All About Heat Pump Water Heaters

Save money and energy by increasing the efficiency of your water heater

When it comes to clean energy devices, dazzling solar panels and electric vehicles often get the most attention. However, replacing an inefficient water heater with a heat pump water heater is a great way to reduce home energy costs and greenhouse gas emissions.

Water heating is typically a home's second largest energy consumer after space heating and cooling, accounting for nearly 20% of an average household's energy use. By switching to a heat pump water heater, an average household can expect to save approximately $200 to $550 annually, depending on current water heating equipment.

Additionally, this climate-friendly device is eligible for New York State incentives and Inflation Reduction Act (IRA) tax credits, resulting in one of the fastest payback periods of any clean energy technology. Consumers are already taking note: Heat pump water heater sales are up 26% in 2022, while gas water heater sales are down 17%.

Would you like to make the switch? Here's what you need to know about heat pump water heaters.

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How do heat pump water heaters work?

Heat pump technology may be better known for heating and cooling air, but it is also an extremely efficient solution for heating water.

Heat pump water heaters run on electricity and transfer heat from the surrounding air to heat water in a storage tank. A fan draws in ambient air and blows it over evaporator coils filled with refrigerant. The heated refrigerant is then pumped through a compressor to increase its pressure and temperature before flowing through condenser coils to transfer heat to the water. After cooling, the refrigerant returns to the evaporator coils to repeat the process.

Because heat pump water heaters transfer heat rather than generating it, they require less energy to operate. Compared to conventional electric or gas models, they offer around three times greater efficiency. The heat transfer from the ambient air to the water tank also dehumidifies the surrounding room.

Over their 15-year lifespan, the superior efficiency of heat pump water heaters results in thousands in household energy savings.

Most heat pump water heaters are built as hybrid systems and consist of a water tank with a heat pump and electrical resistance elements. The hybrid design allows units to switch between heating methods to optimize efficiency and keep up with increased demand – think extra-hot showers and dishwasher runs when hosting overnight guests.

Key factors when choosing a heat pump water heater

There are several differences between heat pump water heater models to consider when choosing the right option for your home.

Sizing and grading in the first hour

For optimal performance and efficiency, choosing a heat pump water heater that meets your household's needs is critical. An undersized system will use resistance heating more frequently if it is a hybrid model, reducing energy efficiency and overall cost savings.

The water heater's capacity is measured by the first hour of operation (indicated on the yellow Energy Guide label), which indicates how many gallons of hot water it can deliver per hour. The rated output for the first hour should be enough to meet your home's peak water heating needs. For comparison, showers typically use 20 gallons of hot water, followed by washing machines (7-13 gallons) and dishwashers (4-7 gallons).

While creating a rough estimate of peak demand can help narrow your search, it is recommended that you consult a qualified contractor when sizing your heat pump water heating system.

Heat pump

Energy efficiency and guarantee of the devices

Once you've decided on the device size, check the UEF (Uniform Energy Factor) rating to compare energy efficiency and expected savings between models. Equipment warranties are another comparison factor to consider when making your decision.

Electrical panel and wiring for home

Another factor to consider is how a heat pump water heater works with your existing electrical system. In the past, heat pump water heaters required a 240-volt outlet, but there are also 120-volt models on the market that can be plugged into a standard outlet. A low voltage heat pump water heater could save money on potential electrical upgrades and provide greater installation flexibility.

Those replacing a gas water heater may need to run new electrical wiring or upgrade their electrical panel to install a 240-volt heat pump water heater. Homeowners with electric resistance water heaters, on the other hand, should already have a 240-volt outlet.

Keep in mind that upgrading an electrical panel is an IRA-eligible home improvement that prepares a property for full electrification.

Heat pump water heater installation and maintenance

Traditionally, water heaters are located in the basement or garage of a home. Any of these locations could be suitable for a heat pump water heater provided they meet a few conditions.

For one thing, heat pump water heaters run most efficiently when installed in locations where temperatures range between 40°F and 90°F. Additionally, they require at least 1,000 cubic feet of airspace to operate – the rough equivalent of a room measuring 12 x 12 x 7 feet. Installing a heat pump water heater also requires connecting to a drain to eliminate accumulated condensation.

Staying on top of maintenance can help maintain operational efficiency and extend equipment life. The equipment manual will likely contain detailed maintenance instructions for the specific model, but any heat pump water heater will require regular cleaning of the filters.

When should you consider replacing your water heater?

It's a good idea to consider replacing it if your water heater is more than 10 years old. If you are not sure when the unit was installed, check to see if there is a manufacturing date or serial number on the water heater to determine the age of the water heater.

The age of the equipment is not the only consideration for replacement. Visible corrosion on the water heater or water pipes is a warning sign that there is a risk of equipment failure. Leaks and sediment or rust in your water are other telltale signs that a water heater is reaching the end of its useful life.

Switching from a traditional electric or gas model to a heat pump water heater saves around a ton of greenhouse gas emissions annually.

Incentives available for heat pump water heaters

New Yorkers can take advantage of IRA tax credits and NYS Clean Heat rebates to get the most bang for their buck on a heat pump water heater.

The IRA 25C tax credit Link opens in new window - close new window to return to this page. covers 30% of the cost, up to $2,000, for a heat pump water heater. Again, you can claim a $600 tax credit for electrical panel upgrades if required to install a heat pump water heater. In the meantime, NYS Clean Heat is offering discounts Link opens in new window - close new window to return to this page. Save an average of $700 to $1,000 on the cost of a heat pump water heater.

These combined incentives help bring the cost of a heat pump water heater up to par with traditional water heaters. Once installed, the devices' world-class efficiency delivers monthly energy savings, helping households further recoup their investments. A household of four can expect to save $5,610 over the life of a heat pump water heater by replacing a traditional electric water heater.

More about energy-efficient household appliances

Ready to reduce your home's energy costs and carbon footprint? Dive into the following guides and stories for further insights and inspiration for creating an efficient, all-electric home.

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