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How Heat Pump Water Heaters Work

Curious about the heat pump water heaters everyone is talking about? Find out what makes them such a great investment for your home.

There’s a lot of buzz surrounding heat pump water heaters (HPWH) these days. This is in large part thanks to the amazing upfront discounts, rebates, and tax incentives offered by the Inflation Reduction Act when homeowners choose to purchase and install a heat pump water heater in their home. These amazing water heaters really are worth all the hype, and we’ll explain why. 

Why is it called a heat pump water heater? 

Heat pump water heaters earn their name because they pull warm air from their surroundings and “pump” it into the water inside the water heater to warm it. They are also called hybrid water heaters, since most units have both the heat pump function and auxiliary internal electric elements that help to heat the water during peak times. The combination of the heat pump function and the bonus function of being able to operate like a traditional electric water heater earns them the hybrid name. 

These heat pump water heaters sponge up the residual heat in a room, push it through a condenser unit, and pump that heat into the water storage tank to create hot water. It’s the same compressor process that refrigerators and air conditioners use to cool the inside of the fridge or the inside of your home, but in reverse. Refrigerators take air from the outside and condense it to cool or freeze; heat pump water heaters take the heat from the air and condense it to heat water. Check out the diagram at the bottom of this article by to see a HPWH in action.

A wonderful byproduct of the heat pump water heater process is cool air – which in the summer can be piped into your existing heating system to give your air conditioning a helping hand on cooling your home, saving you money both when you heat water and when you cool your indoor air. Now that’s efficient! 

Hybrid means high efficiency and lower electric bills 

The heat pump water heater does work more slowly than a traditional electric or gas water heater, since it heats the water more passively. For example, if the water temperature coming into your home is 40 degrees, and the surrounding air in your basement is 65 degrees, the heat pump water heater will take that 25 degree difference and put it into the water, but doesn’t raise it right away to the 120 degrees you want coming out of your faucet. Instead, the heat pump technology works in layers, heating the water 25 degrees, then 25 degrees more, and then again, leaving you with hot water, but taking a little more time to get there. This passive heating process is what saves you so much money in energy costs over the lifespan of the unit, but it can feel slow when we’re so used to the instantaneousness of standard water heaters or tankless water heaters that use active heating via fossil fuels to bring our water up to temp fast. 

This is the genius of the hybrid function of a hybrid heat pump water heater: when the passive heating is taking too long or can’t keep up with demand, the electric heating function kicks in to give you hot water faster. Then, that function can back off once the hot water demand is met and your unit can go back to using passive energy to keep the water hot and ready for on demand use. This balances energy efficiency with the actual hot water demands of modern life, giving your household the best of both worlds. By cutting out propane and natural gas entirely when heating your water, you’re cutting out greenhouse gas emissions within your own home, too. 

What you need to know about installation

Heat pump water heaters need at least 1,000 cubic feet of surrounding air to work properly, according to This is approximately a 10 ft. x 12 ft. room, with 8-foot ceilings. Most basements, garages, or large storage rooms easily accommodate a heat pump water heater. HPWHs also need a year-round ambient temperature of 40º–90ºF, which makes a basement in cold climates the perfect location. Yet another perk to a heat pump water heater: they can dehumidify the surrounding air as they work. Another plus side to a basement installation! 

The initial cost of a heat pump water heater is going to be higher than a conventional electric water heater, but the cost savings on utility bills and overall lower energy consumption will more than make up for it over time. You might see higher water heater installation costs, especially if you choose to re-pipe the exhausted air into your heating system to help with air conditioning, too. Still: using less energy for both heating water and cooling your home is going to offset your operating costs in the long term. 

New heat pump water heater models from companies like Rheem also come WiFi-enabled. You are able to monitor the HPWH from your smartphone via an app, letting you see if the unit is using the electric heat pump or the electric resistance heating feature, helping you keep tabs on how your hot water use affects the unit and allowing you to adjust it from your phone. 

How to choose a heat pump water heater

First, look for ENERGY STAR rated hot water heaters. These units will give you an estimated dollar amount of energy savings upfront, helping you determine if the upfront cost of installation is going to be worth it over the long haul. Second, make sure the plumber or HVAC professional you contact has experience with installing heat pump water heaters. According to the NRDC, less than 2% of water heaters in use today are HPWHs, which means many installation professionals have never installed one before. Third, make sure the tank water heater you choose has an excellent warranty. These are sophisticated machines, and they should come with a warranty that protects your investment. 

If you choose to work with Water Heaters Now for your new heat pump water heater, all of those bases are automatically covered. We offer only professional-grade, ENERGY STAR-rated heat pump water heaters, with industry-best 6 year warranties to back them up. And we can likely have your new water heater installed the same day or next day! If you’re in the Twin Cities Metro area or Rochester, MN, check out our service area and see if we can help you get a new heat pump water heater in your home as soon as today.

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