For anyone wanting to change your WiFi password and update ESPHome devices, I have just managed to successfully complete the task, admittedly only for 13 devices.
- Decide on your new password
- Update your secrets file (or each devices yaml file, if not using secrets) with the new password
- Install the update to each device
- Change the password on your WiFi network with the new one
- Update the password on all your other WiFi connected devices
Hope this helps, I tried a couple of other ways and failed, then I had a light bulb moment