California implemented its updated Energy Code on January 1, 2026, introducing stricter efficiency and control mandates for HVACR systems across both residential and nonresidential sectors. These changes increase compliance costs and maintenance demands. The new standards require smart thermostats capable of dynamic pricing response and default to heat pumps for space heating under the prescriptive path in all climate zones. Electric-ready mandates and enhanced ventilation measures are also now required. Utility programs and incentives are intended to reduce upfront costs for building owners and contractors.
Background
The 2025 update to California's Title 24 Energy Code, effective January 1, 2026, establishes new performance- and prescriptive-based requirements for HVACR systems in new construction and major renovations. The code aims to lower greenhouse gas emissions from buildings, which contribute about a quarter of the state's total emissions, and supports California's broader decarbonization strategy. The update increases ventilation standards and mandates electric-ready infrastructure in both multifamily and commercial sectors. The California Energy Commission issues new code cycles every three years to reflect technological advances and long-term operational savings.The 2025 Energy Code took effect Jan. 1, 2026 according to the state regulatory release. Forecasts expect the new code to produce approximately $4.8 billion in energy cost savings over 30 years and reduce greenhouse gas emissions by about 4 million metric tons. The prescriptive approach now requires heat pumps for space heating statewide, while electric-ready provisions are mandatory for multifamily units and commercial kitchens.
Details
Smart thermostat requirements enable residents to automatically utilize lower-cost electricity by responding to dynamic rate signals. The prescriptive default now mandates heat pump technology in space-conditioning systems. Under CALGreen's 2025 residential mandatory measures, HVAC system sizing must follow ANSI/ACCA Manuals J (load calculation), D (duct design), and S (equipment selection), supporting accuracy in system design. Installers must possess recognized certifications, such as those from state apprenticeships or utility-sponsored programs. In commercial buildings, replacement of end-of-life rooftop HVAC units now requires installation of high-efficiency systems. Acceptance testing must be carried out by certified Acceptance Test Technicians (ATT) for permit applications submitted from January 1, 2026. These procedures are intended to ensure efficiency and performance are verified onsite.
Incentives are available to assist with compliance. The TECH Clean California program offers rebates-for example, a heat pump space heating installation qualifies for a $2,200 bonus per unit, with added allowances up to $600 for electric infrastructure upgrades. Federal credits under the Inflation Reduction Act provide up to $2,000 for qualifying heat pump installations and $600 for high-efficiency central AC, though some rebates may already be reserved. Maintenance costs are expected to increase; transitioning from R-410A to low-GWP or A2L refrigerants, performing NOx emission compliance checks, and conducting detailed inspections may raise service costs by 20-30%. Compliance-related maintenance typically ranges as follows: refrigerant change, $300-$700; NOx check, $200-$600; full inspection, $150-$500.
Outlook
Contractors and building owners should plan for training and certification to meet Manual-based sizing and ATT testing requirements. The timing of incentive funding may critically affect project budgets, as some regional rebates are nearing capacity. As jurisdictions begin code enforcement, practitioners should monitor updates to compliance software and ATT certification protocols to support accurate system installation and permit approval.
