Images of a tankless and heat pump water heater transposed next to each other

You have several options when it comes to water heating. Two popular options are tankless water heaters and heat pump water heaters. 

Are you in the market for a new water heater? If so, you may wonder if a tankless or heat-pump water heater is more efficient. 

This post will explore the differences between these two types of water heaters and help you decide which one is right for you.

But first, a down-and-dirty answer to the burning question on your mind.

Are Tankless or Heat Pump Water Heaters More Efficient?

Tankless water heaters save anywhere from 15-30% on your energy costs vs. traditional hot water heaters. In addition to cost and energy savings, tankless water heaters use less water as well, since heating is on-demand and you get hot water immediately.

Tankless vs. Heat Pump Water Heaters Comparison 

The debate between tankless and heat pump water heaters has been around for years. So, before choosing one or the other, it’s essential to understand how they stack up against each other.

Here’s a quick comparison of tankless and heat pump water heaters:

Heat Pump Water Heaters are More Efficient Than Tankless Heaters

Most people are familiar with tankless water heaters, which heat water on demand by running it through a coil of heated tubing. However, these units are not very efficient, as a significant amount of heat is lost during the process.

closeup on the bottom and cables connected to a gas tankless water heater

In contrast, heat pump water heaters draw heat from the air and transfer it to the water. As a result, they are much more efficient than tankless units and can save homeowners significant amounts of money on their energy bills.

Heat Pumps Save You Money Over the Long Term

While heat pump water heaters cost more than tankless units upfront, they are significantly cheaper to operate in the long run. In fact, Energy Star states that heat pumps can save homeowners up to 50% on water heating costs because they use less energy to operate, which translates into lower energy bills.

The savings can add up throughout a heat pump water heater’s lifespan—typically about 13-15 years. So you could save hundreds or even thousands of dollars by switching to a more efficient heat pump water heater.

Heat Pumps Require More Space

One downside of heat pump water heaters is that they require more space than tankless units. That’s because they need to be installed in an area with enough airflow to allow the unit to function correctly.

As a result, heat pump water heaters are not a good choice for petite homes or apartments. If you live in a small space, you’re better off sticking with a tankless unit.

Tankless Pumps Are Easier To Install

Another downside of heat pump water heaters is that they can be difficult to install because they require unique electrical and plumbing connections. As a result, most people need to hire a professional to install their heat pump water heater.

A homeowner makes adjustments to the foam insulation attached to the pipes atop his water heater tank
A homeowner installing a heat pump water heater in his basement.

In contrast, tankless units are much easier to install and can even be done by some homeowners as a DIY project. If you’re handy and have some basic plumbing and electrical knowledge, you may be able to install a tankless unit yourself.

Tankless Heaters Are Better in Extreme Temperatures

One advantage of tankless water heaters is that they are better equipped to handle extreme temperatures. That’s because they use gas or propane to heat the water, which is not affected by cold weather like electric heat pumps.

As a result, tankless water heaters are a better choice for people who live in colder climates. A tankless water heater is probably your best bet if you live in an area with severe winters. 

In contrast, heat pump water heaters can struggle to operate in frigid weather and may even need to be supplemented with another type of heating system.

When To Choose a Tankless Water Heater

Now that you know the key differences between tankless and heat pump water heaters, you may wonder in what circumstances it’s best to choose one over the other. 

Here are a few scenarios when a tankless water heater makes more sense:

When You Have a Lower Initial Budget

Tankless water heaters are typically cheaper to buy and install than heat pump units. So, a tankless unit may be the way to go if you’re working with a tight budget. Keep in mind, however, that you’ll likely spend more on energy over the long run with a tankless unit.

Note: Heat pump water heaters often qualify for energy-efficiency rebates, which can help offset the initial cost.

When You Have Less Space

As mentioned, heat pump water heaters are more extensive than tankless units and require more space. Therefore, a tankless unit may be better if you have limited space in your home or garage.

A tankless water heater mounted on a green tile wall

Before making a purchase, ensure that the unit you select can meet your hot water needs. If you have a large family or frequently entertain guests, you may need multiple tankless units, which can get pricey. Besides, it may make more sense to buy a larger heat pump unit.

When You Need a More Durable Unit

Tankless water heaters typically have a longer lifespan than heat pump units—up to 20 years compared to 15 years for most heat pumps. So, a tankless heater is usually the way to go if you’re looking for a more durable unit.

However, you must keep the unit well-maintained to get the entire lifespan out of it.

Here are a few tips for properly maintaining your tankless water heater:

  • Descale the unit every few months to prevent mineral buildup – this process involves flushing out the system with a vinegar-water solution to remove any long-term accumulated minerals. That way, the unit will run more efficiently and last longer.
  • Check for leaks regularly – leaks can lead to costly water damage, so it’s essential to check your unit regularly for any signs of a leak. If you find a leak, have it repaired immediately by a qualified technician.
  • Perform monthly maintenance – to keep your unit running smoothly, perform a few simple maintenance tasks every month. These include checking the inlet and outlet water temperatures, verifying that the gas line is connected correctly, and inspecting the venting system for any blockages.
A plumber installing a tankless water heater in a bathroom

When You Have Extreme Temperatures

As mentioned, heat pump units don’t work as effectively in extremely cold or hot weather. So, a tankless unit may be a better choice if you live in an area with frigid winters or scorching summers.

Tankless units can also provide a steady hot water supply, even during peak demand periods. So, if you have a large family or frequently entertain guests, a tankless unit may better meet your hot water needs.

When To Choose a Heat Pump Water Heater

There are also a few scenarios when a heat pump water heater makes more sense:

When You Need the Most Efficiency

As mentioned, heat pumps are more efficient than tankless units, so if you’re looking for the most efficient option, a heat pump is usually your best bet. However, remember, heat pump units typically cost more to purchase and install than tankless units.

That said, if you need to make your water heater more efficient, be sure to follow these tips:

  • Install the unit in a cool, well-ventilated space – heat pump units require a cool, well-ventilated environment to operate effectively. So, if you’re installing a new unit, choose a location that meets these requirements.
  • Choose a high-quality unit – not all heat pump units are created equal. To get the most efficient system possible, do your research and choose a high-quality model from a reputable manufacturer.
  • Inspect the unit regularly – inspect your heat pump for any signs of wear and tear often. If you find any damage, have it repaired immediately by a qualified technician.
A technician adjusts a timer on the front of a water heater

When You Want To Save Money in the Long Run

Although heat pump units cost more to purchase and install, they typically have lower operating costs than tankless systems. That’s because heat pump units are more efficient and use less energy to heat water. So, if you’re looking to save money over the long term, a heat pump unit is usually your best option. 

When You Need an Easier-To-Maintain Unit

Heat pumps also have some advantages when it comes to maintenance. These units have very few moving parts, so they tend to be more durable than tankless units.

Although they require maintenance every two years, heat pumps typically don’t need as much attention as tankless units. So, if you’re looking for a system that’s easy to maintain, a heat pump is probably your best option.

The Bottom Line

As you can see, there are pros and cons to both tankless and heat pump water heaters. Ultimately, deciding which one to choose depends on your specific needs and preferences.

If you want the most efficient option, go with a heat pump. If you need a unit that’s easy to install, go with a tankless water heater. And if you live in an area with extreme temperatures, a tankless water heater may be the better option.


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