When to Use Heat Pump Water Heater？

Heat pump water heaters require installation in locations that remain in the 40º–90ºF (4.4º–32.2ºC) range year-round and provide at least 1,000 cubic feet (28.3 cubic meters) of air space around the water heater. Air passing over the evaporator can be exhausted to the room or outdoors.

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Heat pump water heaters will not operate efficiently in a cold space since they tend to cool the space they are in.  Installing them in a space with excess heat, such as a furnace room, will increase their efficiency.

You can also install an air-source heat pump system that combines heating, cooling, and water heating. These combination systems pull their heat indoors from the outside air in the winter and from the inside air in the summer. Because they remove heat from the air, any type of air-source heat pump system works more efficiently in a warm climate.

Homeowners primarily install geothermal heat pumps -- which draw heat from the ground during the winter and from the indoor air during the summer -- for heating and cooling their homes. For water heating, you can add a desuperheater to a geothermal heat pump system. A desuperheater is a small, auxiliary heat exchanger that uses superheated gases from the heat pump's compressor to heat water. This hot water then circulates through a pipe to the storage water heater tank in the house.

Desuperheaters are also available for tankless or demand-type water heaters. In the summer, the desuperheater uses the excess heat that would otherwise be expelled to the ground. With frequent operation during the summer, the geothermal heat pump may provide the majority of your hot water needs.  

During the fall, winter, and spring -- when the desuperheater isn't producing as much excess heat -- you'll need to rely more on your storage or demand water heater. Some manufacturers also offer triple-function geothermal heat pump systems, which provide heating, cooling, and hot water. They use a separate heat exchanger to meet all of a household's hot water needs.

When you think about cutting your utility bill, your mind probably jumps to energy-guzzling appliances like your fridge, TV or washing machine. But here’s something you might not realize: your water heater could be the biggest energy drain of all.

Sure, you can save money by using less hot water, but an even smarter move is upgrading to a more efficient way of heating it. Enter the heat pump water heater. Instead of generating heat directly like traditional electric or gas models, it pulls warmth from the air, using far less electricity. That efficiency boost can make it up to three times more energy efficient than conventional options, which means lower bills and a greener home.

And there’s another reason to consider the switch: new energy regulations. The Department of Energy is rolling out tougher efficiency standards by , meaning the market is shifting. Getting ahead of the change with a heat pump water heater now could save you money -- and future-proof your home’s energy use.

Here's what you need to know before considering a heat pump water heater.

How does a heat pump water heater work?

A traditional water heater works by pulling cold water in through a tube and heating it with built-in heating elements. Once the water is hot, it can be circulated throughout the home. The problem is that, through this method, electricity (or gas) has to be used to generate all of that heat.

By contrast, a heat pump water heater uses electricity to move heat from the air to heat the water. DR Richardson, co-founder of Elephant Energy, an electrification company that installs heat pump water heaters along with other appliances, explains: "Heat pumps take existing energy and move it from one place to another instead of generating it via combustion." Richardson compares the process to that of a refrigerator, just in reverse. 

For context, a refrigerator cools the contents inside of it by pulling heat from inside and releasing it into the room. A heat pump water heater flips that process around. It takes heat that's in the air and transfers it to a storage tank where it can heat water for your home.

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Heat pump water heater pros and cons

Heat pump water heaters promise the same results as a traditional water heater but perform in a significantly more efficient way. This sounds ideal, but there are still situations in which a heat pump water heater may not be the right choice. Homeowners considering a switch will need to weigh the benefits and trade-offs that they may experience in adopting a heat pump water heater. 

Heat pump water heater pros

Cheaper energy bill: According to the Department of Energy, water heating accounts for nearly 20% of the average American's monthly energy bill. A heat pump water heater is two to three times more efficient than traditional options, meaning it can require just one-third of the typical energy consumption to heat water for your home, depending on your existing hot water system.

Cooling effect during the summer: Heat pump water heaters carry some unexpected impacts too. Because these systems work by taking heat from the air, they have a natural cooling effect. "Another benefit that may appeal to those living in hotter, more humid climates is that heat pump water heaters help cool and dehumidify the surrounding space they are in," Richardson said.

Cleaner air in your home: If your home uses natural gas, which principally consists of the fossil fuel methane, for water heating, you may be exposed to a higher level of hazardous air pollutants. A heat pump water heater reduces your reliance on gas, potentially improving the air quality within your home.

Heat pump water heater cons

Limited installation options: Heat pump water heaters need to be kept in specific temperatures to operate properly, typically in an area of your home that can be kept between 40 to 90 degrees Fahrenheit. Most indoor spaces can work, it is potentially limiting.

Time and cost of installation: Heat pump water heaters are efficient, but they can also take some time to get installed, as it is a somewhat dramatic shift to your home's infrastructure. "If you're interested in getting one of these units installed, it's important to make a plan ahead of time," Richardson said. "Especially if you're switching over from a gas unit, there may be some electrical work involved, so it's best to replace your old unit proactively." He said you can expect the lead time for installation to be one to three weeks on average. 

How much do heat pump water heaters cost?

Heat pump water heaters are typically money-savers, but they aren't without their own costs. HomeAdvisor suggests a standard water heater costs, on average, between $882 and $1,807. By contrast, Richardson said that a new heat pump water heater can run between $5,000 and $7,000, parts and installation included. 

Richardson said there are financial programs that can bring the cost down significantly. "Many of our customers have paid closer to $1,000 to $2,500 due to the myriad of incentives available at the federal, state and local levels," he said. That cost may drop further as Inflation Reduction Act rebates are made available. 

The cost of heat pump water heaters may remain slightly higher than traditional water heaters even with incentives, but they tend to save households money over time. This makes them a worthwhile investment for most homes. "The homeowners we've worked with in Colorado and Massachusetts have typically been able to save between $200 to $600 per year by switching to a hybrid heat pump water heater," Richardson said. 

The Department of Energy noted heat pump water heater units tend to last longer than traditional water heaters, meaning you'll be replacing the unit less often too, adding to your long-term savings.

Should you buy a heat pump water heater?

If your existing water heater is approaching the point of needing to be replaced, or if you would simply like to make a change to a more efficient heating method, a heat pump water heater is worth your consideration. In most situations, the upfront cost of purchasing the unit and having it installed will be the biggest expense you'll face. but you'll start seeing savings on your energy bill almost immediately.

There are situations in which a heat pump water heater might not be ideal. If you are in a typically colder climate or a place that experiences harsh winters, you'll need to remember that the heat pump water heater will pull heat and humidity from the already cold, dry air. You may end up spending more on your heating bill to counteract this, although typically the savings on hot water works out to a net positive.

You'll also need to make sure you have a place to install the unit, as it needs to be kept in a stable climate to operate effectively. As long as your home meets the necessary conditions for installation, and you are willing to deal with the potential trade-offs of this heating method, a heat pump water heater can save you money and lower your carbon footprint in the long run.