Heat pump water heater (HPWH) systems extract energy content from a heat source, usually air, to efficiently heat water. Depending on cold water and ambient air temperatures and on patterns of hot water use, HPWHs do the same job as standard electric water heaters but use half the electric energy. These systems use a motor to run a compressor that draws a gaseous refrigerant through an evaporator, raising its pressure until it liquefies in the condenser (Figure 1). This familiar process heats the condenser and cools the evaporator. In wringing the heat from air, HPWHs both cool and dehumidify the air that passes through them, thus helping to meet space-conditioning needs during cooling seasons.

Figure 1: The heat pump cycle

In a heat pump water heater, air is cooled as it passes through the evaporator’s fins (with the help of a fan to improve efficiency), while at the same time, water is heated as it passes through the condenser’s heat-exchange surfaces.
Figure 1: The heat pump cycle

But if HPWHs are so efficient, why aren’t more businesses purchasing them? An uninformed design community, historical reliability issues, and high initial costs are the three main culprits. For the most part, the only engineers with the knowledge to properly design these systems work for the manufacturers themselves. When HPWHs first entered the market, poorly designed and unreliable products made consumers skeptical of the technology. Also, the complexities of HPWHs make them more difficult to install than standard water heaters, raising the price of installation as well as the opportunity for installation errors. These difficulties continued throughout the 1990s and early 2000s for both residential and commercial systems, which led to a profound decline in the use of HPWHs. Largely as a result of this decline, a continuing barrier to HPWH sales is that very few HVAC distributors carry them, and many contractors are unaware that they even exist and therefore do not advocate for them. However, although commercial systems remain underutilized, residential systems are making a comeback since the US Environmental Protection Agency and Department of Energy’s Energy Star program released its 2009 Water Heater Specifications, increasing the availability of integrated systems and making them simpler to choose and install. And don’t let the name mislead you—residential HPWHs can supply adequate hot water for many types of small commercial facilities.

What are the options?

HPWHs are available in the US in a variety of capacities, from small residential versions to large commercial systems that can produce more than 3,000 gallons per hour of hot water and over 30 tons of conditioned air. That’s enough hot water production for a large-scale commercial laundry facility!

Integrated versus add-on systems

Differences in HPWH technologies include system configurations and efficiencies. The largest commercial-size HPWHs are typically add-on systems, where the heat pump apparatus stands alone (Figure 2). Heat is transferred from the condenser to the water tank via a heat exchanger and a small pump, using the tank’s water as a heat-exchange medium.

Figure 2: Configurations of heat pump water heaters

Integrated—or drop-in—HPWH systems come in a single package and may be installed quickly. Add-on systems use an existing hot water tank (and its electric resistance heaters as backup), but the heat pump may be placed at some distance from the tank to accommodate space or air-handling needs.
Figure 2: Configurations of heat pump water heaters

Because an add-on HPWH system utilizes an existing electric resistance water heater, unlike an integrated system, it has a lower initial expense. Also, in many cases, add-on systems can have more flexible installation since there can be some distance between the HPWH apparatus and the water tank. This flexibility allows facilities to use the cooling benefits of the technology even if the water heater isn’t located near the intended heat source. Add-on systems are available in a variety of sizes for residential, commercial, and industrial applications. It is worth noting, however, that add-on HPWHs can potentially violate manufacturers’ warranties since they are an independently added device, so they may not be appropriate for all cases. Similarly, Energy Star doesn’t cover add-on residential systems in its program because they don’t inherently save energy unless they are added to an existing product.

Integrated systems incorporate both the heat pump apparatus and the hot water tank into a single unit, with the condenser typically wrapped around the tank, surrounded by insulation. Though installing integrated systems does require a basic understanding of the technology in order to properly set up the equipment and adjust settings, they are designed to require no special expertise in HVAC installation or wiring; ordinary plumbers can install them without the aid of other tradespeople. Also called “drop-in” systems because of their simplistic design, integrated systems are more compact than add-on systems and typically have the same footprint as ordinary electric hot water systems of the same water capacity. Accordingly, they tend to be easier to retrofit. Although they’re intended primarily for residential use, with maximum hot water capacities as high as 20 to 25 gallons per hour, these units can also be adequate for many low-demand commercial applications.

System efficiencies

The instantaneous energy efficiency of an HPWH system depends on incoming water temperature, intake air temperature, the heat transfer characteristics of the heat pump, and various conductive and convective losses throughout the system. In most circumstances, the hot water output is useful throughout the year, but the cold air output may not be. There is no simple index that accounts for both outputs and describes overall HPWH efficiency. Instead, the HPWH industry relies on two indexes of energy efficiency: coefficient of performance (COP), which is favored by manufacturers of commercial-size HPWH systems; and energy factor (EF), which is used by manufacturers of residential-size HPWH systems. In both cases, a higher value indicates greater efficiency.

COP is a measure of the instantaneous energy output of a system in comparison with its instantaneous energy input. Standby losses and the interaction of changing water and air temperatures are not reflected in measurements of COP. Accordingly, the COP of a standard electric hot water heater is close to 1, and the COP of a typical HPWH may be 3 to 4. Buyers of commercial systems should be aware that COPs quoted by manufacturers may reflect the combination of the production of cold air and hot water in relation to energy input. This figure is helpful only if full use is made of the cold air.

EF is a more useful measure for water heating efficiency alone, and it reflects circumstances that are likely to occur in the field. The test to determine EF is conducted over a 24-hour period with temperatures of incoming water and input air held constant. A measured amount of water is pulled from the system every other hour for the first 12 hours, and no water is drawn for the final 12 hours. Because this test reflects standby losses, the EF of a typical electric hot water system is 0.90, and the EF of a typical HPWH is about 2.5. This represents an efficiency improvement of more than 200 percent, even ignoring the cooling benefit.

How to make the best choice

Match the technology to the application You may be a good candidate for an HPWH if:

  • Your business needs to replace an electric water heater
  • You’re looking to add air conditioning to spaces where it would normally be cost-prohibitive
  • Natural gas is not available in your area
  • You require a large steady flow of hot water throughout the day

Because HPWHs produce cool, dry air as a by-product of heating water, the best applications are those that take advantage of both outputs simultaneously. Therefore, HPWHs are especially well-suited for commercial sector applications where demand for hot water is relatively constant and the need for cooling or dehumidification is continuous. Commercial laundries fit this description, as do many commercial kitchens and even fast-food restaurants, particularly in climates where space cooling is essential. The best applications tend to be buildings in hot and humid climates because cold, dry air is produced whenever there is a demand for water heating.

Pick the right size Picking the right size HPWH system requires estimating daily hot water needs in gallons, just as you would size any other water heating system. However, for HPWH systems, an allowance must be made for high peaks in hot water demands. HPWH systems are quite efficient, but the heat production is slow and steady. A key factor to consider is the rate of hot water production, listed in product literature as the “recovery rate” and measured in gallons per hour. Recovery rates are typically half those of traditional electric water heaters, but the instantaneous power consumption (demand) is typically 40 to 70 percent less. Accordingly, electric demand savings with HPWH systems can be substantial, but only if the use of backup electric resistance heat is quite low.

If you’ll be using HPWH systems in applications that require considerable hot water over a short time, choose either a larger tank than a traditional hot water system has or an HPWH system with a high recovery rate. Either choice will help smooth over peak hot water loads.

Look for high energy efficiency The Energy Star program establishes appliance efficiency specifications above the federal standards. Residential equipment that meets these specifications is awarded the Energy Star label, which helps consumers readily identify high-efficiency products. Check the Energy Star list of HPWHs to find the most efficient models (at this time, only integrated HPWHs qualify for the Energy Star label).

Perform a quick cost/benefit estimate The cost-effectiveness of an HPWH is heavily weighted by utility rates and water use. Consistent water loads and a need for year-round cooling and dehumidification make HPWHs a more attractive option for many types of businesses. The initial cost of a commercial HPWH is much greater than an electric or gas-fired boiler, but the annual savings are large and paybacks typically range between two and three years. Water inlet and setpoint temperatures, HPWH location, air-conditioning and dehumidification loads, and water consumption rates are some of the parameters a commercial designer takes into account. Because estimating commercial HPWH economics is a complex process, it’s a good idea to contact a vendor or system designer to see if an HPWH is appropriate for your application.

If you have a smaller hot water load, it is possible to use a residential-size HPWH. However, for facilities that currently use electricity to heat water, the economics are typically attractive only if they consume at least 60 gallons of hot water per day. For facilities that currently use natural gas water heaters and have higher consumption levels, HPWHs can be cost-effective if the price of gas is high and the price of electricity is low. See Table 1 and Table 2 for cost estimates of a residential-size HPWH versus an electric water heater and a gas water heater.

Table 1: Cost-effectiveness of a residential-size HPWH versus an electric resistance water heater

Heat pump water heaters (HPWHs) produce significant energy savings compared to an electric resistance water heater. Those savings can yield short payback periods for the incremental retail cost in some cases.
Table 1: Cost-effectiveness of a residential-size HPWH versus an electric resistance water heater

Table 2: Cost-effectiveness of a residential-size HPWH versus a natural gas tank water heater

When natural gas prices are high and electricity prices are low, HPWHs can make economic sense when compared to gas water heaters.
Table 2: Cost-effectiveness of a residential-size HPWH versus a natural gas tank water heater

Integrate plant systems For buildings that use rooftop cooling towers or large refrigerators, it may be worthwhile to harvest waste heat from these units, using the HPWH system both to produce hot water and to help meet the air-conditioning load (Figure 3).

Figure 3: HVAC heat recovery via an HPWH

Using the return water of a cooling tower as input to a heat pump water heater (HPWH) enhances the efficiency of both the HVAC and the hot water systems.
Figure 3: HVAC heat recovery via a heat pump water heater

Pick a good location All HPWH systems should be installed with careful attention to the flow of air across their evaporators. First, because airflow is a necessity (several hundred cubic feet per minute, even for smaller systems), do not place systems in isolated, tight areas. Second, because they produce dry, cool air, put them where their output air will be useful, such as damp basements or spaces that need cooling most of the year. Of course, ducts and dampers may be employed to achieve the needs of source and output air, thus allowing flexibility in choosing a location. Finally, as with refrigerators, the compressor motor on a HPWH system produces some noise, so it may be wise to pick a location where the noise won’t be a nuisance.

Perform regular maintenance Heat-exchange surfaces perform better when clean, and HPWH systems are no exception to the rule. To maintain good energy performance, keep the filter that protects the evaporator’s heat-exchange surfaces clean. This is particularly important in kitchens and other areas that contain airborne pollutants.

What’s on the horizon?

Though carbon-dioxide (CO2) HPWHs are already marketed heavily in Japan and Europe under the name Eco-Cute, they will be new to the US when the manufacturer Sanden releases its CO2 split system and integrated HPWHs in about 2015. This HPWH technology uses CO2 as the refrigerant instead of a conventional refrigerant such as Freon. CO2 is much more environmentally friendly than other refrigerants because it has a much lower global warming potential and doesn’t deplete the ozone layer. CO2-based HPWHs can also have higher efficiencies and operate at lower ambient temperatures than current systems (as low as 5° Fahrenheit). For example, in a 2013 test by the Northwest Energy Efficiency Alliance, researchers found that a 40 gallon European version of Sanden’s integrated CO2 HPWH had a remarkably high energy factor of 3.39 and that its heating capacity remained largely unchanged for different ambient air temperatures.

Who are the manufacturers?

There are a variety of manufacturers producing HPWHs. Some manufacturers produce either residential or commercial systems, while some produce both.

Neither this list nor any mention of a specific vendor or product constitutes an endorsement or recommendation by E Source, nor does any content the Business Energy Advisor constitute an endorsement or recommendation, explicit or otherwise, of your service provider’s various technology-related programs.

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