Why You Should Get a Heat Pump Water Heater (and When It Doesn't Make Sense)

A few years ago, my neighborhood went through an extended blackout, and I had to take a few ice cold showers during the cold weather, and that reminded me that I shouldn’t take hot water for granted.

Yet, most people don’t spend much time thinking about their hot water heaters. And when they break down, most of us just replace them with the same type and move on. But heating up that water is expensive—typically close to 20% of your home’s total energy footprint goes into hot water, and it’s usually the second-largest energy-related expense. That’s why you should consider a heat pump water heater—if you can make it work.

How does a heat pump water heater work?

Where traditional water heaters use gas or electricity to directly heat water, a heat pump water heater works like a reverse refrigerator, pulling warm air over hot condenser coils that are either wrapped around a water tank or that go through the tank directly. The heat is transferred to the water, and the result is the same: A constant supply of hot water you can access any time you need it.

There are a lot of benefits that come with a heat pump water heater:

• More efficient. It’s estimated that heat pump water heaters can reduce your energy costs by as much as 75%. Considering that heating water is your second-largest energy expense, that can mean significant savings over time.

• Environmentally friendly. Heat pump water heaters are also pretty clean in terms of pollution. It’s estimated they can reduce the amount of carbon your house contributes to the atmosphere by as much as 75%.

• Tax Incentives and rebates. You can get a tax rebate of up to 30% of the installation cost to a maximum of $2,000 if you install a heat pump water heater, and many states also offer incentives. That means you can get an immediate financial benefit before the efficiency savings kick in.

Downsides to a heat pump water heater

You might be wondering why everyone doesn’t install a heat pump water heater, considering their advantages. There are some downsides:

• Cost. Heat pump water heaters are typically more expensive than traditional water heaters, with total costs as high as $5,000—on par with a tankless water heater’s cost. This can be offset by tax rebates and the energy savings over time, but represents an immediate obstacle for many people.

• Climate. Heat pump water heaters need ambient heat to work—they’re generally designed to work best in temperatures between 40 and 120 degrees Fahrenheit. If you want to install them outdoors (which many people do, because of their size—see below) you’ll need to be located in an area where it doesn’t get too cold, or you might find yourself without sufficient hot water, or with lukewarm water at best.

  It should be noted that if the heat pump water heater is installed in a space where ambient heat is produced—alongside a boiler, for example—it can actually use the waste heat from the other appliances to work. This might take extra planning, however. You can also find hybrid models that include a traditional heating element as a backup that kicks in when the temperatures get too low.

• Space. Heat pump water heaters tend to be pretty big, and they need a lot of air circulation to work properly, which is why they’re often installed outdoors. They can be installed indoors, but it’s generally suggested that they be in a room at least 450 cubic feet in size in order to work at peak efficiency.

• Condensation. Because of how they operate, heat pump water heaters cool down the space where they’re located, pulling heat into their water tank. As a result, there can be a lot of condensation which will need to be drained. That might require a drain be installed if there isn’t one already in place; otherwise, you might need to install a pump to remove the extra water (which can be used elsewhere—to water a garden, for example).

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