What Is a Heat Pump Water Heater?

A heat pump water heater uses a heat pump to heat water for home use. It can replace traditional water tanks fueled by electricity, gas, propane, or oil, as well as tankless water heaters.

Along with solar water heaters, heat pump water heaters are among the most sustainable and efficient ways to provide your home with hot water. This, along with the creation of government incentives and growing concerns about the climate crisis, has raised interest in heat pump water heaters; demand is expected to double by 2032.

Heating water uses about 20% of home energy use, so it’s worth understanding your options if you’re in the market for a new water heater. Here, we detail how heat pump water heaters work, pros and cons, and more.

How It Works

A heat pump water heater consists of two parts: a heat pump used to heat the water and an insulated storage tank to store it. The two parts can either be integrated as part of a single unit or split into two separate units.

A heat pump uses electricity to draw heat from one space and move it to another. Heat pumps are primarily used for space heating, but they can just as easily be used for water heating. In an integrated heat pump water heater, the heat pump draws heat from air inside a building and uses it to heat the water in its storage tank. In a split unit, the heat pump draws heat from either the ground or the air outside the building. The heat is then transferred to the storage tank to heat the water.

From there, the heat pump works by blowing warm air across coils filled with a liquid refrigerant. Because of its super-low boiling point, the refrigerant readily turns into a vapor, which is then pumped through a compressor. Compression heats the vapor even further. The heat is then transferred from the vapor to the water in the water tank by a second series of refrigerant-containing coils. The cooled refrigerant is then condensed and returned to the heat pump to start the process all over again.

Hybrid heat pump water heaters have a resistance heater for high-demand situations. The unit can be set to only rely on the heat pump water heater or to use resistant heat as a supplement.

Other components common to conventional water tanks include cold water inlets, hot water outlets, a drain at the bottom of the tank, thermostats, and a control panel.

Pros and Cons

With their greater efficiency and smaller environmental footprint, heat pump water heaters have more pros than cons. Still, individual consumers will have to consider their own needs and living situation to see if a heat pump water heater is right for them.

Pro: Sustainability

As an example, in Canada, roughly 20% of residential greenhouse gas emissions (GHGs) come from water heating, which comes primarily from natural gas water heaters. By contrast, heat pump water heaters run on electricity, meaning they burn only as much fossil fuels as are needed to generate their electricity. In 2021, 40% of U.S. electricity came from non-fossil fuel sources. As the grid gets cleaner, the greenhouse gases emitted to provide homeowners with hot water will decrease accordingly.

A natural gas water heater leaks a small but significant portion of its methane (a potent greenhouse gas) into the atmosphere. With 58 million gas water heaters in the United States, that’s the equivalent of 1.7 million gasoline cars driving on the road for a year.

Pro: Safety

Without any fossil fuels burning in your basement, heat pump water heaters are inherently safer. Natural gas water heaters are among the most common sources of carbon monoxide poisoning, which results from the incomplete burning of fossil fuels.

Pro: Cost

The price of natural gas and other fossil fuels is inherently more volatile than the price of electricity, especially if that electricity is generated from renewable sources like wind and solar. A heat pump water heater lowers the chance of spikes in utility bills.

Pro: Efficiency

Energy Star-certified heat pump water heaters are up to four times more energy efficient and use 70% less energy than conventional water heaters. This allows a household of four or more to save approximately $470 per year on electricity. Over the 13- to 15-year lifetime of the unit, this can save a homeowner more than $4,500, meaning the unit pays for itself.

In addition, a heat pump water heater can heat more water more quickly than the other sustainable way to heat water, a solar water heater.

Pro: Dehumidifying Feature

Heat pump water heaters dehumidify a room as they draw heat from it, reducing the chances of mold or bacterial growth.

Pro: Tax Incentives

Tax incentives exist for the purchase and installation of heat pump water heaters. The Inflation Reduction Act (IRA) allows you to deduct up to $2,000 for the purchase and installation of a heat pump water heater. The IRA also provides for a state-administered rebate of up to $1,750, depending on income and state availability. Other state or local incentives may also apply.

Con: Potential Costs in Cold Weather

In moving heat from one place to another, integrated heat pump water heaters exhaust cold air into the room, increasing the space heating costs for that room in the winter, though reducing the cooling costs in the summer. A split heat pump water heater, however, expels the cold air outdoors.

Con: Upfront Costs

Before rebates and incentives, the upfront cost of a heat pump water heater is generally higher than a conventional water heater. Before installation, a heat pump water heater can cost on average $2,300 to $3,500, while a conventional gas or tankless water heater can cost $200 or less, at minimum.

Con: Slow to Heat

A heat pump heats water more slowly than a gas heater, so you will need to make sure that the water tank can hold enough hot water to meet the peak demands of your household.

Installation and Maintenance

Installing a heat pump water heater is likely to include:

• making sure you have the correct electrical service required by your heat pump;
• turning off electrical and water main supplies to the house;
• connecting the water heater to the water and electrical supplies;
• installing temperature and pressure valves;
• reconnecting the water and electricity;
• testing the unit;
• adjusting the temperature and other settings on the control panel.

Tips for Saving Energy

While heat pump water heaters may be the most sustainable option for heating water in your home, you can implement additional measures to save energy and lower costs.

• As with any water heater, you can save energy by using a low-flow shower head, running the dishwasher only when it is full, avoiding pre-rinsing dishes, using cold water to wash clothes, and using a high-efficiency washing machine.
• Heat pump water heaters work best in a “set it and forget it” state, but many also include a “vacation mode” for extended periods when hot water isn’t needed.
• Pace your hot water use. Requiring a hybrid heat pump water heater to run in resistant heating mode is less energy efficient (and more expensive).
• Look for a high-efficiency water heater with a “coefficient of performance” of 3.0 or higher.
• Make sure your water heater and other water-using appliances are Energy Star certified.