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New research on heat pump water heaters was presented at the 2026 ACEEE Summer Study on Energy Efficiency in Buildings tested a smarter approach in real homes, and found it can meaningfully cut costs and emissions, but only where the equipment has room to work.

Space heating and cooling account for 41% of total commercial energy use nationwide, and in California, most of it still runs through gas-fired rooftop units. New research presented at the 2026 ACEEE Summer Study on Energy Efficiency in Buildings, based on two CalNEXT pilot incentive programs, finds that higher efficiency heat pump rooftop units, known as HP RTUs, are increasingly available on the market. The bigger obstacle to adoption is that current incentive levels don’t cover enough of the added cost.

Commercial customers in California lack support when purchasing advanced energy efficiency products and distributed energy resources. These decisions are complex and reliable product performance information, particularly for comparing specific products, can be difficult to find. Yet, these customers are crucial to advancing the state’s electrification and energy efficiency goals.

Virtual power plants and automated demand-response programs have increased across the U.S., though the industry still hasn’t figured out how to talk to the customers it needs to enroll.

Across the board, participants said the devices and systems needed to shift electricity use in response to grid conditions already exist or are close to ready. What's missing is clarity on how rates will be structured, what technical standards devices must meet, and whether state agencies have the political will and staffing to enforce any of it.

The paper, published this month in the ACEEE Summer Study on Energy Efficiency in Buildings, compares seven cooling strategies — from traditional air systems to direct-to-chip (D2C) liquid cooling and full immersion tanks — across energy efficiency, compute density, retrofit difficulty, cost, and environmental impact.

Researchers at UC Davis’s Western Cooling Efficiency Center (WCEC) have designed a modular data center for AI computing that packs 1.5 megawatts of computing power into the volume of a standard 40-foot shipping container—and keeps it cool without energy-intensive compressor-based systems. Better still, the sealed-loop design rejects heat directly to the air, consuming no water at all.