Heat Pump Water Heater vs Tankless: Which Is Better?

Water heaters last a long time, and you shouldn&#;t have to replace yours very often. When it is time for a water heater replacement, however, it&#;s important to compare your options carefully so you don&#;t get stuck with an unreliable source for hot water over the next 10+ years. 

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In this guide, we compare two of the most popular types of water heaters&#;tankless vs heat pump water heaters&#;to help you make the best choice for your home. 

Heat Pump Water Heaters 

Heat pump water heaters use the same technology as heat pump HVAC systems. They transfer heat from the surrounding air into the water in the tank instead of generating heat directly by burning fuel, the way a conventional water heater does. This is a much more energy efficient process, which is part of the reason why heat pump water heaters have become so popular in California. 

Tankless Water Heaters 

Tankless water heaters heat water only when it&#;s needed instead of storing hot water in a tank. Because they don&#;t have a storage tank, they&#;re much smaller than other types of water heaters and can be ideal for small spaces. 

Heat Pump Water Heaters vs Tankless Water Heaters 

There are a few key areas to consider when considering a new appliance for your home: energy efficiency, performance, safety, lifespan, and cost. Let&#;s see how heat pump water heaters and tankless water heaters stack up in each category. 

Energy Efficiency

• Heat pump water heaters are typically the most energy efficient option. Because they don&#;t generate heat, they can be two to three times more efficient than conventional electric resistance water heaters. 

• Tankless water heaters are also more efficient than conventional water heaters. Since they don&#;t have storage tanks, they are not susceptible to stand-by heat loss. 

Performance 

• Heat pump water heaters are available in many sizes. They can be sized to meet your family&#;s water heating requirements so you won&#;t have to worry about running out of hot water in the middle of a shower. 

• Tankless water heaters tend to be less reliable&#;if you need to run the dishwasher while taking a shower, a tankless water heater may not be able to handle the strain. They work well for apartments and small houses, but cannot meet the needs of most large homes or families. 

Safety 

• Heat pump water heaters don&#;t burn fuel, which means there is no risk of carbon monoxide leaks. It&#;s the safest and healthiest option for home water heating. 

• Gas-fired tankless water heaters burn fuel, which means there is always a risk of carbon monoxide leaks. 

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Lifespan 

• Heat pump water heaters typically last for 12-15 years. 

• Properly maintained tankless water heaters can last for up to 20 years. 

Cost 

• The cost of a heat pump water heater is typically between $1,500 and $3,000. But heat pump water heaters are eligible for incentives that can significantly reduce the cost. The

  Energy Efficient Home Improvement Credit

  (aka the heat pump tax credit) reduces your federal tax liability by 30% of your heat pump water heater installation costs, up to $2,000. 

• Tankless gas water heaters can cost anywhere from $800 to $2,000. They are not eligible for federal tax incentives. 

The Winner: Heat Pump Water Heaters

Heat pump water heaters are the clear winner in most categories. They are extremely energy efficient, which can lead to lower operating costs, and they&#;re eligible for excellent incentives. They&#;re also safer and more reliable than gas-fired tankless water heaters. But, every home is different. An experienced water heater installer will be able to help you choose the best type of water heater for your home and install it for optimal performance. 

The Best Heat Pump Water Heater Installers in California

The Clean Energy Connection makes it easy to find a qualified heat pump water heater installer in California. Our free online directory features highly experienced and carefully vetted clean energy contractors, including water heater installers. You can search the directory by services, location, incentives, languages spoken, and more to find the perfect contractor for your water heater installation.

Heat pump water heaters require installation in locations that remain in the 40º&#;90ºF (4.4º&#;32.2ºC) range year-round and provide at least 1,000 cubic feet (28.3 cubic meters) of air space around the water heater. Air passing over the evaporator can be exhausted to the room or outdoors.

Heat pump water heaters will not operate efficiently in a cold space since they tend to cool the space they are in.  Installing them in a space with excess heat, such as a furnace room, will increase their efficiency.

You can also install an air-source heat pump system that combines heating, cooling, and water heating. These combination systems pull their heat indoors from the outside air in the winter and from the inside air in the summer. Because they remove heat from the air, any type of air-source heat pump system works more efficiently in a warm climate.

Homeowners primarily install geothermal heat pumps -- which draw heat from the ground during the winter and from the indoor air during the summer -- for heating and cooling their homes. For water heating, you can add a desuperheater to a geothermal heat pump system. A desuperheater is a small, auxiliary heat exchanger that uses superheated gases from the heat pump's compressor to heat water. This hot water then circulates through a pipe to the storage water heater tank in the house.

Desuperheaters are also available for tankless or demand-type water heaters. In the summer, the desuperheater uses the excess heat that would otherwise be expelled to the ground. With frequent operation during the summer, the geothermal heat pump may provide the majority of your hot water needs.  

During the fall, winter, and spring -- when the desuperheater isn't producing as much excess heat -- you'll need to rely more on your storage or demand water heater. Some manufacturers also offer triple-function geothermal heat pump systems, which provide heating, cooling, and hot water. They use a separate heat exchanger to meet all of a household's hot water needs.

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