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Are heat pump water heaters worth the cost?

How it works, how much it’ll cost you and how much you’ll save

Profile picture of Jonathan Trout
by Jonathan Trout ConsumerAffairs Research Team
water flowing from a faucet

When was the last time you checked on your water heater? “Out of sight, out of mind” is the old adage that sums up how much we think about it. As long as we have hot water when we give the “H” knob a twist, we don’t often think about the appliance that’s tucked away in the garage, basement or utility room.

Your water heater is one of the most inefficient appliances in your home. In fact, electric water heaters account for an average of 18 percent of your electricity costs, according to the Energy.gov. The older your water heater the less energy efficient it is.

Enter heat pump water heaters: the new and, energy-efficiency-improved, electric water heaters. “Heat pump water heaters can use up to 63% less energy than traditional electric water heaters,” says, Sarah Widder, of DOE’s Pacific Northwest National Laboratory.

man setting the temperature on a heat pump water heater

How does a heat pump water heater work?

Heat pump water heaters use electricity to move heat from one place to another rather than generating their own heat like a traditional electric water heater. This makes them two to three times more efficient, according to the Department of Energy (DOE). Think of a heat pump water heater as a refrigerator working in reverse.

  • A refrigerator pulls heat from inside a box and dumps it out into whatever room it's in.
  • An electric pump water heater pulls heat from the surrounding air and dumps it, at a higher temperature, into a tank to heat water.

Heat pump water heaters are sometimes called “hybrid” water heaters because, during periods of high hot water use, they can switch to standard electric resistance heat automatically. You can use your unit’s control panel to set the water heater to various settings, including hybrid mode. If you don’t want it to switch over automatically, simply set it to the regular heat pump mode.

Many control panels have multiple settings and modes to maximize energy savings. If both of your kids are showering at the same time in different bathrooms while you’re running the dishwasher, you can switch it to “High-demand” or “Hybrid” mode to get adequate hot water. Hybrid mode is the most energy efficient mode for daily use.

man going over his finances

How much will a heat pump water heater save you?

If every household in the United States used a heat pump water heater (under 55 gallons), the energy cost savings would top $8.2 billion dollars a year, according to Energy Star. A heat pump water heater can save your household of four people around $330 a year on your electric bill, according to the government website Energy Star. That adds up to a savings of around $3,400 over the life of a typical heat pump water heater. If your family is closer to the size of the Brady Bunch, you’ll save even more on your electric bill each year. The larger your family, the quicker you’ll see a return on investment.

cash fanned in hands

How much will a heat pump water heater cost you?

Like most things that operate more efficiently and save you money, a heat pump water heater costs quite a bit more than a traditional electric water heater. At Lowe’s, a 50-gallon heat pump water heater goes for around $1,100, while its older, conventional cousin the electric water heater can be purchased for closer to $300.

It’s recommended you have a professional install your heat pump water heater to maximize its energy efficiency. According to HomeAdvisor, the average water heater installation cost is around $700 to $900. When choosing a qualified professional to install your water heater remember to:

  • Request estimates in writing
  • Ask for references
  • Make sure they check out with your local Better Business Bureau
  • Make sure they get necessary permits and know about local building codes

In the end, the upfront cost will offset over the lifespan of the water heater due to the amount you’ll be saving on your electric bill.

Bottom line

If you’re in the market for a new electric water heater, consider forking over the extra cash for the heat pump water heater. The savings are significant, especially for larger households. Heat pump water heaters have a longer lifespan (around 13 to 15 years) than conventional electric water heaters (around 8 to 12 years), making them a great investment.

Do you know how much it costs to replace a water heater?

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Profile picture of Jonathan Trout
by Jonathan Trout ConsumerAffairs Research Team

As a member of the ConsumerAffairs Research Team, Jonathan Trout believes having access to free, comprehensive information on products and businesses is vital to making smart purchasing decisions. He focuses his efforts on researching and reviewing multiple brands across a variety of industries, with the goal of writing unbiased buyers guides to help inform consumers on impending purchases.