Heat Pump Water Heater Guide

Instead of using electric resistance coils to heat water directly, a heat pump water heater pulls heat from the surrounding air and transfers it into the water tank. It is the same principle as your refrigerator running in reverse. Because it moves heat rather than creating it, it uses about 70% less electricity than a standard electric water heater. The unit looks like a tall cylinder, typically 6 feet high and 2 feet wide. It has a compressor on top that makes a soft humming noise similar to a dehumidifier. Most models also have traditional electric elements as backup for times of high demand. The water is stored in a heavily insulated tank, so it stays hot for hours even when the heat pump is not running.

Mass Save offers a $600 instant rebate on qualifying heat pump water heaters. Some models qualify for an additional $250, bringing the total to $850. The rebate is applied at the point of sale by your installer. The federal tax credit covers 30% of the installation cost up to $2,000. A typical installed cost is $2,500 to $4,500 including the unit, labor, and any electrical work. After the Mass Save rebate and the federal tax credit, the net cost often falls below $1,500. Annual electricity savings range from $200 to $400 depending on your hot water usage and current water heater type. The payback period is typically 3 to 5 years. The unit itself lasts 10 to 15 years. Since it also dehumidifies and cools the space around it, a basement-installed unit provides a small bonus in summer.

A heat pump water heater needs to be installed in a space with at least 1,000 cubic feet of air volume, which is roughly a 12 by 12 foot room with an 8 foot ceiling. Smaller spaces need a louvered door or ducting to bring in outside air. The space must stay above 40 degrees year-round, which makes unconditioned Massachusetts garages unsuitable unless you add a small heater. Basements are ideal. They stay cool in summer and are generally above 50 degrees in winter. The unit produces condensation like an air conditioner, so it needs a drain or a condensate pump. It also makes some noise, though at 45 to 55 dB it is comparable to a refrigerator. Do not install it directly beneath a bedroom if noise is a concern. It requires a 240-volt dedicated circuit. Most homes built after 1990 already have this for an existing electric water heater. Older homes with gas water heaters may need an electrical upgrade, which adds $500 to $1,500 to the installation cost.