Evaluating Home Hot Water Heating: Should I Get a Heat Pump Water Heater?

Grasping the Fundamentals of Heat Pump Technology

Imagine a magical machine that steals warmth from the air, even when it's chilly outside, and uses it to heat your water. That's what an air source hot water heat pump does! It works like a refrigerator in reverse, sucking in air and using a special compressor to concentrate the small amounts of heat already present in the air outside your home. It then transfers this concentrated warmth to your water, making it toasty and ready for your shower or bath.

Unlike resistive element electric or gas hot water heaters that simply convert energy to heat with an efficiency of 60-90%, so for every unit of energy they consume, they generate 0.6 to 0.9 units of heat. The magic of the heat pump is that it uses a small amount of electricity to move a lot of heat, so they can generate three to four times as much heat from the same energy input, ie they are 300% to 400% efficient. It's like a master thief, stealing warmth from the surrounding air and delivering it straight to your hot water tank, saving you money and energy in the process. And the best part? It works throughout the year, even when the outside air is cold, which explains why they are popular in Norway!

The ability of a heat pump to operate at above 100% efficiency is known as a coefficient of performance (CoP), with 100% efficiency being represented as a CoP of 1, and 300% efficiency being represented as a CoP of 3. Heat pump systems on average can achieve a CoP of 3 – 4. The higher the CoP, the more efficient and cheaper the system will be to run.

The point of all of this is to reduce your monthly energy bills by giving you cheaper hot water (heating your water is typically a quarter of the cost of your annual energy bill). Upgrading your hot water is typically the first thing to do to electrify your home and increase our energy efficiency.

It is important to note that modern heat pump hot water heaters are much more reliable and efficient than those installed decades ago. Some of these older heat pump systems were poorly made or were unsuitable for use in Australian conditions, and suffered from unreliable electronic controllers, leaked water, or excessive noise. There are now more than four million heat pumps sold globally every year increasing every year due to being cheaper to run. 

Diagram of heat pump operation and water flows

Cost to purchase and install a heat pump compared to traditional gas or resistive heaters? 

A heat pump hot water system is more expensive to buy than either a gas or resistive system. The cost will vary depending on the following key factors:

  • System quality – you get what you pay for, and a better quality system will be more efficient and last longer
  • System size – a larger system is more expensive
  • Your location – different states offer different rebates for heat pumps
  • Difficulty of installation – any complicating factors or additional requirements

There are federal and state government incentives to replace your old gas or resistive hot water system with an efficient heat pump. Refer here for more detail on these rebates

Cost includes typical installation cost for a 3 person household, and is after federal and state rebates. Assumes gas connection available at property.

There is a greater variability in the cost of a heat pump system due to the varying government rebates, and a wider range in the quality and efficiency of the system. We recommend buying a good quality system to ensure a decade plus of cheap, reliable hot water. More information on the cost and features of different heat pump brands can be found here.

To find out if a heat pump is right for you and how much it would save, visit the free online Solar Maximiser tool that compares all of your smart energy options and provides independent, accurate and free guidance.

Operating costs of the different hot water technologies

Your actual cost to heat your water will depend on how much hot water you actually use over the year. It is also determined by: 

  • your energy tariffs and chosen energy plan
  • if you have rooftop solar (for electric resistive and heat pump systems)
  • when you heat your hot water, especially if you have rooftop solar 
  • your climate - colder climates take more energy to heat the water
  • the efficiency of your hot water system.

For an average household of three people who use 120 litres of hot water per day the operating costs are shown below. 

Assumes standard system efficiency. Costs for different household sizes, peak tariffs, LPG and solar thermal here.

Rooftop Solar is a solar PV system set up to charge your hot water from your excess solar generation.

If by replacing your gas hot water system with electric, you can also remove your daily gas supply completely by electrifying your whole home, then you can reduce your energy bill by an extra $237 each year. Refer here for further advice of choosing the best electricity plan

As you can see a heat pump is the cheapest system to run, especially if you have rooftop solar and set your heat pump to operate during daylight hours from your excess solar that would otherwise be sold back to the grid for about 6c/kWh. 

If you get a Reclaim heat pump, Solar Analytics can automate the operating times to maximise your savings. Read here for more information on how to maximise your heat pump savings.

To see how much rooftop solar, a battery or a heat pump would save your household, use the free online Solar Maximiser tool that compares all of your smart energy options and provides independent, accurate and free cost and savings information.

And if you do have rooftop solar, learn how else you can increase your solar savings and reduce your energy bills by optimising your solar

Advantages of Heat Pump Water Heaters

As shown above, the main advantage of a heat pump hot water heater is that it is much cheaper to run than either a gas hot water or traditional resistive electric hot water heater. 

  • Energy efficiency: Heat pump water heaters are 3 to 4 times more energy efficient than traditional electric resistance or gas water heaters because they extract heat from the air, even in cold weather, instead of generating heat directly.
  • Environmental friendliness: Heat pump water heaters produce fewer greenhouse gas emissions than traditional water heaters because they consume far less energy (1.9 tonnes CO2 per annum versus 9.5 tonnes for gas hot water). And less than 0.5 tonnes CO2 each year if you primarily use your rooftop solar to run the heat pump.

Like gas and resistive water heaters heat pumps are:

  • Low maintenance.
  • Scalable for any size home (or even commercial premises)
  • Quiet. There is a fan located outside the house that extracts air, so the noise is similar to the external part of a reverse cycle air conditioner.
  • Durable. There are now millions of heat pumps sold every year, and good quality systems have a proven lifetime equal to that of traditional gas and resistive heaters.

If you are considering a new water heater, a heat pump water heater is a great option. They are energy efficient, environmentally friendly, durable, and low-maintenance. 

Environmental Impact and Sustainability

Hot water heat pumps are a sustainable and environmentally friendly way to heat your home's water. Although coal is still the largest source of electricity generation in Australia, the proportion supplied by renewable energy is increasing from 35% in 2022 to 82% in 2030. This means that electric hot water is getting greener every year.

And if you have solar on your roof, you can optimise when you operate your heat pump or resistive hot water to run from your excess solar generation. This means that you will not only reduce the cost of heating your hot water, you can run it with up to 100% renewable energy.

Environmental benefits of hot water heat pumps:

  • Reduced greenhouse gas emissions since they can run off 100% renewable sources.
  • Improved air quality: hot water heat pumps don't produce any harmful pollutants of gas heating, which can help to improve air quality.
  • They are very efficient: use 3-4 times less energy than traditional water heaters.
  • They have a long lifespan:  last up to 25 years, which means that they are a long-term investment.
  • They are made from recyclable materials: Hot water heat pumps are made from materials that can be recycled, which helps to reduce waste.

Overall, hot water heat pumps are a great choice for homeowners who are looking for a sustainable and environmentally friendly way to heat their home's water.

Solar Analytics Insights on Energy Efficiency

In addition to providing comprehensive and automated guidance to maximise savings from your rooftop solar system, Solar Analytics also provides insights to minimise your hot water costs. The simplest way is through our integration with Reclaim Heat Pumps. Once you have authorised Solar Analytics to receive your heat pump energy data, you will receive free insights and advice to save even more off your energy bill

Solar Analytics analysed hot water costs for our 50,000 customers for whom we have provided improved energy efficiency insights and analysis. This showed that our customers with a hot water heat pump on average used only 2.4kW per day to heat their water, compared to 7.1 kWh/day for conventional tank storage hot water systems.

Increasingly we are seeing our customers shift their hot water charging from Off Peak overnight to daytime charging so that they can use more of their rooftop solar generation. The below diagram shows the range of savings customers obtain from different hot water control methodologies.

More information on how to reduce your hot water energy bill can be found here.

How Heat Pump Water Heaters Save Energy Costs

Heat pumps reduce your energy bill due to their high efficiency. A typical heat pump runs for 2-4 hours per day, drawing 300-1000W, for an average daily consumption of 2.4kW per day. This is roughly a third of the energy consumed by gas or resistive heaters. 

These savings are further increased when you have rooftop solar and set the heat pump to operate during periods when you have excess solar generation. As shown in the below example, the heat pump (blue line) is fully charged from the rooftop solar. Hence, on this sunny day the hot water was completely free and powered by the customer's own solar system.

A graph with different colored linesDescription automatically generated

Analysing the Return on Investment

Factors to Consider Before Making a Decision

Compatibility with Existing Systems

Heat pumps are compatible with existing plumbing systems in most cases. The main exception to this is the replacement of an instantaneous gas or electric hot water system. The heat pump requires both the heat extraction unit and the water storage tank, so for apartments or other locations that have extremely limited space available, the heat pump may not be a suitable solution.

If you already have a storage tank gas or electric hot water system, have space near you hot water system, or are building new or renovating then a heat pump system is typically very easy to install. However, there may be some modifications or adjustments needed to ensure proper integration and optimal performance.

  • Heating Element Compatibility: If you have a hybrid heat pump water heater, which combines a heat pump with a backup electric resistance heating element, ensure the existing electrical wiring can support the power requirements of both the heat pump and the heating element.
  • Age and Condition: If your existing hot water system is very old, you should also get the pipes and wiring checked to ensure they are appropriate for capacity and insulation.
  • Removal of gas lines. If you are replacing a gas hot water heater, it is worth considering if you can remove all of your gas appliances and electrify your whole home. This will save an extra $200-$300 each year by avoiding the daily gas supply charge.

By carefully evaluating your existing plumbing and heating systems and seeking professional guidance, you can ensure a smooth and successful integration of a heat pump into your home, maximizing its efficiency and performance.

Installation and Maintenance Considerations

Installing and maintaining a heat pump water heater requires careful consideration to ensure optimal performance, longevity, and safety. Here's a comprehensive guide to heat pump installation and maintenance considerations that your heat pump installer will consider:

Heat Pump Installation

  1. Site Selection: Choose a location that is well-ventilated, free from obstructions, and has access to electrical and plumbing connections. Ensure the area can accommodate the heat pump's dimensions and weight.
  2. Electrical Requirements: Check there is an appropriate electrical circuit available. A heat pump typically draws less than one kilowatt, so less than your toaster and much less than a resistive heater. 
  3. Plumbing Connections: Ensure the water supply and drain lines are compatible with the heat pump's connections. This is similar for all system technologies.
  4. Professional Installation: Engage a qualified HVAC technician for proper installation. They will ensure proper placement, connections, and adherence to safety standards.

Heat Pump Maintenance

  1. Regular Cleaning: Check the drainage lines are clear, and clean or replace the air filters every 6-12 months to maintain airflow efficiency.
  2. Monitoring Performance: Monitor the heat pump's performance using the heat pump’s app or an advanced service like Solar Analytics to ensure optimal savings and operation.
  3. Professional Maintenance: Consider professional maintenance every 2-3 years for a thorough cleaning, inspection, and tune-up to ensure continued optimal performance.

Additional Considerations

  1. Climate: In colder climates, consider a heat pump designed for cold weather operation to ensure efficient performance.
  2. Water Quality: If you have hard water, consider a heat pump with built-in water softening capabilities to prevent mineral buildup.
  3. Warranty: Understand the manufacturer's warranty terms and conditions to ensure proper coverage and maintenance requirements.

By following these installation and maintenance considerations, you can ensure your heat pump water heater operates efficiently, provides consistent hot water, and lasts for many years.

Comparing Heat Pumps to Traditional Water Heaters

Efficiency Compared: Heat Pump vs. Conventional Heaters

Heat pumps are significantly more efficient at heating water than traditional water heaters. This is because they use a refrigerant to absorb heat from the air or ground, which is then used to heat water. Traditional water heaters, on the other hand, simply generate heat by burning electricity or fuel.

The COP, or Coefficient of Performance, is a measure of how efficient a heat pump is. A higher COP means that the heat pump is converting more energy into heat. As you can see from the table, heat pumps have a COP of 3.0, while traditional water heaters have a COP of 1.0. This means that heat pumps are three times more efficient than conventional heaters.

Overall, heat pumps are a more efficient and cost-effective way to heat your water than traditional water heaters. If you are looking for a way to save money on your energy bills and reduce your environmental impact, then a heat pump is a great option.

Best Practices for Optimal Performance

Choosing the Right Size for Your Home

Choosing the right size heat pump hot water heater for your home is important to ensure that you have enough hot water to meet your needs without wasting energy. The key factors to consider when sizing a heat pump hot water heater for your home are:

  • Household size: The number of people in your household is the most important factor to consider when sizing a heat pump hot water heater. Your actual hot water usage will vary depending on your lifestyle and habits.
  • Climate: The climate in your area will also affect the size of heat pump hot water heater you need. In colder climates, heat pump hot water heaters have to work harder to heat water, so you may need a larger unit.
  • Existing hot water heater size: If you are replacing an existing hot water heater, you can use the size of your current heater as a starting point. However, you may need to adjust the size up or down depending on your household size and climate.

Below is a table of recommended heat pump hot water heater sizes for different household sizes. If you heat your hot water with Off Peak electricity, i.e. only during the evening, you may want a slightly larger tank size to ensure you never run out of hot water.  

Frequently Asked Questions

What are the key benefits of choosing a heat pump water heater?

The two key disadvantages of a heat pump system are that they require more space than the instantaneous heaters, and have a higher upfront cost. 

What is the lifespan of a typical heat pump water heater?

A typical heat pump water heater has an expected lifespan of 10 to 15 years. This is longer than the lifespan of a traditional electric water heater, which is typically 8 to 12 years long, and a gas water heater, which typically lasts about 8 to 10 years. 

Here are some factors that can affect the lifespan of a heat pump water heater:

  • Proper maintenance: Regular maintenance, such as cleaning the coils and checking the refrigerant levels, can help extend the lifespan of a heat pump water heater.
  • Water quality: Hard water can cause mineral buildup on the coils of a heat pump water heater, which can reduce its efficiency and shorten its lifespan.
  • Installation: A properly installed heat pump water heater will be more likely to last for its full lifespan.
  • Climate: Heat pump water heaters that are operated in colder climates may have a shorter lifespan than those that are operated in warmer climates.

With proper care and maintenance, a heat pump water heater can provide years of reliable hot water service.

Ambient air temperature

Although it does not seem like cold air has much heat energy, air at 0°C still has over 90% of the heat energy of air at 40°C and therefore has plenty of heat to extract. This is achieved with a heat pump, which uses a compressor, expansion valve and heat exchangers to absorb and transfer this heat energy into the water.

The optimal ambient temperature range for air-source heat pump water heaters is between 4°C and 32°C, however good quality systems such as the Reclaim Energy CO2 Heat Pump will operate effectively between -10ºC and 43ºC, without the need for an electric backup/booster element. They are also fitted with an inbuilt freeze protection, making it suitable for all Australian conditions and climate variations.

The efficiency of heat pump water heaters will decrease as the ambient temperature drops below 4°C. This is because the heat pump has to work harder to extract heat from the colder air. 

If you are considering a heat pump water heater for your home, it is important to check the operating temperature range of the model you are interested in. You should also consider the climate in your area. If you live in a cold climate, you may need to choose a model that is specifically designed for cold weather operation.

Are there any government incentives for installing heat pump water heaters?

There are federal and state government incentives to replace your old gas or resistive hot water system with an efficient heat pump. 

The rebate available is typically $1,000 to $2,000 depending on the type of hot water system you are replacing, the size of the new heat pump, and your location. Your heat pump installer can provide more details and even apply for these on your behalf.

Refer here for more detail on these rebates

Can I retrofit a heat pump water heater to my existing plumbing?

Typically, yes, you can retrofit a heat pump water heater to your existing plumbing. Although there may be some plumbing modifications needed in some cases.

How does the environmental impact of heat pump water heaters compare to other options?

Heat pump water heaters offer significant environmental advantages over traditional water heaters, which are typically powered by fossil fuels like gas or oil. Here's a comparison of their environmental impact:

  • Greenhouse Gas Emissions: Heat pump water heaters produce far fewer greenhouse gas emissions than traditional water heaters. 
  • Air Quality: Heat pump water heaters don't produce any harmful air pollutants, unlike traditional water heaters that emit carbon monoxide, nitrogen oxides, and particulate matter. These pollutants can contribute to smog, acid rain, and respiratory problems.
  • Fossil Fuel Reliance: Heat pump water heaters help reduce our reliance on fossil fuels, especially if you power the system from your rooftop solar.
  • Energy Efficiency: Heat pump water heaters are more energy efficient than traditional water heaters. This means they use less energy to heat the same amount of water as traditional electric water heaters, which further reduces their environmental impact.

What maintenance is required for a heat pump water heater?

Heat pump water heaters require minimal maintenance, but regular upkeep can help extend their lifespan and ensure optimal performance. 

  • Regular Cleaning: Check the drainage lines are clear, and clean or replace the air filters every 6-12 months to maintain airflow efficiency.
  • Monitoring Performance: Monitor the heat pump's performance using the heat pump’s app or an advanced service like Solar Analytics to ensure optimal savings and operation.
  • Professional Maintenance: Consider professional maintenance every 2-3 years for a thorough cleaning, inspection, and tune-up to ensure continued optimal performance.

How does the energy efficiency of a heat pump water heater compare to traditional options?

Heat pump water heaters are significantly more energy efficient than traditional water heaters, offering substantial savings on energy bills and reducing environmental impact. 

What factors should be considered when determining the right size of a heat pump water heater for my home?

Several factors influence the appropriate size, including:

  • Household Size and daily water usage
  • Climate: Colder climates require a slightly larger system 
  • Peak Hot Water Demand: Identify peak hot water usage periods, such as mornings or evenings, when multiple occupants require hot water simultaneously. Ensure the heat pump can meet these peak demands.
  • Recovery Rate: The recovery rate measures how quickly the heat pump can reheat water after use. A faster recovery rate is crucial for continuous hot water availability in homes with high demand.
  • Efficiency: Consider the heat pump's Coefficient of Performance (COP), which measures its energy efficiency. A higher COP indicates better energy efficiency and lower operating costs.
  • Water Quality: Hard water can cause mineral buildup on the heat pump's coils, reducing efficiency and lifespan. If you have hard water, consider a model with built-in water softening capabilities.
  • Space Requirements: Measure the available space for the heat pump, considering the unit's dimensions and clearance requirements for proper ventilation and access for maintenance.
  • Professional Consultation: Consult a qualified HVAC technician to assess your specific hot water needs, considering household size, climate, usage patterns, and existing plumbing configuration. They can recommend the most suitable heat pump water heater size and provide expert installation.

Final Considerations and Decision Making - Making an Informed Choice for Your Home

At the end of the day, the best type of hot water heater for your home will depend on a number of factors. This includes the following:

1. How old is your current hot water system? 

If your system is only a few years old, you may be reluctant to replace it with a new hot water system for a few years.

2. Do you already have rooftop solar? 

If so then an electric hot water system will be the cheapest, and if your old hot water system is ready to be replaced then upgrading to a heat pump is likely the best option.

3. Do you have space for a heat pump system? 

Most houses do have space, but if not then you will need to consider alternatives like solar thermal or instantaneous. You can also see if a smaller heat pump system will fit, and accept that it will run more frequently.

4. Are you planning on getting off the gas and electrifying your whole house? 

If so, then replacing your gas hot water with a heat pump is likely your first action to take.

Exploring Financing Options for Your Water Heater Upgrade

As with solar and other smart energy appliances, there are many options to pay for the initial outlay required to install a heat pump system. The simplest and cheapest option is to pay cash upfront, however with heat pumps costing up to $5,000 after the rebate, this may not be possible. The next simplest and cheapest is to redraw from your existing home mortgage if you have the capacity.

If neither of these options are available the next best option is to contact your bank and ask if they have any attractive loans for energy efficiency or smart energy appliances. Some banks are even offering interest rates below that of your home loan as an incentive to keep you banking with them, and because they know that these appliances will reduce your monthly bills.

There are also a large number of finance companies like Brighte who will offer a variety of different loans. It is essential that you consider these loans the terms and conditions carefully to ensure the loan is right for you. 

Consult with Solar Analytics for Personalised Advice

Finally, before you fork out your hard earned cash on a new heat pump, make sure that you will get the financial returns you expect. The first step is to use the free Solar Maximiser online tool to find out if a heat pump is right for your home, what it should cost, and how much you can save. Then once you have decided that you do want to get a hot water heat pump, ensure that you buy a good quality system from a reputable hot water retailer.