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Hot Water

After your furnace/heating system, the next largest energy consumer in your home is your water heater. Heat pump water heaters can help reduce your hot water-energy consumption, costs, and carbon emissions.

Benefits of a Heat Pump Water Heater

The most cost-effective applications for heat pump water heaters (HPWHs) in existing homes are as replacements for standard electric or propane water heaters. HPWHs cost a bit more than standard electric or propane water heaters, but they easily pay for themselves in annual energy cost savings. In addition, compared to standard electric and propane water heaters, they reduce carbon dioxide emissions by 60-70%. Compared to Energy Star natural gas water heaters, HPWHs are much more efficient and reduce CO2 emissions by about 50%, but the annual energy costs are about the same.


  • Compared to electric resistance water heaters, Energy Star heat pump water heaters (HPWHs) consume about 1/3 as much energy, reducing your annual energy costs for hot water by 67%.
  • Compared to Energy Star propane water heaters, HPWHs are about five times as efficient, reduce annual energy costs for hot water by 70%, and reduce carbon emissions by 60%.

The installed cost for a HPWH is about $1,500 more than the installed cost of an efficient gas, propane, or standard electric water heater. The HPWH will pay for itself in about 4.0 years vs. a standard electric water heater, as shown.

Does a HPWH Make Sense for my Home?

There are a few potential challenges in installing a HPWH, and you need to consider the following four issues before making a decision to buy one for your home.

  • Temperature. The HPWH must be installed in a location that will be above 40 degrees F year-round. For example, in Colorado, you cannot put a HPWH in your garage. 
  • Drain. You need access to a drain (for condensate) which will not freeze. This could be any of the following:
    • Floor Drain
    • Utility Sink
    • Sump pump
    • Existing drain pipe
    • Outside (only for locations that are above freezing all year round)
  • Enough space. You need a space that is about 750 cubic feet (about 8.5’ x 9’ x 10’), or a smaller space that can be fitted with louvered doors or ducted. And the space needs a ceiling at least 6 feet in height for a household of five or less (7 feet high for more than 5 people). 
  • Cool exhaust air. Heat pump water heaters exhaust a moderate amount of cool air. They should not be located in rooms that are frequently occupied; however, basements, utility, and laundry rooms are excellent locations.
  • Electrical panel. If you are replacing an electric water heater, there is no problem. If replacing a propane or gas water heater, you will need a new 220 V circuit from your electrical panel to the HPWH. In addition, you need to ask your plumber or electrician if your electrical panel has enough capacity to handle the HPWH. If the panel requires an upgrade to handle the power needs of the HPWH, this could significantly increase the installation costs.

DIY Installation Guidance

If you are replacing a standard electric water heater and want to install your HPWH yourself, here is some useful guidance from the Northwest Energy Efficiency Alliance (NEEA). Heat pump water heaters are available from many major water heater manufacturers, including RheemA.O. Smith, and Bradford White

More Reading

Common Questions

Explore popular, common questions regarding Heat Pump Water Heaters and more.
Because the heat pump water heater exhaust air is cool, should I duct it to outside the home?

No. Although the exhaust air is typically cooler than the room air, it is usually much warmer than the outside air during winter months in Colorado. Ducting the exhaust air outside will pull in more outside air to take its place, and will therefore increase the energy use of the house.

Can I put a heat pump water heater in my finished basement? Won’t it take away from the efficiency of heating my house, by exhausting cool air into the basement?

Yes, it’s fine to put the heat pump water heater in a finished basement. You should just make sure the cool exhaust air from the water heater does not blow directly into commonly occupied areas. Yes, this will add a small amount of energy to the home’s overall heating load. However, this amount of cool air from the heat pump water heater will have a minimal effect on the home’s overall heating system performance/consumption. In addition, the cool air will help keep the basement cool in the summer months, reducing the energy used for air conditioning.

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.

What size heat pump water heater do I need?

You need the same size as for a conventional water heater. For a home with two occupants, you should choose a 40 or 50-gallon unit. For 2-4 people, you should choose a 66-gallon unit; and for more than 4 people, a 75 or 80-gallon unit.

Will a heat pump water heater reduce my energy bills?

A heat pump water heater will reduce your energy costs for hot water by 65% compared to a conventional electric water heater, and by 75% compared to a propane water heater. Your energy costs for hot water will be about the same with a heat pump water heater compared to an efficient natural gas water heater.

Are heat pump water heaters more efficient than conventional water heaters? What is the uniform energy factor?

Heat pump water heaters are much more efficient than gas, propane, or conventional electric water heaters. The uniform energy factor (UEF) is the new metric for rating the energy efficiency of water heaters. The higher the UEF, the higher the efficiency. Heat pump water heaters have UEF ratings between 3.0 and 3.5, while “efficient” gas and propane water heaters have UEF ratings between 0.65 and 0.70. Conventional electric water heaters have UEF ratings of about 0.95.