Heat Pump Water Heaters: Best Practices, Concerns, and Myths
Published November 17, 2025
As heat pump water heaters become more common in the construction of energy-efficient homes, understanding their installation limitations and best practices is becoming increasingly important. While HPWHs deliver impressive savings and performance, improper setup can undermine their potential. Plumbing expert Gary Klein emphasizes that installation matters as much as the equipment itself.
Opportunities
Many jurisdictions are pushing or requiring all-electric construction in their latest codes. Electric resistant water heaters have a significant negative impact on energy models for projects following the performance or ERI path through the energy code. HPWHs are beneficial in meeting code requirements. Furthermore, Xcel’s $10k rebate for new homes requires the installation of a HPWH. Other utility programs throughout the state have prescriptive rebates to help offset the cost.
Myths
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Challenges: Location Matters – A Lot!
According to Klein, “Where you put the water heater determines how well it will serve the occupants and how much energy it will use. HPWHs draw heat from the surrounding air, so placement in a space with sufficient air volume and moderate temperature is critical. In tight mechanical rooms or unconditioned garages, the unit will struggle to meet the water heating demands.
In addition, the exhaust duct blows cold air. Careful consideration as to what this cold air is blowing on is very important. If it cannot be diluted into adequate air volume, consider ducting it to a location where cooler air is not going to be an issue.
Challenges: Noise, Mode, and User Expectations
HPWHs produce fan and compressor noise, which can surprise homeowners used to silent tank heaters. Builders and architects need to address expectations and consider sound when locating the water heater.
Furthermore, homeowners need to understand the operating modes (heat pump only, hybrid, electric resistance). The recovery times for heavy hot water users can result in insufficient hot water. However, setting the unit in electric resistance negates all the benefits of a HPWH where you have a very expensive water heater in both equipment and electric bills.
For building professionals pursuing utility rebates, all-electric jurisdictional requirements, or energy-efficient homes, heat pump water heaters are a critical component. But equipment choice alone doesn't ensure performance. Design and installation craftsmanship also matter.
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