Watt's Next: Understanding Heat Pump Water Heaters

If your water heater is over 10 years old, it may be costing you more than you realize. Heat pump water heaters (HPWHs) offer a highly efficient alternative to traditional gas or electric models—and newer models have made switching easier, even in older homes or tight spaces. In this next installment of our "Watt's Next" electrification series, we explore heat pump water heaters.

What Is a Heat Pump Water Heater?

Unlike conventional heaters that rely on burning fuel or using electric resistance to create heat, HPWHs operate like a refrigerator in reverse. They draw warmth from the surrounding air and transfer that heat into the water tank. By moving existing heat rather than generating it from scratch, HPWHs deliver substantial energy savings with lower environmental impact.

Why Consider a HPWH?

HPWHs offer a range of benefits:

1. Use up to 70% less electricity than standard electric models
2. Lower monthly utility bills
3. Longer operating life compared to traditional units
4. Reduced greenhouse gas emissions
5. Eligibility for generous rebates and tax incentives
6. Improved performance and hot water availability during short power outages

Understanding Sizing and Installation Needs

Many households upgrade from older 40-gallon water heaters to 65-gallon HPWHs. This larger size helps meet demand—especially useful for families or during outages. However, these tanks can be too large for existing closets in older homes, requiring relocation or spatial planning.

At a recent energy conference, a Rheem representative noted that 120V plug-in models were designed to “fill the gap,” offering enough hot water for basic needs while completing an upgrade to 240V. When the process is finished, a switch is flipped, and it runs on the 240 circuit.

Installers can help homeowners navigate space limitations, possibly relocating units to garages or utility rooms.

120V vs 240V Models: What’s the Difference?

Newer models give homeowners flexibility. For example, you can install a 120V unit now and upgrade to a faster 240V model later when a contractor becomes available.

Power Outages and Resilience

HPWHs need electricity, but modern tanks retain hot water efficiently thanks to improved insulation.

During recent PSPS events, one household reported having 65 gallons of hot water that lasted over a day—supporting six people—despite having no battery backup.

This demonstrates how proper tank sizing and insulation can maintain function even without power, avoiding the need for more costly battery systems.

Solar and Battery Systems: Optional Upgrades

While some HPWHs can be integrated with solar panels and battery storage, these add complexity and cost. For many homes, proper sizing and tank insulation offer sufficient resilience.

For those interested in expanding systems, tools such as EnergySage and Electrum offer calculators and contractor listings to estimate solar and battery costs.

Available Incentives and Rebates

1. Federal Tax Credit: Up to $2,000 through the Inflation Reduction Act—available only through December 31, 2025. More info
2. The Switch is On: California’s hub for rebates, tips, and contractor listings. Visit site
3. SCE Marketplace: Rebates and qualifying models for Southern California Edison customers. Visit site
4. TECH Clean California: Additional rebates that may stack with utility programs. Visit site

Is a HPWH Right for You?

A heat pump water heater may be a smart choice for:

1. Homeowners with aging or inefficient water heaters (10+ years old)
2. Those transitioning from gas to electric appliances
3. Families looking to lower their energy use and utility bills
4. Residents in areas affected by PSPS events
5. Homeowners interested in solar or battery systems (optional—not required for functionality)

Final Thoughts

HPWHs are no longer a niche technology—they’re widely available, cost-effective, and increasingly easy to install. If you're thinking about replacing your water heater or upgrading your home’s efficiency, consider discussing HPWH options with a qualified installer. To explore contractors, visit The Switch is On's contractor finder tool, or contact gogreen@toaks.gov or toaks.gov/gogreen for local support.