Heat pump water heaters represent the latest advancement in energy efficiency when it comes to electric water heating. While standard storage tank electric water heaters typically have efficiencies ranging from .93 - .98 EF (Energy Factor) heat pump water heaters are coming in over 2.5 EF with the best in class (using US refrigerants) currently rated at 3.5 EF. Because the heat pump cannot heat water as quickly as the standard electric resistance heating elements most models offer both so they can offer similar recovery times, or better, as standard storage tank electric models when running in "hybrid" mode. Recovery time can also be addressed by upgrading to a 66 gallon, or 80 gallon model, over the standard 50 gallon models offered.
It's important to understand how they work in order to understand why their location in a home is so important. Similar to an air to water space heating system the heat pump located on top of the storage tank uses fans and compressors to take heat energy out of the air surrounding the unit to heat water. Because these units put out a significant amount of cooling it is ideal to locate them in buffered zones outside the thermal envelope. Attached garages and unconditioned basements tend to be ideal, but outdoor vented closets can also work. Most models can utilize the heat pump down to 35 degrees F. Locating them inside the thermal envelope is possible through proprietary ducting kits (sold separately) but the noise from the unit is still a factor for builders to consider.
