State guide

Heat Pump Water Heaters in Colorado

Heat pumps are a strong investment in Colorado. Estimated savings: $609/yr vs a standard electric tank.

$609/yr savings/3.9 yr payback/2 programs + HEAR paused/16.6¢/kWh (8% below avg)

IRA HEAR program in Colorado is paused. Watch for reopening.

Running cost Rebates Best fits

Score breakdown: 63/100

Savings

38/55

Rebates

13/20

Climate

4/15

Install

8/10

RatingPlate Score. Based on EIA energy prices, ENERGY STAR data, state rebate programs, and permit research. Not a government rating or purchasing recommendation. FAQ

Colorado electricity is 8% below the national average. Here's what that means for heat pump operating costs.

Running cost in Colorado

At Colorado's 16.6¢/kWh electricity rate, the most efficient heat pump water heater saves an estimated $609 per year compared to a standard electric tank.

Colorado electricity

16.6¢

per kWh (EIA, 12-month avg. through Aug 2026)

US average

18.0¢

per kWh

Best HP annual cost

$138

A. O. Smith HPTS-50-2

Electric resistance

$747

~4,500 kWh/yr baseline

Colder inlet water (47°F annual average, 37°F in winter) means the heat pump works harder than DOE test conditions assume (58°F). Real-world efficiency will be slightly lower than rated UEF, and winter operating costs will be higher than the annual average.

Heat pump vs gas tank in Colorado

At Colorado prices (16.6¢/kWh electricity, $1.12/therm gas), a heat pump costs about $52 less per year to run than a standard gas tank, on the same DOE rated hot water load. See replacing a gas water heater in 2026 and all 50 states compared.

Heat pump

$142/yr

855 kWh/yr (median 50-gal)

Gas tank

$194/yr

173 therms/yr (UEF 0.64)

Difference

$52/yr

heat pump cheaper

Both use the DOE medium draw test load (55 gallons a day). Gas price: EIA, 12-month avg. through Aug 2026. Replacing gas with a heat pump also means adding a 240V circuit (or choosing a 120V model) and a condensate drain, and the federal HEAR rebate no longer covers gas replacements.

Why Colorado changes the call

01Energy cost

Colorado electricity is 8% below the national average. That directly affects how much a heat pump saves compared to a standard electric tank.

02Climate impact

Incoming water averages 47°F annually and drops to about 37°F in winter. Colder water means the heat pump works harder and real efficiency is slightly lower than rated.

03Available incentives

State and utility rebates can significantly change the payback period. Check what's currently available before finalizing your decision.

Rebates in Colorado

Colorado has 2 rebate programs as of November 2026.

The federal $2,000 tax credit (IRA Section 25C) expired December 31, 2025. State and utility rebates listed below may still be available. Verify current status at the links provided.

Xcel Energy Colorado Heat Pump Water Heater Rebate

$750 standard; plus $1,500 limited-time bonus (up to $2,250)

Who: Xcel Energy
Eligibility: Residential electric, gas or combo customer of Xcel Energy in Colorado. Self-install or contractor. Units over 80 gallons, indirect and commercial units not eligible. Apply by Sept. 30 of the year after installation. Since Nov. 16, 2025, homes with existing electric systems (such as an existing heat pump water heater) get the standard rebate only, not the bonus.
https://co.my.xcelenergy.com/s/residential/home-rebates/water-heaters

Colorado Heat Pump Tax Credit (contractor discount)

$83 minimum customer discount ($250 credit to contractor)

Who: Colorado Energy Office / Colorado Department of Revenue
Eligibility: ENERGY STAR heat pump water heater installed on or after January 1, 2026 by a contractor registered with the Colorado Energy Office. The contractor claims the state tax credit and must pass at least one-third to the customer as a discount.
https://energyoffice.colorado.gov/hptc

IRA HEAR Rebate (Point-of-Sale)

Status: Program launched in Colorado but is not currently accepting new applications. Up to $1,750 for income-qualified households. Under federal guidance effective May 29, 2026, this rebate covers replacing an existing electric water heater (or new construction). Replacing a gas, propane, or oil water heater no longer qualifies.
Colorado's federal HEAR program for single-family homes is closed as of October 2026. The Colorado Energy Office accepted applications from November 13, 2025 to August 1, 2026, and single-family HEAR rebates are no longer available. HEAR for small multifamily buildings is listed as coming soon.

Install requirements in Colorado

Code basis: Varies by jurisdiction (IRC/IPC adopted by most municipalities)

Emissions standards (HB 23-1161)

Effective January 1, 2026, Colorado prohibits the sale of new gas-fired water heaters that do not meet ultra-low-NOx emission limits. This affects both new installations and replacements. Heat pump water heaters are not affected by this requirement.

Electrical

Dedicated 240V, 30A circuit (most models). Some newer 120V plug-in models exist but most residential units require 240V. Check the unit's nameplate for exact requirements.

Condensate drain

Heat pump water heaters produce condensate during operation. A condensate drain line to an approved location (floor drain, condensate pump, or exterior) is required.

Air space

Approximately 700 cubic feet of surrounding air (roughly a 10x10x7-foot room). The heat pump extracts heat from surrounding air. Insufficient air volume reduces efficiency and can cause the unit to underperform. Some manufacturers allow ducting to supplement air supply in smaller spaces.

Noise

Heat pump water heaters produce operational noise similar to a window AC unit (45-55 dB). Consider placement away from bedrooms.

Best fits for Colorado

A smaller set of representative fits using Colorado's 16.6¢/kWh rate. Curated to show different trade-offs instead of listing every published model on every state page. See the full heat pump lineup.

Lowest running cost

A. O. Smith

HPTS-50-2

Lowest annual bill at this state's electricity rate.

$138/yr 46 gal UEF 3.80 63" tall

Best efficiency

GE Profile

PH80S10BPY01

Highest UEF in the published lineup.

$187/yr 80 gal UEF 4.40 76.375" tall

50-gallon sweet spot

Bradford White

RE2HP50-1NCTT

Common replacement size for 1 to 3 people.

$139/yr 45 gal UEF 3.89 64.125" tall

Large-household pick

Noritz

NHP120

Higher first-hour rating for heavier simultaneous demand.

$244/yr 109 gal UEF 3.38 85" tall

Tight-space pick

Bradford White

RE2H50S

Shortest cabinet among the published options.

$157/yr 45 gal UEF 3.44 59.1875" tall

Prefer to buy online? The 46-gallon Rinnai REHP50BM is a heat pump available on Amazon.

Check price and availability: Rinnai REHP50BM on Amazon (paid link)

Common questions: Colorado

Is a heat pump water heater worth it in Colorado?

Yes. Colorado scores B on RatingPlate's analysis, with estimated savings of $609 per year compared to a standard electric tank. Payback on the higher upfront cost is roughly 3.9 years before rebates.

What rebates are available for heat pump water heaters in Colorado?

Colorado has 2 rebate programs. The IRA HEAR program has launched but is not currently accepting new applications in Colorado. Verify amounts and eligibility at the links in the rebates section above.

How much does a heat pump water heater cost to run in Colorado?

At Colorado's electricity rate of 16.6 cents per kWh, the most efficient heat pump water heater costs about $138/yr to run. A standard electric tank costs about $747 per year.

Do I need a permit for a heat pump water heater in Colorado?

Colorado has 1 state-specific requirement: Emissions standards (HB 23-1161). Most jurisdictions also require a standard plumbing or mechanical permit. Check with your local building department.

What is the payback period for a heat pump water heater in Colorado?

Without rebates, the payback period in Colorado is approximately 3.9 years based on $609 in annual savings versus a standard electric tank. With available rebates, payback could be significantly shorter.

Your next click

All heat pump modelsCompare specs across brands Back to homepageCompare other types or find a specific model Lowest cost: A. O. Smith$138/yr in Colorado Sizing guideWhat size do you need? Replacement cost guideEquipment, labor, and hidden costs Heat pump vs gas tanklessCompare technologies across fuel types

Sources

Electricity and natural gas rates: U.S. Energy Information Administration, residential sector (EIA, 12-month avg. through Aug 2026).

Rebate data compiled from state energy offices, utility program pages, DSIRE, and ENERGY STAR. Rebate amounts and eligibility change frequently. Verify at listed program URLs.

Inlet water temperatures estimated from NOAA climate normals using the Burch-Christensen mains water temperature model (NREL).

Model specifications from ENERGY STAR certified product data and manufacturer spec sheets.

Page updated November 1, 2026. Data freshness varies by source.

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