Heat Pump Water Heaters: Big Savings on a Hidden Energy Hog

Water heating quietly ranks among the largest energy uses in most homes, often second only to heating and cooling. If you have an aging electric tank, a heat pump water heater is one of the most effective upgrades available, using a fraction of the energy to do the same job.

How It Works

Instead of using electric resistance elements to make heat directly, a heat pump water heater moves heat from the surrounding air into the tank. That process is far more efficient, which is why these units typically use roughly a third of the electricity of a standard electric tank. The tradeoff is that they cost more up front and have a few installation quirks.

• Needs enough surrounding air space, often a basement or garage
• Gives off cool air and some noise while running
• Slightly slower recovery than resistance heating under heavy use
• Higher purchase price offset by lower running costs

Does the Math Work?

Because the energy savings are large, many homeowners find the higher purchase price pays back over a handful of years, especially where electricity is expensive or hot water use is high. Federal tax credits and utility rebates for efficient water heaters are common and can shorten payback considerably, so confirm what is currently available before you buy.

The economics are weakest if you have very cheap natural gas water heating already, since switching fuels changes the comparison. For homes replacing an old electric tank, though, the case is usually strong.

Before You Install

Make sure the location has enough air volume and a way to handle condensate drainage. Cramped closets may not suit these units without extra work. A plumber or HVAC contractor can confirm fit and give you an installed quote.

Get two or three bids and ask each to include any electrical or drainage changes. Pairing the new unit with a timer or a schedule to heat during off-peak hours, where time-of-use rates apply, can stretch the savings even further.