A water heater in a basement. Not a heat pump water heater, but the kind it might replace.
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Eco-Friendly Water Heating

Hot Trends: Warming Up to Heat Pump Water Heaters

Montana Denton
December 7, 2023

Do you know where your water heater is? Despite being a critical home appliance, water heaters are usually tucked away in basements or garages, consistently providing homeowners with hot baths, fresh laundry, and clean dishes from behind the scenes. But even if your water heater is discreetly tucked away in the laundry room, it’s likely an energy-hungry beast — contributing significantly to your household energy bill.

There’s nothing worse than a cold shower, but how can you keep your energy bill down and your showers hot? In the midst of this conundrum, a more sustainable solution has emerged — electric heat pump water heaters. They promise greater efficiency, cost-effectiveness, and a cleaner environmental footprint compared to their gas and electric-resistance counterparts.

Heating Up: How do Heat-Pump Water Heaters Work?

From washing dishes to laundry cycles, heat pump water heaters use electricity to heat water in your home with incredible efficiency. Despite their name, heat pumps don’t actually generate heat — they move it from one place to another. Unlike an energy-intensive furnace, which creates heat and then distributes it through a home, a heat pump absorbs heat energy from the outside air and transfers it indoors.

Essentially, a heat pump water heater marries a heat pump with a tank of water. The heat pump moves and compresses heat from the air and transfers that heat to the water, providing a sustainable source of hot water.

By contrast, conventional water heaters rely on either gas or electric-resistance heating methods, making them the second-largest energy consumers in homes, trailing only behind space heating and cooling. With water heaters accounting for 17 to 32 percent of a home's energy usage on average, the potential for energy savings with heat-pump water heaters is immense. The most efficient models can slash energy consumption by 80 to 85 percent compared to their conventional counterparts.

Beyond the Price Tag: The Long-Term Value of Heat-Pump Water Heaters

Heat pump water heaters are a green innovation that might still be flying under the radar for many. While clean energy tech like solar and rechargeable batteries have been on the scene for decades, the interest in heat pumps is just heating up.

According to the New Buildings Institute, heat pumps currently make up less than 2% of the country’s water heater sales, but the tech is on the rise — in 2022, sales grew by 26%. By comparison, gas-powered water heaters fell by 17%. More manufacturers than ever are transitioning too — as the demand for a more sustainable solution increases, so does the need to supply heat-pump appliances. Reputable companies like Rheem, AO Smith, Sanco, and more now offer lines of heat pump water heaters.

While the upfront cost of heat pump water heaters is higher due to their sophisticated technology, the long-term savings are considerable. A family of four can cut energy costs by about $200 annually when switching from a gas water heater or nearly $550 when transitioning from an electric-resistance model — adding up to over $7,000 over the 13-15 years of the product’s estimated lifetime.

Additionally, the payback period for replacing an electric-resistance model is as short as two to four years, making heat-pump water heaters one of the most rapidly cost-effective clean-energy technologies.

Cashing in On Green Choices: Financial Incentives and Rebates

Heat pump appliances have been proven to be two to four times as efficient as their traditional gas and electric-resistance counterparts. The financial appeal of heat pump water heaters is further amplified by various incentive programs. The Inflation Reduction Act at the federal level introduced a tax credit that can make these water heaters 30 percent less expensive for qualifying households. Additionally, the U.S. Department of Energy is contemplating more stringent energy-efficiency rules that could bolster sales of this technology.

Local programs across the country are also encouraging the adoption of heat-pump water heaters. The EPA's ENERGY STAR rebate finder can be a valuable resource for uncovering local incentives, and some states are creating policies to sweeten the deal further. Californians are particularly in luck, as they may have access to a rebate through a specific program designed for heat pump water heaters, making it even easier for those considering making the switch.

What to Consider Before Getting a Heat-Pump Water Heater

Before diving into the heat pump water heater world, put your plans on the back burner to consider a few key factors. Most models require 220-volt wiring, which may necessitate electrical work for households replacing gas units. However, the market now offers 120-volt models that can be plugged into standard outlets, making them a convenient choice for gas water heater replacements.

Heat pump water heaters require ample air to pull from, and installation is recommended in spaces with about 450 cubic feet of air space. They also serve a dual purpose as dehumidifiers, extracting 2 to 4 liters of water per day, which means they need a drain connection. Potential noise and cooling effects are considerations for placement —installers suggest avoiding spaces near bedrooms and offer solutions like venting to attics, basements, or outdoors.

The early adoption of heat-pump water heaters comes with the added perk of current rebates and tax credits. These incentives won't last indefinitely, so now is the opportune moment to seize the financial advantages while cutting your energy costs.

Make the Switch: Are You Ready for a Heat-Pump Water Heater?

Looking to make your household greener but have a fully functional water heater? Here are a few things you can do.

You should be prepared to replace your tank water heater as it nears the end of its warranty period (typically between 6-10 years), especially if it hasn’t been subject to regular maintenance (a must for every water heater, regardless of type!). Even if your current water heater functions well, it’s likely burning gas or using electric-resistance methods to heat your water — the transition to the newer tech can lead to substantial energy savings, reduced carbon footprint, and a positive impact on utility bills. Most heat pump water heaters also have built-in smart home capabilities, cutting both cost and energy usage in passive ways such as pre-heating water during off-peak hours (for those on Time-of-Use rate plans). Many heat pump water heaters can also schedule your water heating temperatures to be lower when you’re away or asleep.

If you have several years left on your existing warranty, it might be prudent to set aside a savings goal for a more sustainable replacement in the future. If you already have an electric water heater (which you likely don't), replacing it with a heat pump heater will pay for itself well within its useful lifespan — especially with rebate programs! If you have a gas water heater, you might need to do some simple electrical upgrades to your home to switch to a heat pump water heater, such as running an outlet closer to the water heater.

While most people are forced to replace their water heaters in an emergency situation, you don’t have to wait until your existing unit starts to leak. By considering how a heat pump water heater factors into your budget, you’ll reap immediate and long-term benefits.

Cool Choices, Hot Showers: Greening Your Home Routine

With so many options for home upgrades, heat pump water heaters stand out as game-changers, offering a unique blend of efficiency, savings, and environmental consciousness. Beyond being mere appliances, they symbolize a shift toward a future where every hot shower is not just a luxury but a conscious step toward sustainability. Choosing a heat pump water heater is more than just a home upgrade; it's a statement of commitment to a greener, more comfortable lifestyle where innovation meets conscientious living.

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