What Goes into the Cost of Installing a Heat Pump Water Heater?
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Interest in electric heat pump water heaters is taking off, due in large part to their superior efficiency, tremendous energy savings and greenhouse gas reduction potential. An ENERGY STAR certified heat pump water heater is typically at least 3-4 times more efficient than standard electric and gas models. As a result, a family of four could save nearly $550 per year in energy costs compared to a standard electric water heater. Those savings translate into average payback periods (compared to purchasing a traditional electric water heater) of 3-6 years and thousands of dollars in savings over the product's life. New federal tax credits and local incentives for heat pump water heaters are making the opportunity to change even sweeter.
While installing a heat pump water heater is generally more expensive than purchasing one of the standard alternatives, they are eligible for a range of current and upcoming incentives that make this smart energy choice more affordable. Federal tax credits established by the Inflation Reduction Act cover up to 30 percent of the unit and installation costs (up to a total tax credit amount of $2,000). In addition, many electric utilities and municipalities offer incentives for purchasing a heat pump water heater, typically ranging from $300 - $1,000. Finally, state rebate programs, another component of the Act, are expected to launch in late .
Traditional storage water heaters have an expected lifespan of between 10 and 12 years. In contrast, heat pump water heaters are typically cited as lasting between 13-15 years. When considering a heat pump water heater, we recommend that you proactively plan to replace your existing water heater. This can save money and the added headache of cleaning up a leaky tank and/or footing the bill for an expensive emergency contractor call. Getting multiple quotes in advance can also help you identify a contractor who has experience working with heat pump water heaters and can cue you in to other considerations that may need to be addressed as listed below.
More than 80 percent of water heaters found in homes today are one of two types: standard electric resistance storage water heaters and natural gas storage water heaters. If you're not sure which type you have, look at the top of the unit. If there is a 3-4 round exhaust vent or flue protruding from the top for ushering combusted gases out of the home, its safe to assume that you have a natural gas (or perhaps, propane) storage water heater. If your unit does not have a 3-4" round exhaust vent or flue protruding from the top, you more than likely have an electric resistance storage model.
Tip: Many installers appreciate a photo or two of your existing water heater and the space around it to assess any hurdles or first steps to prepare your home for an installation. With this information at hand, some may even offer quotes without the need for an in-person appointment.
If you are replacing a standard electric storage water heater with a heat pump water heater, the per unit cost for a new heat pump water heater typically ranges from $1,500 to $3,000 (not including applied tax credits, rebates, and/or utility incentives), though some split-unit models (which become a consideration if your space is constrained) can cost several times more. The tank size is one of the most important factors in determining cost. Heat pump water heater tanks range in size from 40 to 80 gallons, with larger tanks typically landing on the more expensive side.
Note: You should not select tank size based on cost. It is important to size correctly, and sizing recommendations for heat pump water heaters can differ from gas and even from standard electric. You may want to size up in many instances, particularly when replacing a gas unit.
Expected costs for materials and labor to install a heat pump water heater can vary widely due to several considerations. A recent informal survey of contractors revealed labor and material estimates ranging from $1,000-$3,000, in addition to the cost of the unit. Some experienced installers charge a flat rate for installation, though most rely on an hourly rate plus materials approach.
A general rule of thumb is that the installation cost may be roughly equal to the cost of the water heater itself, however, there are a variety of factors that will play into each individual installation cost structure. Considerations that are likely to impact installation pricing include:
Contractors accustomed to installing heat pump water heaters are often more willing to offer fixed pricing and/or lower installation cost estimates than those less familiar and perhaps hesitant to install a product they have not previously installed. Visit ENERGY STARs Heat Pump Water Heater and Installer Finder to locate contractors with experience in your vicinity.
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When replacing a fuel-based water heater, there are additional considerations associated with installing an electric heat pump water heater. These include:
Installing a heat pump water heater is one of six energy-saving improvements you can make as part of an ENERGY STAR Home Upgrade to help prepare your home for the clean energy future. To find a local heat pump water heater installer, check out ENERGY STARs Heat Pump Water Heater and Installer Finder.
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Heat pump water heaters use electricity to move heat from one place to another instead of generating heat directly. Therefore, they can be two to three times more energy efficient than conventional electric resistance water heaters. To move the heat, heat pumps work like a refrigerator in reverse.
While a refrigerator pulls heat from inside a box and sends it into the surrounding room, a stand-alone air-source heat pump water heater pulls heat from the surrounding air and transfers it -- at a higher temperature -- to heat water in a storage tank. You can purchase a stand-alone heat pump water heating system as an integrated unit with a built-in water storage tank and back-up resistance heating elements. You can also retrofit a heat pump to work with an existing conventional storage water heater.
Heat pump water heaters require installation in locations that remain in the 40º90ºF (4.4º32.2ºC) range year-round and provide at least 1,000 cubic feet (28.3 cubic meters) of air space around the water heater. Air passing over the evaporator can be exhausted to the room or outdoors.
Heat pump water heaters will not operate efficiently in a cold space since they tend to cool the space they are in. Installing them in a space with excess heat, such as a furnace room, will increase their efficiency.
You can also install an air-source heat pump system that combines heating, cooling, and water heating. These combination systems pull their heat indoors from the outside air in the winter and from the inside air in the summer. Because they remove heat from the air, any type of air-source heat pump system works more efficiently in a warm climate.
Homeowners primarily install geothermal heat pumps -- which draw heat from the ground during the winter and from the indoor air during the summer -- for heating and cooling their homes. For water heating, you can add a desuperheater to a geothermal heat pump system. A desuperheater is a small, auxiliary heat exchanger that uses superheated gases from the heat pump's compressor to heat water. This hot water then circulates through a pipe to the storage water heater tank in the house.
Desuperheaters are also available for tankless or demand-type water heaters. In the summer, the desuperheater uses the excess heat that would otherwise be expelled to the ground. With frequent operation during the summer, the geothermal heat pump may provide the majority of your hot water needs.
During the fall, winter, and spring -- when the desuperheater isn't producing as much excess heat -- you'll need to rely more on your storage or demand water heater. Some manufacturers also offer triple-function geothermal heat pump systems, which provide heating, cooling, and hot water. They use a separate heat exchanger to meet all of a household's hot water needs.
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