Heat Pump Water Heaters: Are They Worth It?

Which is more cost-effective for a house—an electric heat pump water heaterelectric heat pump water heater (HPWH) or a natural gas water heaternatural gas water heater? It depends on factors such as climate, system and installation quality, and local energy prices.

An EPRI demonstration of electric HPWHs showed about 50% energy savings relative to traditional electric resistance water heaters. Savings vary based on operating conditions. Efficiency of HPWHs increases in warm, humid surroundings and decreases when water use necessitates electric resistance backup heat.

Relative to natural gas water heaters, HPWHs may or may not be a better deal over the unit’s lifetime. One key consideration is the installed cost. According to a 2016 study by the National Renewable Energy Laboratory, HPWHs can range from $2,100 to $3,300 depending on the water tank’s capacity. Natural gas water heaters range from $700 for standard units to $4,500 for condensing units. A quality installation may cost more but may improve operating efficiency.

While comparing efficiency of HPWHs and natural gas water heaters is not straightforward (different metrics are used), operating costs can offer a simple comparison. These depend on local energy prices. In California, where average electricity prices are about $0.19 per kilowatt-hour and average natural gas prices are $1.18 per therm, the range of annual operating costs for the HPWH and natural gas water heater are $145–$337 and $111–$182, respectively.

In Florida, where average electricity prices are $0.12 per kilowatt-hour and natural gas prices are $2.04 per therm, annual operating cost ranges for the HPWH and natural gas water heater are $96–$224 and $190–$310, respectively. In Florida’s hot, humid climate, an HPWH may provide additional cost savings by helping to cool indoor spaces.

EPRI is evaluating existing HPWHs and is collaborating with a manufacturer on a grid-interactive, high-efficiency HPWH, with plans to test prototypes in early 2019.

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