Is a heat pump water heater right for your home?
Thinking about replacing your old water heater? Good news — heat pump water heaters (HPWHs) might just be one of the smartest, most reliable investments you can make for comfort, savings and peace of mind.
Here’s what we’re going to cover in this article to help you decide whether or not a heat pump water heater is right for your home:
- A (very) brief history of heat pumps.
- How’s a heat pump water heater different from an electric resistance or gas water heater?
- Key benefits of heat pump water heaters.
- Types of residential heat pump water heaters.
- Installation best practices.
- Myths about heat pump water heaters.
- Market trends.

A (very) brief history of heat pumps.
The heat pump technology has been around since the 1850s and was widely adopted in the early 20th century, when early refrigeration systems were being developed. Air-source HPWHs burst onto the scene in the 1970s — and the technology has been improving by leaps and bounds ever since. Today, more and more manufacturers are entering the market each year, helping HPWHs become the fastest-growing type of water heater (New Buildings Institute).
How’s a heat pump water heater different from an electric resistance or gas water heater?
It’s all about how they work. It’s ingenious, really. Instead of generating heat through combustion or electrical resistance — like a conventional water heater — HPWHs transfer heat, using a compressor and refrigerant.
They’re kind of like your refrigerator, except running in reverse. Instead of fighting the cold by heating water, they pull warmth from the air around them and transfer it into your water tank.

6 top benefits of heat pump water heaters.
Although the initial costs for HPWHs are higher than standard electric or gas units, rebates of up to $1,300 may be available AND they offer immediate and long-term savings. Here’s a look at the key benefits of HPWHs.
#1. Energy savings
The highly efficient technology enables ENERGY STAR® certified HPWHs to consume up to 70% less energy than standard models. Which, in our seven-state region, boils down to a household of four saving up to $300 per year on electric bills!

#2. Rebates and incentives
Homeowners in the Tennessee Valley region can get an instant rebate of up to $1,300 through our Quality Contractor Network, and in stores and online at participating retail locations.
#3. Longevity
On average, HPWHs last slightly longer than conventional water heaters, with fewer breakdowns. A conventional water heater has a life span of 8-12 years and with proper maintenance, HPWHs can last about 12-15 years.
#4. Improved air quality
HPWHs do not create toxic combustion exhaust gases, such as carbon monoxide. And, because they don’t rely on combustion they minimize the risk of fire or explosion that can be caused by a fuel-fired water heater or associated gas piping.
#5. Increased control
Many models allow access to settings — such as temperature setpoints and operational modes — via a digital control panel or app.
#6. Bigger energy savings
Switching to a HPHW will save about 2800 kWh annually per household, that is 2X the saving opportunity that LEDs provided! (Nate Jutras, ENERGY STAR)
Types of residential heat pump water heaters.
There are a few different types of HPWHs, each designed for different types of homes and needs. Here are two kinds of systems that work well in our region:
Unitized 240v hybrids
The most common type of HPWH, these hybrid systems combine the flexibility of electric resistance heat with the benefits of an integrated heat pump water heater. These are great options for households with high hot water demands.
Split systems
As the name indicates, the heat pump is separate from the water tank, allowing for more flexibility in placement and installation. A solid option for tighter spaces.
Installation best practices.
To perform efficiently and reliably, HPWHs need airflow.. Most manufacturers and ENERGY STAR recommend about 700 to 1,000 cubic feet of free air space. That translates to a room that’s roughly 8×8 ft up to 10×10 ft or even larger. Although some manufacturers make units that can be installed in spaces as small as 450 cubic feet. All units are different, so always refer to manufacturer requirements!
Why so much space? Because HPWHs draw in air to extract heat, and in tighter spaces, they can’t breathe properly — making them work harder and less efficiently. If they’re located in a cramped closet without proper ventilation, they may rely too heavily on their electric heating backup.
Since HPWHs draw warmth from the surrounding air, they should be located in an area with a minimum temperature of 37° F. If your laundry room is large enough, that could be an ideal location, as heat-emitting appliances can help them run even more efficiently.
Although today’s HPWHs are significantly quieter than their predecessors, installers should avoid placing them next to bedrooms or home offices.
Finally, don’t forget about condensate! Your unit will produce water that you’ll need to drain away, using a floor drain or a condensate pump.
A member of TVA EnergyRight’s Quality Contractor Network can help ensure your new water heater is installed for maximum efficiency.
Busting a few myths about heat pump water heaters.
Heat pump water heaters are too noisy!
Today’s heat pump technology is far more efficient — and quiet — than previous generations. An intermittent soft humming sound of the compressor is normal for an ENERGY STAR Heat Pump Water Heater — typically in the range of 45 – 50 dBA. To put that into perspective, that’s quieter than normal conversation.
They’re too expensive to service.
Unlike conventional water heaters, which usually have a 6-year warranty, HPWHs often come with at least a 10-year warranty. And if your plumber has hesitations about servicing a compressor, simply contact the manufacturer — if it’s under warranty, odds are they’ll take care of it.
They’ll make my house too cold and increase heating costs.
HPWHs produce a small amount of cool, dry air, but extensive research has found the effect is negligible, usually in the range of 2°-5° F of localized cooling around the unit.

Market trends.

Questions?
Reach out to a member of the Quality Contractor Network to learn more about HPWHs. Don’t forget to ask about our instant rebate!
Peak Rewards pays businesses & organizations for reducing energy use.
Meet Peak Rewards
Peak Rewards is a money-saving Demand Response program designed for the businesses, facilities, schools, nonprofits and other commercial and industrial organizations throughout our seven-state Valley region. Peak Rewards is brought to you by TVA EnergyRight® and your local power company and is powered by our trusted partners at Enel.
Get paid for saving money on energy with our Demand Response programs.
Our Demand Response programs — like Peak Rewards and PowerFlex — reward companies for reducing electricity consumption during periods of peak electricity demand. Peak Rewards participants receive a seasonal payment. And homeowners and renters may be eligible for the EnergyRight Smart Thermostat Rewards program!
What to expect from Peak Rewards

Frequently asked questions about TVA EnergyRight’s Peak Rewards Program.
Q: What is Demand Response?
A: Demand Response programs like Peak Rewards and PowerFlex help maintain reliability in our region during extreme weather events and contribute to the seven-state Valley region’s low electricity costs. Our Demand Response programs offer financial benefits to participants in exchange for temporarily reducing electricity demand when called upon. They also provide a clean, cost-effective alternative to building new power plants.
Q: What is Peak Rewards?
A: Commercial and industrial customers in our region can earn seasonal payments for temporarily reducing electricity consumption in response to peak demand periods. The program is available to customers with a minimum curtailable demand (a deliberate reduction of energy use) of 50 kW, making it a great option for public schools, community organizations, churches, and small- to medium-sized business as well as larger commercial and industrial customers.
Industrial customers with a contract demand exceeding 1 MW may also explore the benefits of PowerFlex.

Q: What’s in it for my business?
- Your business will receive a seasonal payment for your participation.
- You’ll have access to energy intelligence software that can help you make better energy decisions and manage your energy costs in real time.
- Your participation helps maintain reliable and affordable electricity rates across the region.
- There are no up-front or out-of-pocket costs associated with Peak Rewards.
Q: How does Peak Rewards work?
A: After you sign up for this no-cost program, your company will receive a seasonal payment in return for reducing electricity consumption during periods when the region is experiencing abnormally high electricity demand. You’ll also receive a username and secure login to access a cloud-based energy intelligence software application with 24/7 real-time energy consumption monitoring. This can also be used to maximize dispatch performance, track payments and identify additional opportunities for saving energy. You will be called – or “dispatched” – for an energy reduction event up to 32 hours per fiscal year (October-September).
Q: What types of energy reductions can I make?
A: Our Peak Rewards partner, Enel, creates tailored reduction strategies that accommodate operational limitations across a variety of facilities – such as food processing, manufacturing, warehousing, schools and more.
To meet your energy reduction goals, you could:
- Shift energy-intensive processes to non-peak hours.
- Reduce non-essential lighting.
- Modify manufacturing processes.
- Adjust HVAC systems.
- Dial back pumps.
- Change industrial freezer settings.
Q: How do I sign up for Peak Rewards?
A: You can get started by filling out the form below! The Enel team will be in touch to identify your potential for energy reduction and share an enrollment strategy and energy reduction plan that delivers maximum value with minimal operational impact.
Q: What happens after I’ve signed up?
A: The Enel team will install the necessary metering devices at your facility to establish communication with their Network Operations Center (NOC), so they can monitor energy consumption in real time. Then, we’ll simulate a dispatch to ensure that you’re comfortable with your energy reduction plan. Enel will handle enrollment, measurement, verification and payments on your behalf.
Q: What can I expect during a dispatch?
- Notification: You’ll receive a notification via email, phone or SMS informing you that the dispatch will begin. You’ll have 30 minutes to “respond” to the “demand” and meet your energy reduction goals.
- Response: At the start of the dispatch, your facility will reduce its electricity usage to the predetermined energy plan. This can be done manually or through the NOC.
- Support: Before, during and after a dispatch, the NOC remains in communication with your facility. The Enel team is available 24/7 to make sure you experience the highest levels of performance and payment.
Save money with Peak Rewards.
Demand Response offers flexible solutions to fit your business. Complete this form and a member of our team will be in touch to discuss how your company can earn credits or recurring payments by participating in one of our Demand Response programs!