DATE: September 14, 2026
TO: Council Sustainability Committee
FROM: Director of Public Works
SUBJECT Expansion of Heat Pump Water Heater Direct Installation Program
RECOMMENDATION
That the Council Sustainability Committee (CSC) reviews this report and provides a recommendation to City Council to expand the eligibility area for the Heat Pump Water Heater Direct Installation Program (Program) to include all properties within the City of Hayward.
SUMMARY
In September 2023, City Council approved a $1.25 million expenditure plan for the Calpine Clean Energy Fund, including $328,000 for heat pump water heater (HPWH) installations for income-qualified households in three census tracts near the Russell City Energy Center (RCEC). The Program launched in September 2025 and is administered by Larratt Bros Plumbing, Inc. (LBP).
To date, the Program has completed 22 installations and has approximately $132,404 remaining, which is estimated to fund approximately 15 additional installations. Despite extensive outreach within the existing eligibility area, participation has been lower than anticipated. Staff recommend expanding eligibility to the entire City to increase participation and allow the remaining funds to benefit additional income-qualified Hayward households.
FISCAL IMPACT
This agenda item has no impact on the General Fund or Measure C.
The HPWH Direct Installation program is funded through the Calpine Clean Energy Fund.
BACKGROUND
The RCEC is a 600-megawatt natural gas power plant located within Hayward’s industrial zone and operated by Calpine Corporation. Following a May 2021 mechanical failure that resulted in a fire and explosion, the City and Calpine entered into an agreement establishing the Calpine Clean Energy Fund for clean energy and resiliency projects.
On September 12, 2023, City Council allocated $328,000 from the Fund for HPWH installations serving income-qualified households in three census tracts near RCEC. The geographic focus was intended to prioritize households closest to the facility and maximize the benefit of limited funding. On September 8, 2025, staff provided CSC with an informational report on the Program's Request for Proposals, contractor selection, and proposed implementation process. LBP was subsequently selected and awarded the contract, which was authorized by the City Council meeting on April 22, 2025.
The Program provides eligible residents with a no-cost replacement of an existing natural gas water heater with an electric HPWH. Current eligibility requirements include:
Living within one of the three designated census tracts which can be viewed in the Heat Pump Water Heater Direct Installation program webpage; and Verifying income requirements through enrollment in PG&E's CARE or FERA programs or the City's Low-Income Discount Program; and Having an existing natural gas water heater.
Older water heaters are prioritized but not required.
Interested residents call or text (510) 342-3692, which connects to LBP’s “Plunjr” platform. LBP verifies eligibility and conducts a virtual assessment using photos provided in Plunjr. If approved, LBP conducts an in-person assessment, obtains the signed Participation Agreement, coordinates permitting, and installs the water heater.
DISCUSSION
Program Outreach
Staff and LBP implemented outreach in phases with the first phase focused on Hayward residents enrolled in the City’s Low-Income Discount Program who live west of Hesperian Boulevard. Because these residents were already income-qualified and located within the program area, staff anticipated they would be strong candidates for the program. City staff mailed these residents a letter, while LBP conducted door-to-door outreach and distributed door hangers. Staff also sent multiple emails informing residents about the program and their potential eligibility.
Outreach was subsequently expanded to reach additional selected residents within the three designated census tracts. LBP conducted an additional targeted mail campaign consisting of two mailers: the first targeted residents in the census tract with the highest poverty percentile according to CalEnviroScreen 4.0 and the second targeted residents throughout all three census tracts with an estimated household income of $65,000 or less. In total, approximately 1,800 mailers were distributed.
Staff also sent nine marketing emails to approximately 750 addresses associated with residents within the eligible area. Furthermore, LBP and City staff expanded door-to-door outreach in the census tract with the highest poverty level according to CalEnviroScreen 4.0, distributing approximately 1,000 doorhangers in total.
Staff and LBP supplemented these efforts through partnerships with Habitat for Humanity, Rebuilding Together East Bay, and Hayward Unified School District schools located in the eligibility area. Program flyers were distributed at events including the All-American Festival (June 2025), Earth Day (April 2026), Bike Giveaway at Chabot College (April 2026), Ochoa Middle School Open House (May 2026), and the Street Party events (June through August 2026). The program was also promoted through Nextdoor, with posts targeted to neighborhoods within the three eligible census tracts.
Resident Interest and Program Participation
These outreach efforts generated interest from 105 Hayward residents who initiated the application process. Of these applicants, 22 households have completed a heat pump water heater installation. Eighteen applicants were ultimately determined to be ineligible due to electrical panel or space constraints, code violations, income eligibility, geographic eligibility, or having a relatively new water heater. Six of the 18 disqualified applicants lived outside the designated program area. The remaining 65 applicants chose not to proceed with the program. Despite follow-up efforts by both City staff and LBP, including at least two attempts to contact each applicant, these residents stopped responding to calls or messages.
Remaining Funding and Proposed Area Expansion
The Program currently has approximately $132,404 in remaining funding, which is estimated to support approximately 15 additional installations. Given the extensive outreach conducted within the existing eligibility area and the limited number of remaining eligible participants identified through those efforts, staff believe expanding the geographic eligibility area would provide a greater opportunity to fully utilize the remaining program funds. Staff proposes expanding eligibility to all Hayward residents while maintaining the rest of the program’s eligibility requirements. This approach would allow the remaining funds to benefit income-qualified households throughout Hayward.
ECONOMIC IMPACT
The Heat Pump Water Heater Direct Installation program has benefited low-income residents who live in the surrounding area of RCEC by providing them with an affordable option for a more climate-friendly means of water heating. The program also incorporates local workforce benefits. LBP is a signatory contractor with Local Union 342, and Hayward residents have accounted for approximately 25–30% of installation labor hours.
STRATEGIC ROADMAP
This agenda item supports the Strategic Priority of Champion Climate Resilience & Environmental Justice. This item does not relate to a specific project but does address the overall goal to Reduce Greenhouse Gases and Dependency on Fossil Fuels.
SUSTAINABILITY FEATURES
Replacement of natural gas water heaters with electric heat pump water heaters will reduce GHG emissions. Hayward’s 2023 community wide GHG inventory shows that approximately 15% of emissions are from natural gas combustion in homes. Water heaters and furnaces typically account for 91% of residential natural gas use. Reducing natural gas consumption will help the City reach its goal of reducing emissions by 55% below 2005 levels by 2030.
PUBLIC CONTACT
No public contact was made for this agenda item.
NEXT STEPS
Upon direction from the CSC, staff will bring forth this modification to the Program to City Council by the end of 2026. If the City Council approves the proposed program modification, staff will begin outreach to income-qualified Hayward residents throughout the City. Initial outreach will prioritize residents who previously applied but were unable to participate because they lived outside the three eligible census tracts. Staff will then conduct broader digital outreach to residents enrolled in the City's Low-Income Discount Program who are outside the current eligibility area. Additional outreach strategies will be evaluated based on participation and remaining program funding.
Prepared by: Mireille Vargas, Sustainability Specialist Erik Pearson, Environmental Services Manager
Recommended by: Alex Ameri, Director of Public Works
Approved by:
______________________________
Jennifer Ott, City Manager
https://hayward.legistar.com/LegislationDetail.aspx?ID=6343377&GUID=02373BAB-4C20-4402-951D-A5A7F75C6D07&Options=&Search= https://hayward.legistar.com/LegislationDetail.aspx?ID=7648206&GUID=A154F243-6AE8-4B08-957E-8876398D80C2&Options=&Search= https://hayward.legistar.com/LegislationDetail.aspx?ID=7349063&GUID=246A08AD-7ED8-4A8B-B642-43ECE7D2058D&Options=&Search= https://www.hayward-ca.gov/your-government/programs/heat-pump-water-heater-direct-installation-program https://hayward.legistar.com/LegislationDetail.aspx?ID=7261918&GUID=B7976ABF-3582-437F-813C-C8859B65C51A&Options=&Search=