Accelerating the future of water heating

The Hot Water Innovation Prize is a national competition led by the Northwest Energy Efficiency Alliance (NEEA) designed to speed the development of affordable and easy-to-install split system heat pump water heaters for space-constrained installations.

The Prize will be awarded for a turnkey system with an indoor tank and separate compressor-evaporator unit housed outdoors. These systems will make high-efficiency water heating possible in homes and multifamily buildings where current heat pump water heaters don’t fit. By rewarding innovation, collaboration, and real-world feasibility, the Prize is helping move the industry toward a cleaner and more efficient future.

Why it Matters

Water heating represents one of the largest energy uses in U.S. homes—and a major opportunity for savings. While unitary heat pump water heaters are common in sizes larger than 40 gallons, affordable split system heat pump models are not yet available in today’s market.

The Prize focuses on smaller (e.g., 35-gallon) split systems because they extend efficiency benefits to smaller or space-constrained homes, including apartments in multifamily buildings. NEEA estimates show they can reduce water heating electricity use by up to 60%, saving each consumer hundreds of dollars annually while significantly lowering emissions.

And with an estimated 1 million to 2.4 million units in potential annual sales, these split system units represent a significant market opportunity for manufacturers.

Utilities and Program Co-sponsors

Preparing for the Next Generation of Water Heating

Utilities and energy-efficiency organizations have a unique opportunity to help move this technology from lab to field.

We invite utilities and other program-focused organizations to join the national effort to promote winning designs from the Hot Water Innovation Prize. We invite you to join our Co-sponsor, the Vermont Energy Investment Corporation (VEIC), in leading demonstrations of winning product. Co-sponsors are also invited to launch early utility incentive pilots beginning in 2027. These efforts will provide valuable data on performance, installation, and customer satisfaction, laying the groundwork for broader adoption.

Interested utilities and program sponsors can contact us to explore collaboration or co-funding opportunities.

Media and Industry Co-sponsors

Help Amplify the Future of Water Heating

We’re inviting industry associations, trade groups, nonprofits, and media outlets to join as Media Co-sponsors. These communications partners play an important role by sharing updates, stories, and results through their communication channels, like newsletters, events, or social media.

Why participate:

• Align your brand with forward-thinking, market-transforming innovation.
• Gain recognition in Prize materials and media stories as a supporting partner.
• Receive turnkey materials, including social posts, visuals, and copy, for easy sharing.
• Stay connected to technologies and policies shaping the next generation of efficient water heating.

If you’re interested in becoming a Media Co-sponsor and communications partner, get in touch!

How the Contest Works

The Hot Water Innovation Prize is structured around three stages that guide promising ideas from concept to market-ready products. Participating manufacturers are now in the design and testing phase; soon the winners of the Prize will be announced. Then the Prize will evolve to support demonstration projects, pilot incentive programs, and industry education to encourage the sale and installation of the Prize-winning products. These efforts will help utilities, contractors, and consumers access more efficient options and accelerate market transformation to efficient electric water heating nationwide.

Phase A: Participant Qualification (2024)

Participants established their eligibility to compete by demonstrating technical capability, manufacturing capacity, and market reach.

Outcome: Approved manufacturers advanced to Phase B to develop full project plans.

Phase B: Project Plan Submission (2025)

Qualified manufacturers submitted 10-page project plans outlining their product designs, production strategies, and launch roadmaps.

Outcome: Up to five manufacturers each received $30,000 in co-funding and advanced to prototype development.

Phase C: Prototype Submission (2026)

Selected manufacturers are building and testing working prototypes of split system heat pump water heaters to demonstrate performance and affordability.

Outcome: Up to two Winners will be selected in 2026 to receive $175,000 in co-funding, national media promotion, and participation in demonstration projects.

Winner Announcement (2026/2027)

Finalists and Winners will be announced at a leading national energy conference, followed by media coverage, demonstration projects, and inclusion in early utility pilot programs.

Resources

• Hot Water Innovation Prize Flyer — coming soon!
• Guidebook and Rules
• FAQs
• Phase A Launch Webinar Recording (10/2/24)
• Supplemental Guidance on Cost-Effectiveness Guidebook & Rules
• Seasonal Coefficient of Performance (SCOP) Calculator
• Manufacturers Webinarand presentation slides
• U.S. Department of Energy Final Rule

About NEEA and Hot Water Solutions

The Northwest Energy Efficiency Alliance (NEEA) is an alliance of utilities and partners that pools resources and shares risks to transform the market for energy efficiency to the benefit of all consumers in the Northwest.
Hot Water Solutions is a NEEA initiative working to accelerate the adoption of heat pump water heaters in the Northwest by providing resources, tools and support to increase sales and installations of heat pump water heaters.