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Heat Pump Water Heater vs Tankless: Which is the Best Option for Your Home?

Tankless water heaters and heat pump water heaters are both great options — but which one is the right choice for your home? 

Tankless water heaters and heat pump water heaters are both great options — but which one is the right choice for your home? 

Looking to replace your water heater and unsure how to choose between a new heat pump water heater and a tankless water heater? We’ll discuss the pros and cons of each and walk through how to choose a new water heater that is right for your space. 

The Pros and Cons of Hybrid Heat Pump Water Heaters

A heat pump water heater works by taking heat from the surrounding air and condensing it to heat the water in your hot water storage tank. This is the opposite process of everyone’s favorite kitchen appliance: the refrigerator, which uses a condenser to chill the air inside the unit. It’s a tested, reliable technology, and heat pump water heaters have been around for awhile, primarily in warmer climates where temperatures stay about 40 degrees Fahrenheit year round. Updated technology is allowing heat pump water heaters to be installed in cold climates as well, which makes them an exciting new option for the upper Midwest region. 

The Pros

Energy Efficient. Heat pump water heaters are extremely energy efficient. Also called hybrid water heaters, or abbreviated as HPWH, heat pump water heaters are 2-3 times mo re efficient than a conventional electric water heater according to This means you can use 2-3x less electricity to heat the same amount of water, saving you money on energy bills in the long run. 

Upfront Rebates & Tax Incentives. A new heat pump water heater can even save you money on your taxes. The Inflation Reduction Act offers an upfront discount on new installations of HPWHs, and you may also qualify to receive an additional, completely separate tax credit on the hot water heater, too, increasing your savings as you increase your energy efficiency. That’s an enormous win for your utility and tax bills. 

Durable Lifespan. These new heat pump water heaters are also incredibly long-lasting. Water Heaters Now only installs professional grade water heaters, which means they can last upwards of 15 years in your home when properly maintained. A long-lasting water heater means the cost of installation will pay for itself over time with the operating costs you’ll save on your monthly electric bill. And if you use a lot of hot water, you’ll save more as energy prices climb. 

Easy Installation. A new heat pump water heater can likely be installed where your current electric or gas water heater is today if it’s in a basement or other large room — the unit will need at least 1,000 cubic feet of air space around it to work efficiently. If you’re converting from a conventional unit, you’ll likely need minimal HVAC work done to make the switch. 

The Cons  

No Closet Installations. Since heat pump water heaters pull air from their surroundings, they need ample room to pull from. If you’re looking to install in a small space, an on demand or tankless water heater might be the route to go. 

Upfront Cost. If you’re comparing a heat pump water heater to a conventional electric or gas water heater, there’s going to be some sticker shock. These units more than pay for themselves over time in lower energy costs, but if you’re on a tight budget for installation, you’ll be better off looking at a conventional storage tank water heater that runs on electricity, natural gas, or propane. 

The Pros and Cons of Tankless Water Heaters

Tankless water heaters are the top-of-the-line choice for a lot of reasons. The energy savings is unbeatable compared to another type of water heater, and space-savings can be crucial in a smaller home, warm climate, or unique setup. Many homeowners shy away from these on price alone, but let’s take a real look at the pros and cons. 

The Pros

Endless Hot Water. No, really: with the newer models on the market today, a tankless hot water heater can provide you and your home with virtually endless hot water, on demand, and straight to your faucet. Check out the latest WiFi-enabled model from Rinnai here. These are the fastest units at water heating, and can provide far more hot water at once than they used to. Never again will you get halfway through a shower only to be met with cold water once your storage tanks runs through. 

Only Heat the Water You Use. When it comes to energy savings, the best bet for your money is to only heat the water you actually need to heat: and that’s exactly what tankless units do — they heat the water when you call for it instead of heating it and holding it hot until someone turns on the tap. No paying to heat water that cools over time in a storage tank, then reheating it until the moment is right. 

Save So Much Money & Energy. This third point is really just reiterating the previous two, but we’ll say it one more time: an ENERGY STAR-rated gas or electric tankless water heater will save you money and energy year after year after year. 

Long-Lasting. Traditional water heater tanks are under constant threat of corrosion and leaking because they always store hot water in them, which is highly corrosive to your water heater tank. Tankless water heaters are easier to repair and last far longer than conventional water heaters do.

The Cons

Initial Cost. There’s no two ways to say it: tankless water heaters just cost more. They are more expensive appliances, and their costs reflects that. Still, the energy savings over time may make them more cost effective in the long rung. 

Installation Costs. The more sophisticated the appliance, the greater the installation costs. If you’re converting from a conventional tank water, this may not be the type of install you want to DIY, so you’ll have to factor in the costs of a professional plumber or HVAC pro.

Ready to install a new heat pump or tankless water heater?

Choose a water heater installation company that can answer your questions and install a professional-grade water heater when you need it. Check out our service area and see if we can help you get a new water heater in your home — same-day and next-day installation is our specialty. 

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