a new heat pump water heater installed in a garage next to a parked tesla model 3

Water heating is the second largest energy use in a typical U.S. home, contributing normally to about 18-20% of total household utility bills. So, it stands to reason that one of the best ways to save money on energy bills is to invest in an energy-efficient water heater, such as a heat pump water heater. 

But, you may wonder just how much energy a heat pump water heater uses.

If you’re considering buying a heat pump water heater (HPWH) for its energy efficiency, you’re in the right place. Read on for a rundown of the factors making this heating method so efficient and tips for optimizing your unit.

How Much Energy Do Electric Heat Pump Water Heaters Use?

A typical 50 gallon heat pump water heater uses about 2.5 kWh/day (912.5 kWh/year), which is equivalent to $137 per year at 15 cents/kWh utility rates. In contrast, a standard electric 50 gallon water heater uses about 10 kWh/day (3,650 kWh/year). Therefore, a heat pump water heater saves around 75% on water heating costs and energy.

Reasons Why a Heat Pump Water Heater Is Energy-Efficient

Heat pump water heaters are more energy-efficient than traditional electric water heaters. As a result, these units can save up to a quarter of your water heating costs, which is significant. 

a new heat pump water heater installed in a garage next to a parked tesla model 3
A heat pump water heater in the garage of one of our Net-Zero Florida homes.

The above picture is the second netzero renovation we did. The savings from installing a heat pump water heater vs. a traditional one saves 75% energy, which is about 3,650 kWh/year as mentioned above. This equates to about a $450 per year savings, and saves enough energy to power the electric car (Tesla Model 3) for 10,000 miles per year. Pretty cool I’d say! The overall paypack on the install was only 2.86 years.

A few factors that contribute to a heat pump water heater’s energy efficiency include:

Less Electricity Usage

HPWHs use less electricity than traditional electric water heaters. Their lowered electricity use relies on heat pump technology to move heat from one place to another rather than generate heat through resistance (like electric water heaters do).

To explain this in a little more detail, we’ll start with the concept of resistance. Resistance is an object’s force when you try to move it. So, for example, if you try to push a heavy object, you’ll have to use more force (resistance) than if you were moving something lighter.

In the context of electric water heaters, resistance occurs when electrons flow through a material (like a wire) and bump into atoms. That collision creates heat, which is then transferred to the water. The more resistance there is, the more electricity is required to generate heat.

In contrast, heat pump water heaters don’t generate heat through resistance. Instead, they use a compressor and fan to move heat from one place to another. This process requires less electricity since there’s no resistance to overcome.

Here’s a cool video by Georgia Power describing why heat pumps are energy-efficient:

Screenshot from a video by Georgia Power describing why heat pumps are energy-efficient
Courtesy of Georgia Power

Higher Efficiency Ratings

In addition to using less electricity, heat pump water heaters also have higher efficiency ratings than traditional electric water heaters. Efficiency measures how well a device uses energy to perform its desired function. The higher the efficiency, the less energy is wasted.

For example, let’s say you have two light bulbs—one that’s 80% efficient and one that’s 60% efficient. The 80% efficient light bulb will produce the same amount of light using less electricity than the 60% efficient light bulb.

Regarding HPWHs, the U.S. Department of Energy (DOE) has set a minimum efficiency rating of 2.0. In contrast, the minimum efficiency rating for electric water heaters is just 0.62. So heat pump water heaters are more than three times as efficient as electric water heaters.

two Energy Guide labels side by side showing the energy savings of heat pump hot water heaters
Here’s an example of a 45 gallon traditional tank water heater yearly cost on the left, and the yearly cost of a heat pump water heater on the right. The savings are huge. Keep in mind also these numbers are assuming only a 12 cent/kWh rate. Most areas of the country and around the world are much higher now.

Compatibility With Renewable Energy

Another factor contributing to a heat pump water heater’s energy efficiency is its use of renewable energy. Renewable energy is energy that comes from sources that are not depleted when used, such as solar, wind, and hydropower.

Using renewable energy is beneficial because it reduces your reliance on fossil fuels, a major source of greenhouse gas emissions. Greenhouse gases contribute to climate change, so renewable energy can help reduce your carbon footprint.

A solar heat pump water heater with orange trim on a beige floor.
Solar water heating is very efficient, provided you have sufficient sunlight.

Low Standby Losses

When a water heater isn’t in use, it still uses energy, known as standby loss. Standby loss is the energy wasted when a device is turned off or not in use.

For example, imagine you have an electric water heater with a standby loss of 20%. That means that for every 1 kWh of electricity you use, 0.2 kWh is wasted.

According to a U.S. Department of Energy report, HPWHs have much lower standby losses, especially when the ambient temperature is high. So even when they’re not in use, they waste less energy than electric water heaters.

Tips for Making the Most of Your HPWH

Now that you know how energy-efficient heat pump water heaters are, here are a few tips for making the most of yours, including:

Install the Unit in a Warm Space

Choosing the right location for the unit is important if you’re considering installing a heat pump water heater in your home. HPWHs are more efficient when installed in a warm space like a basement. That’s because it relies on warm air to operate.

A homeowner makes adjustments to the foam insulation attached to the pipes atop his water heater tank

According to Energy Star, heat pumps operate best at ambient temperatures between 4.4-32.2°C (40-90°F). If the unit is installed in a cooler space, like a garage or attic, it will have to work harder to maintain the water temperature, reducing efficiency and increasing wear and tear. 

Ensure the Unit Is Properly Sized for Your Home

Besides choosing the right location for your heat pump water heater, it’s also essential to ensure it is appropriately sized for your home. If the HPWH is too small, it will have to work harder to heat the water, reducing efficiency and increasing wear and tear. 

On the other hand, if it is too big, it will be less efficient because it will heat more water than necessary.

The best way to ensure that your HPWH is properly sized for your home is to have a certified contractor perform a load calculation. This assessment considers factors like climate, home size, and the number of people in your household. 

Based on this information, the contractor will be able to recommend the right size HPWH for your home.

Use a Timer to Control Operation

Another way to make the most of your heat pump water heater is to use a timer to control when the unit runs. By scheduling it to run during off-peak hours, you can take advantage of lower electricity rates—many utility providers offer time-of-use pricing, meaning that the electricity price varies depending on the time of day.

Closeup of a hot water heater timer being adjusted by a person's hand.
Adjusting the time that your water heater turns on and off is a good way to save a little money on your energy bills.

Tip: Contact your local utility company to find out when off-peak hours are in your area.

Consider a Solar-Powered Unit

If you’re looking to maximize the efficiency of your heat pump water heater, you may want to consider a solar-powered model. Solar-powered HPWHs use the energy from the sun to heat the water, which can significantly reduce your energy usage and costs.

Solar-powered HPWHs are more expensive than traditional ones, but they offer several benefits that make them worth the investment.

For one, solar units rely on renewable energy, which means they’re more environmentally friendly than traditional heat pump water heaters.

In addition, solar-powered HPWHs can significantly reduce your energy usage and costs. You can save money on your electric bill by using free solar energy to heat the water.


Heat pump water heaters are a superb option for homeowners looking to save energy and money. They are more efficient than traditional electric water heaters and can save you up to 24% on your water heating costs.

Remember, to get the most out of your HPWH, install it in a warm space and use a timer to control when the unit runs. You may also want to consider a solar-powered model.


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