The heat pump water heater market is a huge area for growth in the coming years. It’s estimated to grow from $1.6 billion in 2023 to $3.4 billion in 2033, at a rate of 7.9%. 

In July 2023, the US Department of Energy (DOE) proposed new energy efficiency standards for water heaters which they estimate will save Americans more than $11 billion annually on utility bills. The last time the DOE updated residential water heater efficiency standards was in 2010.

The proposal would require the most common-sized electric water heaters to achieve efficiency gains through condensing technology. If approved, these standards would go into effect in 2029. They are expected to save Americans approximately $198 billion and reduce 501 million metric tons of carbon dioxide emission cumulatively over 30 years.

In case you’re not familiar, a heat pump water heater (HPWH) is a device that uses electricity to heat water. They work by extracting heat from the surrounding air or ground using a refrigerant, which evaporates and turns into a gas. The gas is then compressed, which raises its temperature, and transfers its heat to the water in the storage tank. After releasing its heat, the refrigerant cools down and the cycle continues again. 

This process allows heat pump water heaters to efficiently heat water, provide utility bill cost savings, and increase energy efficiency and environmental benefits compared to traditional water heating systems.

Heat pump water heaters do tend to have higher upfront costs compared to traditional water heaters. To help offset those costs now until the tax credit is set to expire on December 31, 2032, US residents can utilize the heat pump water heater tax credit covering 30% of the project cost up to the $2,000 max. You can learn more about this tax credit on the US government’s EnergyStar page. 

In the HeatSpring free course How Electrification Can Expand Business & Climate Impacts for Solar Business, Ann Edminster discusses some things to consider when evaluating heat pump water heaters for you or your clients’ homes. You can tune into the video or read the transcript below.

Now considerations relative to heat pump water heaters, which are the electrification option of choice to replace a gas furnace.

Can it fit where the existing water heater is? The heat pump water heater may be a bit larger. They generally have a heat exchanger on top so they can be taller than a conventional tank. Water heater may also be desirable to have a slightly larger capacity unit because while they’re much more efficient, they’re also somewhat slower to heat. 

For example, if somebody’s got say a 50 gallon tank, maybe you’ll want to recommend a 60-65 gallon tank. You want to understand that space. 

And then the big factor is heat pump water heaters don’t heat by providing a flame. What they do is they take heat from the surrounding airspace and use a refrigerant technology to transfer that heat to the water, basically the way a refrigerator works in reverse. They need adequate airspace around them to do that effectively. I’ve shown in the red box that it’s generally about 700-800 cubic feet. It does vary by model. 

If there is a constraint in terms of that available airspace, you’re going to want to consider other options. Look for models that might have a somewhat different, somewhat smaller airspace requirement.

Is there an opportunity to make the space larger or find a different space, or could the space be vented to the exterior in order to provide access to more air? 

As I mentioned about space heating, heat pump noise may also be an issue for heat pump water heaters. The noise level does vary unit to unit and it may be an issue based on where in the house it’s placed, again, relative to where people might have noise sensitivities.

Since noise is a really personal thing, if you can find an opportunity for a homeowner to hear a heat pump in operation in someone else’s home that could be helpful. If on the other hand you’re proposing that the location might be relatively remote from areas where the noise is an issue or the homeowner says, well, you know, my fridge noise doesn’t really bother me. Is it any worse than that? Typically the answer is no. So you may or may not need to pursue that.