Heat Pumps: Transforming the Way Contractors Do Business
There are more than 25,000 California contractors whose licenses make them eligible to install heat pump technology.
Yet only a fraction of contractors are actively doing so. Their low participation is driven by two critical factors.
The first has to do with understanding the product, selling techniques, and the customer value proposition. Many contractors cite a lack of the needed know-how to do so as a primary barrier. Indeed, contractors’ limited knowledge about heat pumps was cited as the top challenge for customers in finding a skilled installer, according to an Opinion Dynamics Sept 2024 study.
The second factor is the challenge in integrating different business models. HVAC and plumbing businesses have different primary models. HVAC businesses have traditionally been more open to new technologies, and upselling product lines and services such as heat pump technology are seen as revenue opportunities. For plumbing, on the other hand, the traditional business model is built on volume and serves as many customers as possible, which makes the higher upfront costs of heat pump technology less attractive.
These are the challenges the State of California is taking on, in its efforts to transform the space and water heating market by increasing the adoption of heat pump technology and products statewide. Achieving this goal requires addressing both the technical skills shortage as well as a business and sales model adaptation.
The opportunity presented by a market shift to heat pumps is significant. The US heat pump market is projected to grow to 24 billion by 2028, nearly doubling in size.1 Heat pump projects tend to have higher overall ticket costs, giving contractors who install them well new revenue streams to build their businesses.
Not only are heat pumps environmentally friendly and reduce carbon emissions, but they also offer longer term savings on energy bills because they transfer heat instead of producing it. Innovations such as cold climate heat pumps and variable speed compressors have made heat pumps an excellent choice for residential and business consumers.
To take advantage of this major market shift as it’s occurring, one of the first steps for contractors is learning how to do it well, this means training, and not just the sales team. Installers, technicians and even the front office need to get up to speed on meeting this growing demand for heat pumps.
“Proper heat pump installations require engineering the system to meet the exact needs of each home,” said Larry Waters, owner of Electrify My Home, which provides energy assessments and designs for home electrification. “There’s a lot of advanced planning that needs to be done, it needs to be done carefully, otherwise, customers can unwittingly make very costly mistakes.”
TECH Clean California, a statewide initiative to accelerate the adoption of clean space and water heating technology, is helping to bridge this gap by offering workforce training courses for contractors already in the trade.
“The top-level goal is that we’re trying to prepare contractors for tomorrow,” said Sandy Laube, an energy efficiency workforce expert with Energy Solutions. “We’re attempting to basically change a business model into one where contractors are selling and installing low-carbon emissions equipment, and they’re doing so at the highest possible level.”
As part of this strategy, TECH Clean California currently partners with two electrification experts, the National Comfort Institute (NCI) and Electrify My Home, to offer free courses to interested participants. There are currently no restrictions on who can take the courses, or how many times a particular course can be attended.
The training courses are designed to provide the technical know-how for not just installing the equipment, but in guiding the customer to the best system for their particular house.
“Getting the correct system for a given house is done through load calculations and room-by-room airflow sizing and really putting in the right system for that home,” Waters said. “Costly mistakes that can be made are when a customer or a homeowner makes a decision for a heat pump without looking at different options.”
His firm also offers courses for training contractors and has provided courses for more than 125 contracting businesses.
Another such course, NCI Airflow and Diagnostics, provides explanations on how to test, diagnose, improve existing systems, and deliver high-performing installations. Students learn to identify fan type and fan speed for example, as well as how to locate fan tables and plot the fan airflow. These are critical skills for ensuring the maximum effectiveness of a new heat pump system.
“Most technicians out there just don't really know what they need to do to make these systems perform okay,” said Ben Lipscomb, a trainer and director of engineering and utility programs at the National Comfort Institute. “There's always been this disconnect between what the manufacturers are designing the equipment to be able to do, and what the systems these technicians are putting in are capable of, because of how they were installed.”
For courses such as those offered by the National Comfort Institute, contractors learn skills essential for installations, such as how to diagnose and perform air upgrades on HVAC equipment and duct systems.
Proper duct system design is critical because of the reliance of heat pumps on the surrounding air temperature.
“A heat pump moves heat from outside to inside, and it can operate in reverse as an air conditioner, and move heat from inside to outside,” Lipscomb explained. “For that heat transfer to take place, those indoor and outdoor air flows have to be within a certain range, or things start not working right. That can cause like issues with the equipment breaking down, or just the air being delivered, but not at the right temperature.”
The courses also emphasize heat pump technology in the context of broader electrification goals, including practical applications such as addressing potential future electrical panel issues that could arise as additional electric appliances are added.
“We’ve helped drive some contractors towards becoming more electrification knowledgeable,” Waters said. “The proper way to electrify a home is to look at all the gas loads in advance and plot a plan for the customer to fully electrify over time. This ensures that mistakes are not made up front that cause the customer to have to upgrade their utilities during the process.”
There are policy and regulatory discussions as well, providing the near-term and far-reaching changes in the home building industry, and how they will be impacted by any rule changes.
Contractors are also calling for more training, according to a March 2024 Opinion Dynamics survey. In the survey, two-thirds of the participants said that they attended to learn about the technology, and more than half saw the courses as a way to develop new skills and better serve customers, as opposed to fulfilling a license or certification obligation.
There is a growing need to standardize the curriculum for experienced plumbers and contractors learning how to install heat pump water heaters, the Opinion Dynamics study found. Doing so would help shift the market more quickly, according to the study, encouraging the faster attainment of California’s climate goals.
The study also found that while many heat pump water heater courses focus on installation training, more than one-third of contractors say they would benefit most from classes on servicing the equipment and were also interested in more maintenance training.
Figure 1: Desired training topics for contractors installing HPWH and HVAC systems
Source: 2024 Opinion Dynamics survey*
There is also a high demand for learning more about the relevant codes and regulations governing heat pump water heaters.
In the meantime, the classes have been very helpful in coaching contractors on how to guide the business discussions, letting customers know about the overall benefits of residential electrification, and how they can transition from natural gas to electricity without additional costs.
“These TECH Clean California courses have opened my eyes to what help is available,” said Tom Walsh, a contractor and owner of DaVinci Mechanical. “It has allowed me, as a contractor, to educate myself and take more training – then you can educate on the benefits, rather than being a chop-and-box sales guy. No one else talks about anything like these – the tax credits, the energy savings. And that is what a good contractor is supposed to do.”
Even so, getting the word out to the vast majority of those 25,000 contractors – and getting them involved in the training - has been challenging. TECH Clean California wants to ensure it does not simply develop a small cadre of elite contractors, specializing in heat pump adoption.
The goal, instead, is market transformations, and this means changing how the market views heat pumps – as a default installation product. To do so requires figuring out how to open the door for all contractors to understand and benefit from the new technology.
“At a top level, what we are trying to do is change the way contractors do business in California,” Laube said.
TECH Clean California is also looking at innovative ways to encourage contractors and business owners who would like to participate but cannot find the resources. There are plans for offering small stipends, for example.
Another outreach effort will be offering training courses in languages other than English, to ensure that all communities have access to local contractors in their area.
It is one more way that TECH Clean California is making sure that all of California’s contractors will be ready to go and prepared for the work to come. It’s good for the state, and it’s good for the contracting business.
“If a contractor participates in TECH Clean California, they can be on the leading edge of this trend,” said Ben Lipscomb, who oversees contractor HVAC training programs at the National Comfort Institute. “Long term, those leading companies are going to be the companies that people continue to look for first when they need a new heat pump or just need HVAC work done in general,” Lipscomb said. “It puts them at the forefront of this curve.”
*Opinion Dynamics, under contract with Southern California Edison, serves as an independent third-party evaluator for TECH Clean California. The California Water Heating Market Study was conducted under the Group B contract for the California Public Utilities Commission.
By: Emily Pickrell