Both heat pump water heaters and tankless water heaters offer energy efficient ways to heat water at home. Here’s a quick rundown of how they work and what sets them apart.

A heat pump water heater takes heat from the surrounding air and puts it in the water in the tank. Because it’s moving heat rather than generating heat, a heat pump water heater operates much more efficiently than a conventional water heater. Compared to a standard electric water heater, a heat pump water heater is about three times more energy efficient.

A tankless water heater only heats water when you use it. It has a device that heats the water as it passes through it. This saves energy (because you don’t need to keep a tank of water piping hot) and gives you hot water whenever you want.

To reduce your carbon footprint, go with a heat pump water heater

One of the main things that sets them apart is the fuel they use: Heat pump water heaters run on electricity, and tankless water heaters are powered by gas. 

Because heat pump water heaters run on electricity, they have no direct greenhouse gas emissions. By switching more of your appliances from gas to electricity, you can significantly reduce your carbon footprint over time. This is part of a trend called electrification.

As more wind and solar power comes online (solar is now the cheapest form of electricity), the grid gets cleaner, and our collective carbon footprint gets smaller and smaller.

By contrast, tankless water heaters are powered by burning natural gas. No matter how clean the grid gets, running a tankless water heater will always burn fossil fuels and pump additional greenhouse gases into the atmosphere. That said, tankless water heaters are much more efficient than conventional gas-powered tank water heaters. If you're going back and forth between a conventional gas water heater and a tankless water heater, go tankless.

If you’re short on space and need a continuous supply of hot water, go tankless

Because a heat pump water heater stores the water in a tank, it takes up more room than a tankless water heater. So if you’re limited on space, a tankless water heater may make sense for your home.

Rheem heat pump water heaters also come in a variety of sizes - from 40 gallons to 80 gallons. In general, an 80-gallon water heater is more than enough for six average people, but you have above average needs for hot water, you may be better off with a tankless water heater.

A tankless water heater can provide a continuous supply of hot water, but only up to a certain flow rate, which is measured in gallons per minute (GPM). The flow rate determines how much water the heater can heat at a given time. If you use more water than the flow rate, the water temperature will drop.

The short answer: Definitely.

The longer answer: The amount of energy that you save depends on how you’re currently heating water.

Most gas tank water heaters have an efficiency factor (EF) of 0.58 to 0.60, which means that 58 to 60% of the energy they use is converted into heat for the water.

Electric tank water heaters operate more efficiently with an EF of 0.9. Heat pump water heaters are the most efficient of all. The Rheem heat pump water heaters that we install boast an efficiency rating of between 3.0 and 3.5, making them the most energy efficient way to heat water at home.

Heat pump water heaters are the right choice for most homeowners in Michigan, but they’re not necessarily right for everyone. 

In particular, heat pump water heaters require adequate space, ventilation, and drainage. The installation is more challenging than a conventional water heater, and not every home has the right conditions. If you have questions about whether a heat pump water heater makes sense for your home, please give us a call at (248) 291-7815.

Because the installation is more challenging and the equipment is more costly, the upfront cost of a heat pump water heater is more than a conventional water heater. You'll end up saving more overtime on your monthly energy bills, but if the upfront cost is your only consideration, then a heat pump water heater is probably not right for you.

Please note that pricing is subject to change, and the price to install a heat pump water heater for your home will depend on the particulars of your home as well as the size, model, and labor needed to complete the installation. Before accounting for incentives and tax credits, most heat pump water heaters currently cost between $4,000 and $6,500 to install in Michigan.

You may be eligible for a federal tax credit that covers 30% of the cost up to $2,000. The credit is nonrefundable and subject to annual limits.