Is a heat pump water heater worth it?

A heat pump water heater is a storage tank with a small heat pump on top. Instead of heating water directly with electric elements, it moves heat from the surrounding air into the tank.

How much more efficient is it?

Water heaters are rated by uniform energy factor (UEF): the higher, the less energy for the same hot water. DOE’s Federal Energy Management Program compares three electric models:

Water heater	UEF	Electricity for the same hot water, relative to the resistance model
Standard electric resistance tank	0.95	100%
Heat pump, 120-volt plug-in minimum for ENERGY STAR	2.20	about 43%
Heat pump, ENERGY STAR minimum for integrated models	3.30	about 29%
Heat pump, best available in DOE’s comparison	3.93	about 24%

The percentages follow directly from the ratings: electricity use scales with 1 ÷ UEF. Real results depend on the model, the air temperature around it, and how much hot water the household uses at once.

Is it cheaper to run than gas?

Put both on the same footing, the cost of one million Btu of hot water, using EIA’s U.S. average residential prices for January 2026 (17.45 cents per kWh and $13.96 per thousand cubic feet of gas):

Water heater	UEF	Cost per MMBtu of hot water
Electric resistance	0.95	$53.83
Heat pump, 120-volt ENERGY STAR minimum	2.20	$23.25
Gas storage, ENERGY STAR minimum (20–55 gallons)	0.81	$16.62
Gas storage, ENERGY STAR minimum (over 55 gallons)	0.86	$15.65
Heat pump, integrated ENERGY STAR minimum	3.30	$15.50
Gas tankless, ENERGY STAR minimum	0.95	$14.17
Heat pump, best available in DOE’s comparison	3.93	$13.01

At these national averages, an integrated ENERGY STAR heat pump water heater and an ENERGY STAR gas tank came out close. Local prices decide it: the higher your gas price relative to electricity, the better the heat pump looks. The method is the same as in our guide to heat pump and gas furnace running costs.

Where can it go?

ENERGY STAR’s installation guidance is short: heat pump water heaters “should be installed in interior spaces that remain between 40° to 90° F year-round, and provide 1,000 cubic feet of air space around the water heater.”

Because it takes heat from the air, it cools the space it is in. That is welcome in a warm garage in summer and less so in a basement you are trying to keep warm in winter.

For sizing, ENERGY STAR suggests starting from the gallon capacity of your current storage water heater. Its criteria also require a first-hour rating of at least 45 gallons per hour and a warranty of at least six years on the sealed system.

What about 120-volt models?

ENERGY STAR has a separate category for integrated heat pump water heaters that run on a 120-volt, 15-amp circuit, with a lower minimum of UEF 2.20. They connect to an ordinary 120-volt circuit, which can simplify installation where there is no 240-volt supply at the water heater, at the cost of a lower efficiency minimum than the 3.30 for standard models.

Are there rebates?

The federal tax credit for heat pump water heaters ended with the 25C credit for property placed in service after December 31, 2025. The state-run HEEHR program caps its rebate for a heat pump water heater at $1,750, for households up to 150% of area median income. Since DOE’s Program Notice 26-2 took effect on May 29, 2026, HEEHR appliance rebates cover replacing existing electric equipment with more efficient electric equipment, so replacing an electric resistance tank qualifies where a state program is running, while replacing a gas water heater generally does not. Utilities may offer their own rebates; see our guide to rebates after the 25C credit ended.