The Heat Pump Water Heater

Your electric resistance water heater may cost more dollars to operate than necessary. A heat pump water heater can cut hot water energy costs by as much as 60-75% and save even more energy by the cool air it produces that can be used to supplement air conditioning needs. If you're a demand metered customer who regularly uses hot water during peak hours, you'll save by lowering demand charges with this technology.

How It Works

The heat pump water heater saves energy by transferring the heat available (BTUs) in air to the water heater tank. They can be installed to draw heat from indoor air (if cooling is desired) or from outdoor air. Even when the outside air temperature is as low as 40°, the heat pump water heater can usually extract enough energy to meet water heating needs. It uses the same principle as refrigerators, air conditioners and car radiators. The difference is that they are used to remove unwanted heat, while the heat pump water heater captures heat and puts it to work.

Waste Cooling

When the heat pump water heater removes energy from the surrounding air, it cools it. Air conditioning energy costs can be reduced by installing ducts to transport "free cooling" to places that need it. A heating and air conditioning contractor can help you evaluate the cost-effectiveness of installing the necessary ductwork and controls and a system for venting the cooled air outdoors during the heating season.


The heat pump water heater provides the best energy savings when used in areas where temperatures are mild. When outdoor temperature drops below 40° or rises above 100° the heat pump water heater may not meet performance demands and will not operate as efficiently. If you provide a back-up heating source, such as a booster heater installed near the point of use, it may be able to meet the demand. However, remember that increased use of back-up water heating will result in lower savings.

Most small commercial companies can use a heat pump water heater sized for residential use; however, a residential type heat pump water heater will not be able to supply large quantities of hot water or water above 135° consistently. If there is considerable demand for larger quantities of hot water, consider installing a commercially-sized heat pump water heater.

Heat Pump Water Heater Types

There are two types of heat pump water heaters - a retrofit heat pump to work with your existing water heater or an integral unit that includes water storage tank and heat pump all in one.

In general, if the existing water heater is in good condition, the retrofit unit attached to the water heater is a good choice. If water heater replacement is necessary due to leaks or inoperative heating coils, an integral unit is the optimal solution.

Installation Tips

Follow these guidelines when installing either a retrofit or integral unit:

  • Install residential size heat pump water heaters in an area no smaller than 1,000 cubic feet. If installed in smaller areas, extra ventilation must be provided; commercial units require even larger spaces. Refer to the manufacturer's literature for exact specifications.
  • Install the unit in an area that won't be adversely affected by the waste cooling.
  • Locate the unit at least 6 inches from surrounding walls.
  • If possible, install the unit next to equipment that produces waste heat, such as dryers, boilers, or furnaces.
  • Provide a drainage outlet for condensation. During humid weather, the heat pump water heater may produce as much as five pints of condensate every hour.
  • Insulate exposed hot water pipes to reduce heat loss.

When installing a retrofit unit, follow these installation guidelines:

  • Install a shut-off valve on each line between the heat pump and the water heater tank.
  • Supply back-up heating, if necessary. In a retrofit situation, you can usually leave the electric heating coils and thermostats in the storage tank intact. When the heat pump alone can't satisfy the temperature setting, the electric elements will.
  • If back-up heating is unnecessary, disconnect the heating coils.

Many commercial buildings use air conditioning almost year round. For example, a restaurant produces so much heat that even when it is cold outside, the building may need cooling. A heat pump water heater can provide additional cooling at the same time as it is heating water.