Everything You Need to Know About Heat Pump Water Heaters

With their potential for cost savings, low energy use, and long lifespan, heat-pump water heaters (HPWHs) offer clear advantages over traditional water heaters. This article explores how HPWHs work, their benefits, and key considerations like cost, energy savings, sizing, and installation. It also compares the operating costs and energy efficiency of various water heater types, and includes specifications for four HPWH models.

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The Heat-Pump Water Heater Learning Curve

Heat-pump water heaters, or HPWHs, are gaining popularity because they can provide ample hot water with low operating costs and a lifespan comparable to other tank-style water heaters. But this relatively new technology has a few quirks, and poor design and installation practices can lead to complaints about noise, comfort, and insufficient hot water.

As an installer and project manager, I’ve been involved in dozens of HPWH installations. Here I’ll describe how HPWHs work and answer some frequently asked questions to help you select the right one and optimize its performance.

How Much Does a HPWH Cost?

HPWHs cost more than electric-resistance or gas-fired tanks. A 50-ga. model starts at around $; 80-gal. models can cost upwards of $. Labor and additional materials typically run between $ and $. Factors affecting installation cost include whether a new electric circuit is needed and the difficulty of running drainpipe for the condensate, which is produced as the HPWH absorbs heat from the air.

The up-front costs of HPWHs can be offset by a 30% federal tax credit (up to a maximum credit of $) and, in many areas, state and utility incentives. The Energy Star program provides the HPWH Product Finder, a searchable database of more than 300 eligible models, along with information on rebates by zip code.

My utility offers $700 toward the installation of a qualified HPWH. Combining this incentive with the federal tax credit would bring the net cost of a HPWH installation from $ to $. With a net cost in the same range as other water-heating options and a lower operating cost, a HPWH can make good economic sense.

How Heat-Pump Water Heaters Work: Hot Water From Warm Air

HPWHs work by extracting heat from the surrounding air and transferring it to the water inside the tank. Specifically, the heat pump’s fan pulls ambient air from the room into a heat exchanger, warming the refrigerant.

The heat-pump compressor—much like that found in a refrigerator or air conditioner—compresses the refrigerant, raising its temperature. The hot refrigerant then flows to the condensing coil, where it transfers heat to the water.

If the air moving through the HPWH cools to its dew-point temperature, water condenses on the evaporator coil and drips into a drain pan. From there, this condensate can be piped or pumped to a drain.

How Much Energy Will It Save?

HPWHs heat water by a different mechanism than fossil-fuel or conventional electric systems, allowing them to achieve extremely high efficiencies. Fossil-fuel water heaters burn natural gas, propane, or oil, and a fraction of that heat—in the best tankless systems, more than 95%—is transferred to the water. Conventional electric water heaters run current through resistance elements similar to those in a toaster or space heater, converting electric energy to heat with 100% efficiency.

HPWHs use electricity to power a vapor compression cycle like that in a refrigerator or air conditioner, capturing heat from the air and transferring it to the tank. In doing so, they can achieve heating efficiencies higher than 300%: Each kWh used yields more than three times as much water heating as one kWh of resistance heat.

Dollar savings will depend on household hot-water usage, local electric prices, and the availability and cost of other fuels. A HPWH will have an operating cost about 70% lower than an electric-resistance tank and will almost always be significantly more affordable to operate than the most efficient oil and propane systems.

In areas with average electric prices, HPWHs may have lower operating costs than even instantaneous natural-gas water heaters. Heating water with HPWHs also reduces CO2 emissions, even in areas where the grid is powered mainly by fossil fuels.

What Size Do I Need?

A water heater’s first-hour rating (FHR) is the number of gallons of hot water it can supply in an hour, starting with a fully heated tank. Measured under standard test conditions set by the U.S. Department of Energy, it reflects a combination of tank size and recovery rate (how fast the unit heats incoming water). Fossil-fuel water heaters have high recovery rates, giving them higher FHRs than similarly sized electric or heat-pump water heaters.

A 240V HPWH has resistance elements comparable to those in conventional electric tanks. In the default “hybrid” operating mode, the heat pump provides primary heat, and the resistance elements energize when the heat pump can’t keep up. The FHR reflects the combined output of the heat pump and resistance elements. A 120V HPWH model may have small resistance elements or may lack them entirely. In either case, its FHR is less than similarly sized 240V models (more about voltage below).

If a HPWH is sized correctly, the efficient heat-pump mechanism will provide most of the heating. In a slightly undersized system, resistance elements may engage more often, increasing electric costs. In a severely undersized system, users will run out of hot water during periods of peak demand.

HPWHs are available in nominal sizes from 40 gal. to 80 gal. FHRs range from around 45 gal. for a 40-gal., 120V unit, to 85 gal. or more for an 80-gal., 240V model. The best way to determine what size you need is to fill out a worksheet or online calculator to estimate your peak hot water demand. I like the State Xpert Water Heater Selection Tool (at statewaterheaters.com), which makes recommendations based on shower length and timing, tub size, available space, and geographic location.

Most of the customers I’ve worked with have chosen a 50-gal., 240V model. This choice has worked well in my home; we’ve never run out of hot water, even during holidays when we’ve had up to seven occupants. If you find yourself on the cusp between two sizes, weigh the costs and benefits of upsizing. A larger unit will cost more and take up more space. But it will also use less resistance heat and perform better during a rapid draw such as filling a bathtub.

Heat-Pump Water Heaters: Key Criteria

Here’s a short rundown of the most important criteria to consider when comparing HPWH specs.

Nominal and Rated Volume: “Nominal volume” is a naming convention that allows buyers to identify units of similar size across product lines. “Rated volume” is the actual amount of water the tank holds, in gallons. A nominal 50-gal. tank might only have a rated volume of 46 gal.

Recovery: The rate at which a unit heats incoming water, usually reported in ga. per hr. at a 90°F temperature rise.

First Hour Rating (FHR): The gallons of hot water a unit can produce in one hour, measured under standard conditions. Because it combines stored volume and recovery, FHR provides an overall picture of a water heater’s output.

Uniform Energy Factor (UEF): A water heater’s overall efficiency rating. Heat-pump water heaters have UEFs of 2.80 to 4.10; for each unit of electricity they use, they can deliver 2.8 to 4.1 units of heat.

Estimated Annual Energy Use and Cost: These ratings appear on yellow EnergyGuide labels and allow buyers to compare operating costs across models and fuel types. Your actual operating costs will depend on usage patterns and local energy prices.

Power: Data sheets specify a unit’s voltage (120V or 240V) and required circuit/breaker size (15A for most 120V HPWHs, 30A for most 240V units). A 120V unit will also specify whether it requires a dedicated circuit or can share a circuit with other loads.

Sound Pressure: Sound pressure is measured in decibels (db) or weighted decibels (dbA). An increase of 10 db corresponds roughly to a doubling in perceived loudness.

Additional Features

• Wi-Fi connectivity allows users to adjust their HPWH remotely and receive service reminders and error alerts.
• Smart grid-enabled HPWHs allow users to participate in demand-response and load-shifting programs.
• Units with leak detection have external sensors that can trigger a flashing alert, audible beep, and wireless notification. Leak detection can be paired with an automatic valve to provide enhanced flood protection.

Warranty: Product data sheets usually list warranty length on tanks and other parts. Consult the separate warranty document for detailed terms and conditions.

Should I Choose a 120V or a 240V Model?

Most 240V HPWHs require the same 30A circuits and double-pole breakers used by conventional electric tanks. The highest FHR and efficiency ratings (Uniform Energy Factors) listed on the Energy Star website belong to 240V models, and 240V HPWHs are the logical choice in new construction and when replacing an existing electric tank.

In the last few years, manufacturers have begun offering 120V HPWHs that can plug into existing receptacles. These models can make sense for customers who wish to switch away from fossil fuels while avoiding the extra cost of a new 240V circuit. Using an existing 120V circuit can also make the emergency replacement of a fossil-fuel water heater with a HPWH easier.

Another case for 120V water heaters occurs when the extra load of a 240V water heater would exceed the amp rating of the existing electrical panel or service conductors, necessitating an expensive upgrade. In my experience, this situation is rare. Service-sizing calculations done using the methods described in the National Electrical Code (articles 220.83 and 220.87) usually show that a 240V HPWH won’t, on its own, push an electric service over capacity.

Lower-powered 120V models such as the Rheem Performance Platinum Plug-in, which draws about 440W, can share a 15A circuit with other loads. The Rheem ProTerra, which draws about W, has a more powerful compressor and faster recovery; it requires a dedicated 15A circuit. If the home already has a dedicated circuit for an existing power-vented gas or propane water heater, the more powerful model may be a better choice.

Before opting for a 120V HPWH, carefully calculate your peak hot water demand. A 120V model, with its slower recovery, may not meet the need of a higher-use household.

How Much Space Will It Require?

A HPWH’s top-mounted components—compressor, fan, evaporator coil, and air filter—make a HPWH taller than a conventional electric or fossil-fuel tank with the same rated volume. This, plus the larger tank size needed to deliver the desired FHR, can cause problems in older homes with low basements and narrow doorways.

Installation instructions show the clearances needed around the unit. Some models, such as the State Premier AL Smart Hybrid Electric, place the service connections and air intake and exhaust openings on the top or front of the unit, allowing for installation in tight spaces like closets and alcoves. Others require clearance on multiple sides.

Instructions also specify minimum air temperatures needed for heat-pump operation. Some units will switch to electric resistance when the air drops below 45°F. Others, such as the LG Inverter Heat Pump Water Heater, can continue to operate in colder air.

In the southern U.S., HPWHs are often installed in garages, where they can draw energy from the warm unconditioned air. In northern states, tempered areas like unfinished basements usually work better. HPWHs can also be installed in conditioned spaces, so long as care is taken to mitigate mechanical noise and comfort issues caused by the discharge of cooled air (more below).

HPWHs require sufficient air from which to extract heat. Early recommendations set the minimum volume of an enclosed room at 700 cu. ft. (i.e., a 7-ft. by 10-ft. by 10-ft. room). More recent research indicates that HPWHs can operate efficiently in smaller spaces. State Water Heaters, for example, recently reduced its required room size to 450 cu. ft.

Volume requirements can be reduced further if the mechanical room or closet has a fully louvered door, high and low transfer grilles, or a high grille plus a sizable door undercut. In very small spaces, a high grille plus a flexible outlet duct (attached to the air inlet or outlet with a manufacturer-supplied adapter) or ducts on both inlet and outlet may be required.

Will It Make My House Cold in the Winter?

HPWHs extract heat from the air that passes through them, cooling it by 10°F or more. In winter, this cooling increases the load on the heating system, but the impact is relatively small. One study of HPWHs in nine Michigan basements failed to detect a noticeable impact on home heating use. The same study found that basement air temperatures dropped by an average of 2.3°F during HPWH operation but recovered rapidly at the end of each cycle.

In cooler weather, the air coming out of a HPWH can cause discomfort for occupants nearby. That’s one reason I prefer to locate a HPWH in a space such as a basement. If it’s necessary to put it in a conditioned space, try to discharge the cool air to a hallway, stairwell, or mechanical room so it can mix with warmer air before it reaches higher-use areas.

What About the Noise?

While design improvements have reduced HPWH sound levels, fan and compressor noise is still a concern. Several current models are rated at 42 db to 45 db, comparable to a quiet refrigerator or dishwasher. Still, individuals vary greatly in their sensitivity to sound, and I’ve heard reports of measured noise levels significantly higher than manufacturer’s ratings.

Keeping HPWHs away from bedrooms, home offices, and other quiet spaces reduces the possibility of noise complaints; silencers for ducted air streams can help too. HPWHs installed on wood-frame floors may benefit from vibration-dampening pads.

Does It Dehumidify Too?

In the summer, HPWHs provide a small amount of “free” cooling and moisture removal. If the air passing over the HPWH’s heat exchanger cools to its dew-point temperature, condensate will form, drip into a drain pan, and run into a drain.

But because a HPWH operates in response to hot water demand, not humidity levels, it’s not a substitute for a dehumidifier. (For more detail on that topic, see my comments in “Ask the Experts” in FHB #328.)

What’s the Life Expectancy?

Most sources list a HPWH’s life expectancy at 10 to 15 years, similar to conventional electric and fossil-fuel tanks. But HPWHs have more moving parts and therefore more potential points of failure. Although fans and capacitors can be replaced, the compressor and evaporator are, in general, not serviceable in the field. If these components fail, the unit reverts to resistance mode until it is replaced.

Some contractors and homeowners have reported a higher-than-expected failure rate for HPWHs. One researcher I contacted, speaking off the record, speculated that this may stem from skilled-labor shortages and resulting quality-control failures during the pandemic.

A contractor I spoke to reported refrigerant leaks on several relatively new HPWHs. He stated that the manufacturer honored its warranty, providing replacement units and an allowance for labor. He also noted that manufacturing problems leading to the leaks appear to have been resolved.

What’s the Typical Warranty?

Warranties on HPWH tanks and parts range from six to 10 years. Given the high equipment cost and the history of problems, I’d be inclined to opt for a unit with a longer warranty. I would also speak to my contractor about their experiences with the products they offer.

The same maintenance steps recommended for any tank-style water heater—annual flushing of the tank and temperature/pressure-relief valve, and replacement of sacrificial anodes as needed—can extend the life of a HPWH. In addition, the air filter on the top of the unit should be inspected and cleaned regularly.

Where Can I Find Out More?

The Energy Star program offers a 17-page “Heat Pump Water Heater Guide,” which describes best practices for HPWH design and installation (energystar.gov). That’s a good place to start.

— Jon Harrod; contributing editor, HVAC project manager, and building science consultant.

From Fine Homebuilding #330

RELATED STORIES

Dig into the reasons why heat pump water heaters are the most efficient, most comfortable option on the planet.

Time to upgrade your water heater?

If your water heater is getting up in age—or if it’s been running out of hot water before your shower is even finished—it’s time to start shopping around. 

Well, you’ve found the right place.

In this heat pump water heater buying guide, you’ll get all the details on how and why they’re the best water-heating option for the vast majority of homes.

At Sealed, we’re home energy experts, and we LOVE heat pump water heaters.

Not to mention, there are plenty of tax incentives and rebates for heat pump water heaters (because they’re that good at cutting energy waste).

When you work with Sealed, we’ll handle the paperwork so that you receive all eligible rebates. Learn more.

This is meant to be a comprehensive list of resources, so there’s a lot in here.

Use the table of contents below to jump ahead: 

• Heat pump water heater cheat sheet and quick facts
• What is a heat pump water heater
• How does a heat pump water heater work
• Energy efficiency: How much electricity does a heat pump water heater save?
• Conventional water heaters vs. heat pump water heaters
• Best heat pump water heaters
• Heat pump water heaters in cold climates
• The pros and cons of hybrid water heaters
• Heat pump water heater cost: Considerations, rebates, and tax credits
• How to get a new water heater

A quick cheat sheet: What you need to know about heat pump water heaters (aka hybrid water heaters)

For those of you who are late for a date with destiny, here’s a quick glance at heat pump water heaters:

What is a hybrid water heater?

A hybrid water heater is also a heat pump water heater. It’s a type of residential water heating appliance that operates on a combination of heat pump and electric resistance technology.

How much does a hybrid water heater cost?

These appliances don’t come cheap. The appliance itself costs anywhere between $1,500 and over $3,000 depending on tank size, but that number doesn’t include the cost of professional installation or any electric panel upgrades that may be required. 

Tap here for more heat pump water heater cost considerations. By the way, Sealed can help you make your home more comfortable and energy efficient—and that includes getting you eligible rebates on heat pump water heater upgrades, and connecting you to a highly vetted, expert contractor. Find out how.

How efficient are hybrid water heaters?

They’re the most efficient way to heat water for residential use—up to 3 times more efficient than traditional water heating methods of the past (1). More on exactly why and how below.

How do you size a hybrid water heater?

Sizing a new water heater is a job best left to the professionals. We asked our team of experts, and as a general guideline, a 50 gallon tank can be enough for 3 to 4 people. But if your household schedule requires using a lot of hot water at the same time, a 65 gallon tank may be the better option. Alternatively, a 50 gallon tank could be enough for 5 people that space their hot water use out a bit more. Consult a pro regarding the best fit for your hot water usage patterns.

Okay—now that you’ve been through the cheat sheet—for those of you who are ready to dig into the details (and impress your friends with sciencey water-heater knowledge), let’s get started. 

What is a heat pump water heater?

Okay, so if you’re curious what all the buzz is about: A heat pump water heater—also sometimes referred to as a hybrid water heater—is a type of home water heating system that uses a small amount of electricity to move heat from the ground (if you’re using a geothermal heat pump) or the air to heat the water. 

By far, heat pump water heaters are the most efficient way to create hot water at home. They blow other domestic water heating methods… out of the water (pun intended, of course).

In the past, natural gas water heaters were more popular because, well, natural gas used to be a fairly cheap home heating fuel.

But as the cost of natural gas has increased over time—and now that we know more about the harmful effects gas has on indoor air quality and how it can contribute to increased health costs—more homeowners are opting into going fully electric (2).

Nearly 20% of the average household’s energy consumption is used on water heating alone.

And we can’t go without mentioning this: Heat pump water heaters are better for the health of the planet, too. They have a lower carbon footprint because they use less energy to heat up the water in your house. 

That’s good for everyone—including you, your utility bills, and future generations.

But how are they so efficient? Well, we’re glad you asked… 

How does a heat pump water heater work?

A heat pump water heater is more energy efficient than a traditional electric resistance water heater or natural gas water heater because it doesn’t have to work as hard to create heat. 

Heat pumps work by moving existing heat from one place to another, rather than using energy to generate new heat. 

If you have an air-source heat pump water heater, it pulls heat energy from the air (yes, even in cold weather!) to the appliance to generate hot water—that way, you can enjoy washing your dishes, cleaning your clothes, and then get in a good, hot shower after a long day of chores. 

If you are looking for more details, kindly visit Zhongkeneng.

And if you have a geothermal heat pump water heater? It moves heat energy from the ground outside to the appliance to create hot water. 

(Read more about geothermal vs. air source heat pumps here to understand which type might be best for your house.) 

For a super-detailed guide on how modern heat pump technology works, check out the Sealed Ultimate Guide to Heat Pumps.

Hybrid heat pump water heaters can be up to 50% more efficient than natural gas water heaters.

ENERGYSTAR.gov

What’s a hybrid water heater? How does it compare to a heat pump water heater?

For most people looking to switch to a heat pump water heater, a hybrid water heater is probably the best bet, and you’re about to learn exactly why.

A hybrid water heater is incredibly similar to a heat pump water heater—so much so that the terms are often used interchangeably—but there’s one big difference.

Hybrid water heaters are a type of domestic water heater that use a combination of methods to keep your water warm.

A hybrid model has two technologies built into one appliance:

• An electric heating element and
• An air-source heat pump built into the appliance

There are air source heat pump water heaters that can be connected to standalone outdoor condensers, too, but they’re not as common.

Overall, this combo-approach allows a hybrid water heater to switch to the heating method that will work most efficiently when needed—which also makes it a lot smarter than other water heater models, in our opinion.

On the other hand, a heat pump water heater that doesn’t offer a hybrid approach uses air-source or geothermal heat pump heating without an electric heating element backup. 

So a non-hybrid type of water heater is best suited for warm or hot climates and households that use less hot water overall.

In fact, non-hybrid heat pump water heaters are used fairly rarely, which is why the phrases “hybrid water heater” and “heat pump water heater” are often used to refer to the same thing.

Tankless vs. Heat pump water heaters

Tankless water heaters have been the talk of the town in recent years due to their increased efficiency when compared to storage tank natural gas water heaters.

But here’s a surprising fact: Tankless natural gas water heaters are still not as efficient as heat pump water heaters! 

(And they often aren’t as comfortable as a hybrid water heater either. This writer found out the hard way when visiting a home with a tankless water heater and jumping into an ice-cold shower… after leaving the hot water “warming up” for five minutes.)

Tankless gas water heaters can increase your water-heating efficiency up to 34% max, while heat pump water heaters can increase your efficiency up to 50%.

Energy.gov and ENERGYSTAR.gov

Best heat pump water heaters

Wondering what type of hybrid heat pump water heater could be the best option for you?

Generally, we’ve found a 240v hybrid air source heat pump water heater is a smart choice. 

This type of hybrid model works best in a variety of climates and produces cozy, reliable hot water year round. It can run on electric resistance mode or heat pump mode, depending on which is the most efficient any given day. 

Some of the most trusted, best heat pump water heater brands include:

• Bradford White
• Rheem
• AO Smith

However, every house, climate, and household is different, so it’s best to get professional input on which model or brand is best for your situation.

Expert contractors are an excellent source of knowledge and often carry specific brands or models for good reason. 

Heat pump water heaters in cold climates vs. warm climates

Okay, so now that you have a better understanding of how heat pump water heaters work when compared to traditional water heaters or tankless systems, let’s tackle an important question that often comes up.

If heat pumps use heat energy from the atmosphere to warm up your water, what happens in the winter? 

In a colder climate, heat pump water heaters have to work harder to extract heat energy from the air or ground.

So if you live in Buffalo, New York, unfortunately, your heat pump water heater has to do a little more work than if it lived in Key West, Florida, year round.

(Although, you could consider taking your heat pump water heater on a tropical vacation to give it a break every now and again.)

Okay, jokes aside: What if you do live in Buffalo, New York? Does your water heater stop working in the winter?

Nope. And here’s why: The backup heating element in your hybrid water heater kicks on and keeps your water hot and cozy on a very cold winter’s day—while still using less energy on average than a traditional water heating system. 

That way, you can enjoy a long, hot shower after shoveling snow from the driveway… with zero guilt and hot water still left over.

And what if you heat your entire home with a heat pump? (You can, you know!) 

Cold climate heat pumps are designed to operate as reliably and comfortably as ever in colder temps, so not to worry. 

Read What temperature does a heat pump stop working? to learn why heat pump home heating is reliable—even in a Montana winter.

With a heat pump water heater, you can enjoy a long, hot shower after shoveling snow from the driveway… with zero guilt and hot water still left over.

Are heat pump water heaters worth it in cold climates?

Yes, heat pump water heaters are worth it in cold climates. Modern heat pump water heaters are efficient even in cold climate areas.

Like we mentioned above, a heat pump water heater can be up to 3 times more efficient than a traditional electric water heater and up to 50% more efficient than a natural gas water heater (6, 7).

We’ll let that sink in for a minute.

That means you could save up to 50% of your water heating costs when you switch. 

Plus, water heating makes up 19% of the average household’s total energy consumption, so this isn’t just spare change (8). And when you have a lot of people in your household, the savings can be higher. 

When you live in a cold climate, every penny of your energy-spend counts because winter heating costs can be a beast.

If you live somewhere it gets (and stays) cold, you can make your hybrid water heater even more efficient by installing it in an area that stays warmer in winter… and by ensuring you have proper insulation and air sealing throughout your home. 

Get insulation and air sealing in your home—they help your HVAC and water heating system work more efficiently year round.

But remember: The majority of heat pump water heaters are hybrid models that include an electric heating coil backup that your water heater automatically switches to when needed.

So you’ve always got a hot shower, whether you live in Phoenix, Arizona, or St. Paul, Minnesota.

Can you run out of hot water with a heat pump?

If you’re worried about running out of hot water after switching to a heat pump water heater, don’t be!

Typically, when a household “runs out of” hot water, it’s because they have a water heater—heat pump or otherwise—that is incorrectly sized or is on its last leg and is ready to be replaced.

When a household “runs out of” hot water, it’s because they have a water heater that’s incorrectly sized or is on its last leg.

A professional home performance contractor can help you get the correctly sized water heater replacement for your household.

Plus, when your hot water heater is correctly sized and professionally installed, you can rest easy knowing you’ll have plenty of hot water for daily use.

Which leads us to our next tidbit of information…

When should you replace your water heater? 

If your water heater is getting up in age, it’s time to think about making a switch.

Typically, storage tank water heaters last about 10 years at the most, while tankless water heaters can last longer with proper maintenance.

And if your water heater breaks down, you don’t want to end up without hot water for weeks while waiting for a new water heater to be installed.

So when your water heater starts showing signs that it will kick the bucket soon, start shopping for a replacement.

Here are a few symptoms of an aging water heater:

• Sudden, unexplained increase in energy consumption
• Water discoloration
• Signs of rust and corrosion
• Inability to produce enough hot water for household use

How long will a heat pump water heater last?

With proper maintenance and care, a heat pump water heater (also referred to as a hybrid water heater, remember?) can last up to 15 years on average, and possibly more depending on your household use patterns and appliance maintenance schedule.

Of course, how long your water heater lasts will depend on how much hot water your family uses and if it receives regular care according to the manufacturer’s directions.

For example, if you have a household of 8 and never perform regular maintenance, it could last significantly less than 15 years.

If you know your water heater is nearing its replacement time—or maybe you’re just ready to leave natural gas behind and exchange it for better efficiency and healthier air—there are a few things to consider before you make the upgrade.

Switching to a heat pump water heater: Pros and cons

Before we jump into the pros and cons of heat pump water heaters, we should clarify: As home energy experts, we are very pro heat pump. In fact, it’s the only type of water heating system or HVAC system that we install. 

(We should also mention here, you can get a brand-new heat pump installed by an expert contractor if you work with Sealed—and we help you understand what rebates you may be able to apply to your project costs, too!)

In our experience, we’ve found that heat pumps are more comfortable, more efficient, and a healthier option for practically almost every household use case. 

In our experience, we’ve found that heat pumps are more comfortable, more efficient, and a healthier option for practically almost every household use case. 

However, if you aren’t sure what type of water heater is the best and most efficient for your house and climate, we’re happy to talk it through with you.

If a heat pump isn’t right for you, that’s okay. We’re here to help!

So without further ado—even though we’re very pro-heat pump water heater—you’ll get both the pros and cons below.

Heat pump water heater advantages: The pros of switching to hybrid water heater

The advantages of installing a heat pump water heater include having:

• The most energy-efficient water heating method on the market
• Generous tax credit and rebate options for heat pump water heater upgrades
• More comfortable, reliable water heating compared to tankless systems 
• Better indoor air quality (since you won’t be burning fossil fuels to heat your water)
• No carbon monoxide risk with your water heating system
• Lower operating costs over time

Disadvantages of heat pump water heaters: The cons of hybrid water heaters

The cons of installing a heat pump water heater could include the:

• Initial appliance and installation costs
• Possible need for an electrical upgrade (depending on the age of your house)
• Potentially shorter lifespan than a tankless water heater

Even with the possibility of a slightly shorter lifespan compared to a tankless water heater, hybrid heat pump water heaters are significantly more efficient.

So your new heat pump water heater will often pay for itself sooner and reduce more energy use during its lifetime.

How much are heat pump water heaters?

A hybrid heat pump water heater appliance alone can cost up to $3,000, depending on the tank size and appliance features you choose.

And according to one homeowner’s documented personal experience in Bloomberg, a professional heat pump water heater installation could cost over $8,000, including the appliance costs and inspection fees.

 What’s behind the higher costs? Well, a few things, including:

• Increased demand for energy-efficient appliances due to rising energy prices
• Better, more advanced technology built into modern hybrid water heaters
• Expert training and certifications needed to install newer, more efficient technologies
• Skyrocketing labor and material costs in recent years—in some areas, there have been 40–80% price increases (9)

But, don’t fret yet! Appliance and installation costs vary based on your location and market availability in your area—and if you work with Sealed, we’ll handle the paperwork to help you get all eligible rebates toward a heat pump water heater.

Plus, because of their superior efficiency, hybrid heat pump water heaters are so well-loved by the government and utility providers that there are financial incentives to install them in your home. 

And these incentives can do an excellent job at hedging some of those costs!

Hybrid water heater rebates and heat pump water heater tax credits

Hybrid water heaters have plenty of cheerleaders behind their adoption—and that’s because conserving energy benefits everyone (even your utility company!), so there are plenty of incentives to help make the switch easier on your budget.

• Heat pump water heater tax credits can be claimed on your annual federal tax return if you’re eligible
• State rebates vary widely across the U.S., but new programs are expected to roll out in under the Inflation Reduction Act
• Utility rebates are often offered for energy-efficient appliance upgrades, and we can help you understand what rebates are available in your area

In , the Inflation Reduction Act was signed into law, and it created several new programs for energy-efficient home upgrade incentives. To learn about what home upgrades are included in the new legislation, check out our Homeowner’s Guide to Inflation Reduction Act Tax Credits and Rebates.

If you qualify to work with Sealed, we can help you understand what federal, state, and utility financial incentives your home energy upgrades may be eligible for. 

How to get a high-performance heat pump water heater

Thinking of finally making the switch to a heat pump water heater? 

We believe upgrading to a more comfortable, more efficient, and healthier home should be simple and easy to pay for, so we designed a better way to do home improvement. 

With Sealed, you can get energy upgrades like a heat pump water heater, high-performance insulation, professional air sealing, or a super-efficient heat pump HVAC system from a highly vetted, experienced contractor, and we’ll make sure you receive all eligible rebates.

For more Home Use Heat Pump Water Heater(in,vi,ar)information, please contact us. We will provide professional answers.