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 believe in heat pump water heaters so much that they’re the only kind we use in our home efficiency upgrades.
Not to mention, there are plenty of tax incentives and rebates for heat pump water heaters, too (because they’re that good at cutting energy waste).
Plus, you could get one at no upfront cost if your house qualifies. Discover how.
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 at no upfront cost
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 heat pump water heater upgrades at no upfront cost if you qualify. 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.
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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.
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.
How much electricity does a heat pump water heater save?
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, according to the U.S. Department of Energy and an analysis by ENERGY STAR (3, 4).
We’ll say this a bit louder for those who are scrolling fast:
Nearly 20% of the average household’s energy consumption is used on water heating alone, so conserving energy for this daily task can make a big difference (5).
How much electricity your new heat pump water heater will use or save overall depends on:
- How many people are in your household
- Your water-use habits (for instance, do you wash your clothes with cold water to save energy?)
- The specifics of your unit, like how big your storage tank is
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.
Conventional water heaters vs. heat pump water heaters: What’s the difference?
If you’re still wondering What’s the difference between a conventional water heater and a heat pump water heater? it’s a valid question.
If you have an electric water heater, your water is heated by electric resistance heat—or elements that use electricity to heat up the water stored in the tank. (And if you have a hybrid heat pump water heater, you have this backup water-heating system automatically in place.)
Alternatively, natural gas water heaters burn fossil fuel (i.e., natural gas) in your home appliance to heat water that’s stored in the tank. The burner is usually located at the bottom of the tank, and the heat created by the burner is transferred to the water.
If you have a natural gas water heater with a storage tank, the hot water is stored and transported throughout your home through hot water pipes as needed.
But as cold water enters the tank to refill it, the burner kicks back on to reheat the stored water to the desired temperature, causing it to kick on more often and use more fuel.
If you have a tankless water heater, it heats your water on-demand only when it’s needed.
As water flows through the tankless unit, the gas burner heats it up before it’s carried to your kitchen, bathroom, or laundry room.
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:
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 upgrades at no upfront cost if your house qualifies—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 at no upfront cost if you qualify to 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 Sealed can cover the upfront costs of your upgrade. Learn how the payment plan works.
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 2023 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 2022, 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—at no upfront cost
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 hassle-free 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 at zero upfront cost if your house qualifies.
You pay us back for the work done, a little bit at a time, based on the energy savings from your new upgrades.
Sounds too good to be true? It’s not! See how the Sealed payment plan works.
Ready for a home energy makeover? Complete our easy, quick questionnaire to see if you qualify. (If you do, you’ll get a free remote home energy assessment, too!)