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Ask the Expert: Hot Savings with ENERGY STAR Certified Water Heaters

Save Thousands of Dollars in Electricity Costs with ENERGY STAR Certified Heat Pump Water Heaters


Did you know that heating water is the second largest energy-user in your home?  Using a standard electric water heater can cost a four person family more than $600 per year.  New technology is now available that cuts these costs in half, using heat pump technology. Heat Pump Water Heaters (HPWHs) are becoming more popular due to their enormous energy savings, their high-tech performance, and the generous incentives offered by utilities. HPWHs that earn the ENERGY STAR have been independently certified to deliver efficient performance and energy savings. 

How much can I save?

A family of four can save $3,500 over a HPWH’s lifetime, or $330 per year. 

Household Size Annual kwh Savings Annual $ Savings Payback (Years) Lifetime Savings
Table 1. Savings and Paybacks for HPWHs
2 1,350 $170 4.8 $1,360
3 2,020 $250 3.2 $2,430
4 2,690 $330 2.4 $3,510
5 3,370 $410 1.9 $4,590
6 4,040 $500 1.6 $5,670

Assumes: 12 cents/kWh; Incremental Cost = $800; 13 - year lifespan

How does a HPWH work?

Heat pump water heaters work much like a refrigerator in reverse. The heat pump extracts the heat from surrounding warm air, intensifies the heat with a compressor, delivers the heat to the water, and exhausts the cooler air (see diagram showing the heat pump, which sits atop the water tank).

Heat Pump Water Heater

Because it uses warm ambient air temperature to do most of the work, it is a very efficient way to heat water, using less than half the energy of standard electric water heaters.  During periods of high hot water demand, HPWHs switch to standard electric resistance heat — which is why they are often referred to as “hybrid” hot water heaters. HPWHs also have programmable settings; “economy” mode which uses only the heat pump setting, and “vacation” mode which shuts down the heater for a set amount of time.

What incentives are available?

Utility companies are offering very generous incentives, as much as $1,000, to encourage consumers to purchase ENERGY STAR HPWHs. Check with your local utility to see how much you qualify for.

A Purchase that Protects the Environment.

If all residential electric water heaters sold in the United States were ENERGY STAR certified HPWHs, the energy cost savings would grow to $8 billion each year, and 100 billion pounds of annual greenhouse gas emissions would be prevented, equivalent to the emissions from 9 million vehicles

Where Do I Go From Here?

  • Don’t Wait: Examine your existing electric water heater. If it is more than 10 years old, consider replacing it with a new ENERGY STAR certified HPWH. Early replacement can help avoid problems like leaks and flooding that can occur when a water heater fails, which is typically around 10 years after installation.
  • Use the ENERGY STAR Rebate Finder. Find out which incentives you may qualify for and take advantage of the savings while they last.
  • Call your plumber or visit your retailer. Ask specifically for an ENERGY STAR certified HPWH. 

How do I learn more?

For more water heater information see: ENERGY STAR Water Heaters Mean Big Savings.

About the Author: Steven Ryan is the Environmental Protection Agency’s Program Manager for ENERGY STAR water heaters.

Steve Ryan headshot