (perhaps noncompliant) work.
Improving building departments’ permitting capacity is critical to implementing these solutions. Having trained staff who can address questions specifically related to heat pumps will make it easier for contractors to comply with code. SVCE produced guidelines that can help building departments find and maintain the capacity and expertise to implement simplifying solutions for electric retrofits.
Next Up: State Action
California has created permitting standards for home solar in order to meet state climate and energy goals. Its goals to install 6 million heat pumps by 2030 and to end gas heating in buildings should prompt state action on heat pump permitting. Next month, we’ll explore how California can improve that permitting by creating standardized code compliance pathways, mandating some permitting modernization efforts, and offering resources to city building departments.
Read the other articles in the Smoothing the Transition to Heat Pumps series: