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All About Heat Pump Water Heaters

Save big bucks while taking advantage of the existing heat in your home. Here’s what you need to know about heat pump water heaters.

Plumber and homeowner install a hot water heater. Colleen McQuaid

Air conditioners. Mini-splits. Refrigerators. All are heat pumps, devices that operate using a principle of physics: heat will always transfer its energy to a cooler medium. The medium could be a solid, a liquid, or a gas.

For instance, when warmer air inside a refrigerator is passed across tubing coils filled with a cold refrigerant, the refrigerant picks up the heat from the air. Pumped through a compressor, the refrigerant is compressed, then pumped to a second coil, where the heat is dispersed to the cooler air at the back of the refrigerator. Continuing through the loop, the now cooler refrigerant is allowed to expand, which lowers its temperature. A fan circulates the cooler air inside the fridge, the refrigerant is now able to absorb heat again, and the cycle repeats.

How Does a Heat Pump Water Heater Work?

A heat pump water heater, also known as a hybrid water heater, employs the same process but in reverse. A fan at the top of the unit draws in air across an evaporator, which is a series of refrigerant-filled tubes.

The evaporator acts like a dehumidifier, blowing cooler, drier air back into the space. The heat from the ambient air of the water heater’s location (basement, utility room, garage) is transferred to the refrigerant, which is pumped through a compressor to increase its pressure and temperature.

The heated refrigerant then passes through a coil wrapped around the water tank and transfers its heat to the water. Now cooler, the refrigerant returns to the evaporator, where the cycle begins again. Hybrid water heaters are so named because they also have backup electric resistance elements, like conventional water heaters, that can be used to augment hot water if your demand outruns your supply.

Because a hybrid water heater runs lower-voltage fans and compressors, it uses about a third of the electricity than that of a traditional electric water heater. Most, if not all, hybrids are given Energy Star ratings for their energy efficiency.

Like conventional water heaters, hybrids are available with storage capacities that range from 40 to 80 gallons. Most are equipped with Wi-Fi-enabled smart controls that allow you to schedule peak times for usage or extended downtimes. They also can be synced to a phone app so that if you’re going on vacation, you can tell them when you’re coming home so you’ll have plenty of hot water when you return.

You can also monitor your water consumption and energy use with the app. Manufacturers offer warranty periods for hybrids that are longer (10 years) than those of conventional water heaters (usually 6 years). Many of the higher-end models offer an option of leak detection and auto-shutoff, so you can prevent potential floods.

So far, so good. So why doesn’t every house have one?

Cost of a Hybrid Water Heater

One problem with hybrids is their initial cost. You can buy a traditional 50-gallon electric water heater for around $500, whereas a 50-gallon hybrid water heater might cost $1,500 or more. The good news is that state-sponsored rebates and federal tax incentives may be available to help lower the cost. You can find which products have Energy-Star ratings and rebates/incentives here.

You’ll also save money because the appliance will pay for itself in energy savings over a relatively short period of time. According to, the annual average cost to operate a 50-gallon conventional electric water heater is $436. The annual average cost to operate a 50-gallon hybrid water heater is $122, so in three years the typical household will have saved nearly $1,000 in electric bills.

Heat Pump Water Heaters: Installation and Maintenance

The installation of a hybrid is similar to that of a conventional water heater—it’s connected to hot and cold water lines and a 220-volt circuit, but it must be placed in a space that’s at least 1,000 cubic feet with a constant temperature range of 40 to 90 degrees F. Hybrids will still work in a cooler space, but since they’ll have to work harder, they won’t operate as efficiently. And, if necessary, they can be installed in a smaller space, provided the space has louvered doors that allow air circulation from a larger space.

In colder climates, hybrids work best when placed in a space with a furnace or boiler, where they can take advantage of the heat cast off by the furnace or boiler. In addition to the space and ambient temperature requirements, they also must be connected to a drain to handle the condensation that results from the dehumidification. Depending on the location, the unit may need assistance from a condensate pump to get the water to a suitable drain.

Like conventional models, hybrids need routine maintenance: their tanks should be flushed once a year and the anodes (heating elements) checked for corrosion. Many hybrids have an air filter, too, which should be cleaned or replaced annually.