Get a Quick Payback on Heat Pump Water Heater

Do you have a standard electric water heater? Have you thought about upgrading?

It's rare that you find a time that it makes financial sense to throw away something that is working perfectly for a new version. But this may just be that time.

Here's the difference...

A standard electric hot water heater has a heating element that gets hot and heats the water. As simple as that. The heating element is usually 90+ percent efficient. However, 1Kwh only produces around 3,400 Btus of heat. So it would take over 30kwh to reach 100,000 BTUs. 30kwh costs around $3.00 in electricity vs. about $0.75 for the equivalent in gas. Not so cheap.

But who said 100% efficient is the best we can achieve? Since a heat pump transfers heat instead of producing heat, it can actually far exceed 100% efficiency. In fact, most heat pump water heaters average an effective 200% efficiency (or 2.0 Energy Factor). As the temperature around the water heater rises (AKA summer time), the energy factor increases. This means that at a 2.0 Energy Factor, a Heat Pump hot water heater can effective produce 100,000 BTUs of heat for around $1.50 instead of more than $3.00. Not as cheap as gas, but a huge improvement.



And here's another benefit. A heat pump actually gives off cool air. So if it is in your garage, basement, attic, etc, you will actually cool that area some, which will probably help keep your home cooler. Energystar estimates that the average home will save $290 per year at current electricity prices. A family of 4 is estimated to save $450 per year compared to a standard water heater.

Now lets talk about price of the unit. Sears is currently selling a 50 gallon GE unit for $1600. Link. A basic electric costs $300. But the heat pump unit qualifies for the tax credit, saving you 30%, or $480, effectively only costing you $1,120. So assuming you're replacing your unit and installation is the same, you're spending $820 more and saving $300+ per year. That'll pay back in less than 3 years. If you're upgrading your working unit, your payback will be a little longer. Say you pay effectively $1,120 + installation for a total of $1,500. Payback is 5 years or less, and you now have a brand new unit. With a water heater generally lasting 15+ years, this unit will pay for itself many times over.

Not many upgrades will actually pay for themselves. People like to upgrade to have the latest and greatest, but it is hard to find ones good for our wallets. But this one may be the exception.

Do you own a heat pump water heater? What is your experience?