Where should I put the heat pump water water heater? How big does the space need to be?

Basements, utility rooms, and laundries are great locations for a heat pump water heater. Pick a spot that will not be frequented by occupants, and position it away from bedrooms and living spaces to fully mitigate any noise concerns. Heat pump water heaters mildly dehumidify the air around them, so they can be a helpful addition to a root cellar or pantry. You can locate the water heater in a small space as long as there is adequate airflow. This can often be achieved by installing a louvered door and grills or grates or similar air gaps.