There are many different incentives offered in Michigan, depending upon your gas provider, for installing an efficient water heater.


Consumers Energy offers rebates for efficiency upgrades including water heaters. Homeowners must use a participating contractor for the work. The rebate is $75 for a Super High Efficiency Gas Water Heater with an EF value of 0.67 or higher and $100 for a Tankless Gas Water Heater with an EF value of 0.82 or higher. Water heaters with these efficiency ratings also may qualify for DTE Energy's water heater rebates, which offer the same rebate amounts.


The Efficiency United Residential Efficiency Program offers various incentives through its participating utility providers. For example, Michigan Gas Utilities offers a $35 rebate for efficient water heaters. Visit Efficiency United’s website and select your utility provider to learn more about its programs.


Finally, the federal government offers the Residential Energy Efficiency Tax Credit for the purchase of ENERGY STAR appliances. The Tax Credit provides a tax credit of 10 percent, up to $500, of energy efficiency upgrades such as heat pumps, furnaces, air conditioners, insulation, water heaters, windows, doors and roofs. Starting in 2011, $500 is the lifetime limit for this tax credit. This means that if you received any Federal Energy Efficiency Tax Credits between 2006 and 2010, those count towards this $500 lifetime limit. Thus, if you've received $500 or more in these credits previously, you would be ineligible for further tax credits under this program. The credit also only applies to your primary residence, and it must be an existing home. Act fast, because the tax credit expires at the end of 2011.