Heat pump water heaters offer an innovative and energy-efficient way to provide hot water in homes. Rather than generate heat itself like an electric water heater, a heat pump water heater transfers heat from the air around it—a process that consumes less energy.
As a result, heat pump water heaters can help reduce energy bills and lead to long-term savings. This guide covers how heat pump water heaters work, things to consider when installing one, and how they compare to other water heater options.
What Is a Heat Pump Water Heater?
A heat pump water heater, also known as a hybrid water heater, is an appliance that uses heat transfer technology to warm water more efficiently than conventional electric water heaters. These units function by extracting heat from the surrounding air and transferring it to the water in the tank, rather than generating heat directly.
This process allows heat pump water heaters to use about one-third of the electricity compared to traditional electric models, according to the Natural Resources Defense Council, making them a more energy-efficient and cost-effective option for homeowners.
How Heat Pump Water Heaters Work
Heat pump water heaters work by transferring heat, allowing them to provide hot water while using less energy. Below, we’ve provided a breakdown of the heat transfer process and the hybrid functionality that helps make these units more efficient.
The Heat Transfer Process
The heat transfer process functions similarly to refrigerators but in reverse. A fan at the top of the unit draws ambient air across an evaporator containing refrigerant-filled tubes. The refrigerant absorbs heat energy as the warm air passes over the evaporator. The now-cooler air is expelled back into the room, effectively dehumidifying the space.
The heated refrigerant is then pumped through a compressor, which increases its pressure and temperature. This hot, pressurized refrigerant passes through a coil wrapped around the water tank, transferring heat to the water inside. As the refrigerant cools, it returns to the evaporator to repeat the cycle.
Hybrid Functionality
Heat pump water heaters are called “hybrid” because they include backup electric resistance elements similar to conventional electric water heaters. These elements can be activated to supplement hot water production if demand exceeds the heat pump’s capacity. They also activate if the ambient temperature falls below the optimal range for efficient heat pump operation. This hybrid functionality ensures a consistent hot water supply while maintaining energy efficiency.
Components of a Heat Pump Water Heater
Understanding the key components of a heat pump water heater helps explain how these efficient appliances function. Each part plays a crucial role in the heat transfer, working together to provide hot water while minimizing energy consumption.
Compressor
The compressor helps increase the pressure and temperature of the refrigerant after it has absorbed heat from the air. This process further raises the temperature of the refrigerant, preparing it to transfer heat to the water in the tank efficiently.
Condenser
The condenser is a coil wrapped around the water tank. Hot, pressurized refrigerant from the compressor flows through this coil, transferring its heat to the water inside the tank. As the refrigerant releases its heat, it cools and returns to a liquid state.
Evaporator
The evaporator includes a series of refrigerant-filled tubes located at the top of the unit. It acts as the initial heat exchanger, absorbing heat from the ambient air drawn in by the fan. As warm air passes over the evaporator, the refrigerant inside the tubes absorbs the heat energy, changing from a liquid to a gas state.
Expansion Valve
The expansion valve regulates the flow of refrigerant through the system. After the refrigerant has released its heat in the condenser, it passes through the expansion valve, which allows it to expand and cool rapidly. This process prepares the refrigerant to absorb heat again as it returns to the evaporator, completing the cycle.
Advantages of Heat Pump Water Heaters
Heat pump water heaters offer several significant advantages over traditional water heating systems. These benefits make them an attractive option for homeowners looking to reduce energy consumption and lower their utility bills.
Cost Savings Over Time
While the initial cost of a heat pump water heater is higher than that of a traditional electric model, the energy savings can quickly offset this investment. According to ENERGY STAR, the annual average cost to operate a 40-gallon electric water heater is $400, compared to just $104 annually for a 40-gallon hybrid water heater. This means you can save over $800 in fuel costs in three years.
Energy Efficiency
Heat pump water heaters have a significant advantage in terms of energy efficiency. These units use heat pump technology to transfer heat instead of generating it directly, so they consume less electricity than conventional electric water heaters. This high efficiency leads to substantial energy savings over the appliance’s lifespan.
Environmental Benefits
Due to their reduced energy consumption, heat pump water heaters have a lower environmental impact than conventional water heaters. They also generate fewer greenhouse gas emissions linked to electricity production, making them a more eco-friendly option for environmentally conscious homeowners.
Potential Incentive, Rebate, and Tax Credit Savings
Heat pump water heaters are considered energy-efficient upgrades, so they may qualify for rebates and incentives offered by many state and local governments and utility companies. These programs can significantly reduce the upfront cost, making these units more accessible to homeowners. In addition, the federal government offers the Energy Efficient Home Improvement Tax Credit for heat pump water heater upgrades. You can receive a 30% tax credit for up to $2,000 for eligible ENERGY STAR-certified units.
We recommend visiting the Database of State Incentives for Renewables & Efficiency (DSIRE) or visiting the ENERGY STAR website to find available incentives in your area.
Potential Drawbacks of Heat Pump Water Heaters
While heat pump water heaters offer numerous benefits, you should consider these potential drawbacks before purchasing.
Higher Upfront Costs
The most significant disadvantage of heat pump water heaters is their higher initial cost. A hybrid heat pump water heater can cost $2,750–$3,500 with installation, compared to around $850 for a traditional electric water heater.
Climate Limitations
While heat pump water heaters can operate efficiently in most climates, their performance may be affected in extremely cold environments. The unit may need to rely more heavily on its backup electric resistance elements in colder regions, potentially reducing its efficiency. However, installing the heat pump in a space with a boiler or furnace can help mitigate this issue by using the waste heat from these appliances.
Space Requirements
Heat pump water heaters require more space than conventional models due to the additional components needed for the heat pump system. According to the U.S. Department of Energy, these units must be installed in an area with at least 1,000 cubic feet of space and a constant temperature range between 40 and 90 degrees Fahrenheit. This requirement may limit installation options in some homes, particularly those with smaller utility areas or basements.
Heat Pump Water Heater Installation
Heat pump water heaters, or hybrid water heaters, have specific installation requirements for optimal performance. The heat pump installation process differs from the installation process of electric water heaters. We have outlined the key factors to consider before investing in a unit.
Condensate Drainage
Heat pump water heaters produce condensation as they dehumidify the air. As a result, they require a connection to a suitable drain to manage this water. Sometimes, a condensate pump may be necessary to transfer the water to a proper drainage point. Proper drainage helps prevent water damage and ensures the unit operates efficiently.
Location Requirements
Ensure your installation location meets the space and temperature requirements for heat pump water heaters. Ideal locations include basements, garages, or utility rooms that meet these criteria. In colder climates, placing the unit near a furnace or boiler working in combination with a water heater can be beneficial, as it can use the waste heat produced by these appliances.
Ventilation Needs
Your heat pump water heater requires proper ventilation to maximize its heat extraction capabilities. If you have installed the unit in a space smaller than recommended, use louvered doors to allow air circulation from a larger adjacent area.
Maintenance and Care for a Heat Pump Water Heater
Like regular maintenance on traditional water heaters, maintenance on your heat pump heater keeps it operating at peak efficiency and extends its lifespan. We have outlined several maintenance tips below.
Annual Flushing
Similar to draining and flushing a conventional water heaters, heat pump water heaters also benefit from annual tank flushing. This process helps remove sediment buildup that can reduce efficiency and potentially damage the tank. We recommend checking your owner’s manual for specific instructions on how to flush your unit.
Anode Rod Inspection
The anode rod helps protect the tank from corrosion. Without it, you likely would have to replace corroded water heater fittings often. We recommend annually inspecting and replacing the anode rod when it significantly degrades. Regular replacements can help extend your water heater’s life.
Filter Cleaning
Many heat pump water heaters have an air filter that helps protect the evaporator coils from dust and debris. Clean or replace filters annually to ensure optimal airflow and heat transfer efficiency. If the unit is installed in a dusty environment, you may need to replace them more frequently.
Comparing Heat Pump Water Heaters To Other Options
Heat pump water heaters suit some homes but may not be the right fit for everyone. To help you decide, we’ve outlined alternative options. Some options can also have a heat pump added to the water heater. Each type of water heater offers unique advantages and disadvantages, and your specific circumstances will determine the best choice for your home.
Traditional Electric Water Heaters
Traditional electric water heaters are less expensive upfront but consume significantly more energy than heat pump models. However, plastic water heaters can also be a more energy efficient traditional model. Traditional electric water heaters have a simpler design and fit in smaller spaces, but their higher operating costs make them less economical in the long run.
Gas Water Heaters
Gas water heaters typically have lower operating costs than traditional electric models but higher than heat pump water heaters. They can heat water quickly and work well in colder climates but require proper venting and a natural gas or propane connection.
Tankless Water Heaters
Tankless water heaters provide hot water on demand and can be very energy-efficient. However, they may struggle to meet high demand in larger households that have or need to install a reserve tank. They often have higher upfront costs than heat pump water heaters. You can learn more in our guide to tankless water heaters.
Our Conclusion
Heat pump water heaters offer better energy efficiency and long-term cost savings than traditional water heaters. Although the higher upfront cost and space requirements may deter some homeowners, you can explore available rebates and incentives to help lower your investment costs. Before deciding, we recommend considering your home’s layout, climate, and hot water needs. Additionally, consulting with a professional installer can help you determine if a heat pump water heater is the best option for your home.
