Very Cool: Heat Pump Water Heaters Save Energy and Money

Co-authored by Eric Weiner

A new NRDC study shows that water heaters that use high efficiency heat pump technology—the same process that keeps your refrigerator cold—can cut the amount of electricity used to heat water by half or more, saving significant amounts of energy and money on your household electricity bills.

Hot water production is the second-largest component of home energy consumption after space heating, accounting for 13 percent of total residential energy use. In the United States, 41 percent of households have conventional electric water heaters, which use electrical-resistive heating elements immersed in the tank to heat the water. That’s a big chunk of building sector energy use ripe for reduction by applying energy efficient technologies—and a critical step on our path to reducing U.S. carbon emissions from the fossil fuel-fired energy production that is driving climate change. It also can make a huge difference on your electric bill.

Heat pump water heaters use the same technology as refrigerators—but in reverse. Instead of removing heat from inside the refrigerator and releasing it into the room, heat pump water heaters move heat from the air into the water tank. Because they rely on gathering heat from the air, their performance varies with air temperature, between warm climate regions and cold regions, and in different installation locations, like a basement or vented closet. This also means that the U.S. Department of Energy test method to evaluate heat pump water heater electricity consumption and efficiency, which uses “standardized conditions” in a laboratory environment, is not representative of the actual “field” performance in homes in different regions.

That’s why NRDC partnered with Ecotope to model and analyze the performance of three different types of electric water heaters: conventional electric water heaters; “hybrid” heat pump water heaters, which use heat pump mode most of the time but have a back-up resistive heating element for when the air temperature is too cold or the hot water demand is too high for the small heat pump to do the entire job on its own; and “pure” heat pump water heaters which use a larger capacity heat pump and don’t need a backup resistive heating element. For each, we calculated the coefficient of performance (COP)—the amount of energy delivered as hot water divided by the amount of electrical energy used by the water heater. For example, a water heater with a COP of 2 is twice as efficient and uses half of the electricity of a water heater with a COP of 1. In our analysis, we looked for the effects of climate regions across the 50 states and across California’s 16 climate zones, installation location within the home, tank size, and hot water usage rates. Here’s what we found (and you can find more detailed results here):

• Hybrid heat pump water heaters use less than half as much electricity as a conventional electric water heater. Pure heat pump water heaters are even more energy efficient, using less than a third as much electricity as a conventional electric water heater.
• Heat pump water heaters are most efficient in warmer climates, but even in cold climates states like North Dakota, heat pump water heaters still use only half as much electricity as conventional electric water heaters.
• Pure heat pump water heaters are more efficient than hybrid models that use back-up resistive heating elements. For hybrid heaters, size matters: larger, 80-gallon hybrid water heaters are more efficient than the smaller 50-gallon versions, particularly for households that use more hot water than average, such as those with more than three people.
• Installation location in the home matters, too—and it varies with climate regions. In cold climates, heat pump water heaters perform best when installed in the basement rather than in a garage or vented closet. In warm climates, a vented closet or the garage is the best choice.
• Hybrid water heaters are most efficient for two- to three-person households; in larger households that use more hot water, efficiency is lower because the higher hot water demand means the back-up resistive heating element is used more often. For pure heat pump water heaters, efficiency is higher in large households than in small ones because standby losses (the background heat losses from the tank even when no hot water is used) are relatively smaller.

Heat pump water heaters are more expensive to buy and install than conventional electric water heaters (although utility rebates and tax credits may be available to reduce this cost). However, because they are so much more efficient, the lower electricity bill will more than cover the difference. Over the typical 13-year life of a water heater, total cost for purchase, installation, and operation of a 50-gallon hybrid water heater can be up to 60 percent lower than for a conventional electric water heater depending on electricity rates and the coefficient of performance. This chart shows NRDC’s estimate of typical lifetime costs across the range of electricity rates in the United States and the range of equipment and installation costs found in the market. (The chart shows only conventional and hybrid models because they are the most commonly available on the market; pure heat pump water heaters have only just been launched in the United States and there is currently only one model available).

Bottom line—with an energy efficient heat pump water heater, you can take the same number of hot showers, for less money, while helping save the planet.

*Our study focused on heat pump water heater technology, but another “advanced water heater” technology known as grid-connected electric water heating also shows promise for delivering a cleaner, more economic energy future whether the heaters use conventional or heat-pump technology. Water heaters connected with the local utility or grid operator having real-time communications and control can take advantage of the thermal storage capacity of the water heater to shift electricity load away from grid peak times, help integrate renewable electricity into the grid, and provide grid support services, as discussed by my colleague Robin Roy.