Both heat pump water heaters (also known as hybrid water heaters) and tankless water heaters have made a huge impact on sustainable water heater technology. Both are great options that can reduce energy costs while also having a positive environmental impact.
In this article, we aim to give you all of the information you need to make an educated decision on the best hot water heater for your home.
On average, heat pump waters are much more efficient than tankless heaters. But they also need quite a bit of space, they make a fair bit of noise, and they also don’t give instant hot water. On the other hand, tankless water heaters use much more energy, but give an instant, constant supply of hot water.
To see the breakdown of each of the pros and cons we just mention, keep reading!
Breaking Down Heat Pump Water Heaters
Heat pump water heaters are a great green technology that utilize the ambient air to help heat the water. This ultimately reduces the amount of energy needed to heat the water and can significantly minimize costs.
Pros
Utilizes Ambient Air
A huge pro is that heat pump water heaters use ambient heat from the air surrounding the unit to help heat the water. If you live in a warmer climate, this can significantly reduce the amount of energy and money you are spending to heat your water.
Fast ROI
Everyone loves a good return on investment for their energy-efficient appliances. The ROI for hybrid water heaters can be as soon as four years after the initial installation. This is quite fast for an appliance and simply means that you will be saving money for the majority of the unit’s lifespan.
Long Lifespan
Heat pump water heaters have a lifespan of 10-15 years. This is an average of 5 years longer than a standard electric or gas water heater.
Rebates & Tax Incentives
Depending on your location and the unit you choose, there are quite a few rebates that can be applied. Utilizing these tax credits and rebates could cover a good portion of your initial costs. For a full breakdown of these savings, check out our full article on the topic here.
Cons
Need More Space
Because of the heat pump on top of the water heater, hybrid water heaters are taller than their electric or gas counterparts. Additionally, the unit uses the air around it, so it is recommended to have about 100 square feet of open space surrounding the water heater. This prevents the water heater from re-circulating its own cool exhaust air.
More Effective In Warmer Climates
Heat pump water heaters are naturally more effective in warmer climates. The warmer the air is, the more efficient the heat pump can be in heating the water without using electricity. While they can still be efficient in cooler climates, they do work the best in warmer climates.
Higher Initial Cost
There is a significantly higher initial cost to a hybrid hot water heater as opposed to a standard electric water heater. It can be over $1,000 in most cases, whereas a standard water heater typically runs less than $500. While the rebates, tax incentives, and energy savings will end up saving you a lot of money in the long run, it can be hard to front the initial cost of the appliance.
Breaking Down Tankless Water Heaters
Pros
Heats Very Fast
Tankless hot water heaters get hot water to you very fast. They can heat very effectively and efficiently and, because they don’t have a tank, never run out of hot water. This means you will never be yelling at other household members for using all of the hot water again!
Long Lifespan
The average lifespan for a standard electric or gas hot water heater is usually from 10 to 12 years. Tankless hot water heaters have an average lifespan of over 20 years. That is significantly longer than pretty much any other water heater option.
Saves Space
Tankless water heaters are not very large. They are actually mounted on a wall and not on the floor at all. This can save a significant amount of space in your home.
Great ROI
Similar to the heat pump water heater, a tankless water heater has a great return on investment. Studies show it can save up to 22 percent on electricity bills. Additionally, there is a tax credit worth 10 percent of the purchase and installation costs of a tankless hot water heater. They also have longer warranties, which can reduce your costs if the water heater were to break.
Cons
Temperatures Can Fluctuate
If the water heater is overloaded with too many things, such as multiple showers and a dishwasher going at the same time, there can be some inconsistency in temperature. Because there is no tank, it does not have stored hot water to pull from. So if it is stretched too thin, it might not heat the water fast enough.
High Initial Cost
Similar to the heat pump water heater, a tankless water heater will run you more than a standard tank electric or gas water heater. Tankless water heaters start at about $1,000.
Moving Gas/Water Lines
Depending on where your old water heater was, gas and water lines may need to be moved to accommodate the tankless hot water heater. Tankless water heaters are installed on a wall. So if the previous water heater is not where you want the new water heater, then plumbing may need to be moved.
Where Do You Buy Heat Pump / Hybrid Hot Water Heaters?
The best thing about this new technology is that it’s becoming popular enough to become adopted by the big box home improvement stores, and there’s likely one in stock near you.
*This section does include some affiliate links, where we earn a small commission if you use them to eventually purchase the units. It helps support the blog and our writers that do the research and help to get this content published.
The two main places to look first would be Home Depot and Lowes. Home Depot carries the Rheem hybrid heat pump units and Lowes carries the A.O. Smith brand. Both have a 10 year parts warranty and are very solid units.
For the netzero homes that I’ve renovated, I’ve actually tried both units. They are both great, but I prefer the Rheem unit. The main reason is that it’s a good bit quieter than the A.O. Smith model. While both units will make some noise, these will (should) be installed in an area where you don’t mind the noise of a heat pump.
We did a separate article on the noise where you can hear both units. You can see that article here which includes videos and the actual sound they both make.
Since the Rheem is our pick, here is the information on that one:
Rheem Performance Platinum Proterra Hybrid
This collection of heat pump water heaters is one of the most affordable and efficient lines on the market. It comes in four sizes: 40-gallon, 50-gallon (Probably the most common size for a 3-bedroom home), 65-gallon, and 80-gallon. No matter what size you purchase, the water heater has an average return on investment of two to three years and an average savings of $4,600 over ten years.
These units are also Wi-Fi enabled so you can control the water heater from your phone or other mobile device. They come with a 10-year warranty and a 1-year in-home labor warranty. This collection of hybrid hot water heaters also reduces energy usage by an average of 75 percent. All of the units in this collection are also EnergyStar certified.
The Rheem Performance Platinum Proterra Hybrid can be found at Home Depot. Here are the sizes and rough costs at the time of this writing:
| Unit Size | Home Size | Cost |
| 40-Gallon | 2+ Bathrooms, 2-4 People | $1,609 |
| 50-Gallon | 3+ Bathrooms, 3-5 People | $1,699 |
| 65-Gallon | 3+ Bathrooms, 3-5 People | $1,879 |
| 80-Gallon | 3+ Bathrooms, 5+ People | $2,689 |
Where Do You Buy Tankless Hot Water Heaters?
Since these units are much less bulkier and come in smaller packaging, it opens up the possibility to have it shipped to you. Home Depot and Lowes carry them, but now it allows us to buy from places like Amazon as well.
For a quick look, here are the top 5 bestselling tankless hot water heaters on Amazon today:
- Endless On-Demand Hot Water; Consistent hot water when you need it that never runs out; Continuously monitored water temperature and controlled flow rates ensure efficiency and consistent performance within 1 degree of selected temperature
- Save Space; EcoSmart tankless electric water heaters are 90% smaller than traditional tank heaters; may be installed on wall or at point of use; Dimensions 11.5 x 8 x 3.75 inches
- Save Energy; EcoSmart tankless electric water heaters are 99% thermal energy efficient; Only heats water when called unlike a tank heater that maintains water temperature even when not being used.
- EcoSmart ECO 11 Sizing; 13-kilowatt tankless electric water heater ideal for providing hot water for a bathroom, small sink, office breakroom and other point-of-use or low-flow applications; provides between 1.3 and 3.1 gallons-per-minute depending on the inlet water temperature; refer to the sizing guide to select the proper solution
- Endless on-Demand Hot Water; Consistent hot water when you need it that never runs out; Continuously monitored water temperature and controlled flow rates ensure efficiency and consistent performance within 1 degree of selected temperature
- Save Space; EcoSmart tankless electric water heaters are 90% smaller than traditional tank heaters; may be installed on wall or at point of use; Dimensions 17 x 17 x 3.75 inches
- Save Energy; EcoSmart tankless electric water heaters are 99% thermal energy efficient; Only heats water when called unlike a tank heater that maintains water temperature even when not being used. Save up to 50% in water heating costs according to the Department of Energy
- EcoSmart ECO 27 Sizing; Refer to the sizing map. Requires 3x40 AMP Double Pole Breaker, 27-kilowatt tankless electric water heater ideal for providing hot water for whole home applications; provides between 2.7 and 6.5 gallons-per-minute depending on the inlet water temperature; refer to the sizing guide to select the proper solution
- Warranty and Certifications; Limited Lifetime Warranty on electronics, exchanger and element; UL-499 certified; ETL Listed
- Endless Hot Water: Enjoy unlimited hot water flow throughout the house; compact, durable, and easy to install; professional installation recommended
- Energy and Space Efficient: Space-saving design conserves energy as it heats only when necessary
- Optimal Water Pressure: Up to 11 GPM hot water flow rate for a powerful, constant stream
- Instant Heating: Equipped with Circ-Logic - Pair with an external pump to reduce wait time for hot water via scheduled or on-demand recirculation
- Guaranteed to Last: 15-, 5-, and 1-year residential for heat exchanger, labor, and parts, respectively. Wifi monitoring.
- The product is highly durable
- The product is easy to use
- Manufactured in China
- Amperage (amps): 75. Activation flow: 0. 3 GPM. Flow Rate @ 35 F Rise (gallons/min): 3. 51 gal (US)/min
- The product works and is compatible with 2 X 40 AMP (DP) breakers and 2 X 8 AWG wire
- External digital thermostatic control with LED display (+/1 degree accuracy)
- Most advanced self-modulation, adjust power to meet hot water demand
- Durable Copper immersion two heating elements, field Serviceable. Flow Rate- up to 4.4 GPM
- Simple installation – bottom 3/4 inch NPT water connections
- Threaded for easy replacement, simple installation, digital temperature display
You will have to decide whether you’ll want gas or electric units, and that depends on the service to your house (if you have gas service) or if electric will ultimately be a better (or the only available) fit.
Conclusion
There are pros and cons to both heat pump and tankless water heaters. The choice depends on a variety of factors: cost, location, and the features of each type. Without a cut and dried solution, it will be a personal decision for each individual or family, based on what’s most important to you.
Both have high initial costs but with a very fast ROI and a long lifespan. Luckily, no matter which you choose, you will be living a more sustainable life while also saving a lot of money in the long term.
FYI that the Rheem water heaters have a manufacturing quality issue starting with their v5 model around Jan 1 2021. The quality problem causes them to be extremely loud, sounds 65 dB instead of the rated 49. I’ve filled warranty claims and have replaced it twice, and all 3 units have had the same issue. There are some buyers who say the noise problem has been fixed. But I just replaced our faulty unit yesterday and the replacement has the same problem.
Hey Jonathan, that’s great info to know and thanks for giving everyone a heads up! I got my Rheem unit around May or June of 2021 and have lucky not had any issues yet. I’m sorry that your new unit is having issues too! I haven’t measured the decibels yet but it’s fairly quiet, and much more quiet than the A.O. Smith (sold at Lowes) one I got for the last house, so crossing fingers here.
When it was time to get a new water heater, about 12 years ago, I got a tankless. It is much more efficient, saving me money. The other big reason I love it is, I have six people in my home; we take showers one after the other, and we never run out of hot water! I do annual maintenance, circulating white vinegar through the coils, and I have had zero problems! I recommend a tankless very highly!
I love the idea of a heat pump water heater – mainly due to energy efficiency and that it can help cool your space in the summer (I would redirect the cold air outside in the winter). However, I’m a sucker for INSTANT hot water, so I have chosen multiple electric tankless units in my home. They are not as energy efficient, but because I have one for each bathroom and one very small model just for the kitchen sink & dishwasher, this means there will still be hot water in the house if one unit ever fails. Also, I appreciated running only cold water lines throughout the house and not having to insulate hot water lines. I would’ve preferred a heat pump water heater with a recirculating line but Rheem released a memo warning against this for the Proterra as it will not work in heat pump mode – only standard electric mode. Bummer. Maybe there are other heat pump units out there that will..