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Hybrid Heat Pump Water Heaters: Cost and Savings Analysis

  QuitCarbon Team  ·  3 minute read

Did you know that water heaters consume around 20% of an average household's energy? This makes it crucial to consider energy-efficient alternatives like hybrid heat pump water heaters. Compared to traditional units, hybrid heat pump water heaters are 2-3 times more efficient than traditional ones, resulting in potential savings of about $350 per year for a family of four. Despite the initial costs, the long-term savings make these water heaters a good investment. Visit our Complete Guide to Heat Pump Water Heaters to learn how they operate and how to select the best type for your home.

Here are some things to consider when doing a basic cost-benefit analysis:

How Can I Get Savings From Hybrid Heat Pump Water Heaters?

Now that you know what a hybrid heat pump is, you're probably wondering why they save you money. 

Are Heat Pump Water Heaters Cheaper to Operate?

Hybrid heat pump water heaters consume significantly less power compared to conventional models, resulting in substantial savings. They are 2-3 times more efficient than conventional electric water heaters. For example, if a current electric water heater costs $35 per month to operate, a hybrid model will only cost about $9.50 per month due to its increased efficiency. Over time, that leads to major savings. 

Are Hybrid Heat Pump Water Heaters Worth It?

Hybrid heat pump water heaters outperform standard gas or electric models in terms of cost savings. This is due to their high Energy Factor (EF), which measures the heater's ability to convert energy into hot water.

Water Heater  Energy Factor (EF)
Gas and Oil 0.50-0.60
Electric ~0.95
Hybrid Heat Pump 2.75-3.50

As you can see, hybrid heat pumps are much more efficient, as much as five times better than gas and oil water heaters. That means you can access hot water without using copious amounts of energy. 

How Much Do Hybrid Heat Pump Water Heaters Cost Upfront?

The cost of a heat pump water heater depends on the model and size. Units typically cost between $1,900 for a 50-gallon tank to $2,800 for an 80-gallon tank. Manufacturer, tax credits, government rebates, local labor costs, and seasonal variations can impact the final cost.

Installation Expenses for Hybrid Heat Pump Water Heaters

Installing a new hybrid heat pump water heater may require modifications to your water, electric, or gas systems. You should likely hire a licensed contractor for this task unless you have some prior expertise. Thankfully, the savings generated by your new hybrid water heater usually cover the purchase and installation costs within approximately five years.

Benefits and Viability of Hybrid Heat Pump Water Heaters

Replacing your water heater is a significant undertaking. However, since conventional heaters typically last eight to ten years, most homeowners will eventually face this situation. Hybrid heat pump water heaters alleviate the financial burden, as their high-efficiency results in immediate energy savings. Heat pump water heaters are also a better alternative to gas or oil water heaters, as they don't rely on expensive fossil fuels and are significantly more efficient.

These environmentally friendly units can even assist in cooling your home while providing hot water. Moreover, their reliability surpasses that of standard heaters, leading to extended lifespans.

What Tax Credits and Rebates Are Available for Hybrid Heat Pump Water Heaters?

Recognizing the benefits for homeowners and the environment, the federal government offers a tax credit for high-efficiency heat pump water heaters. As of 2023, qualifying homeowners can receive a tax credit of 30% off costs up to $2,000 due to the Biden administration's Inflation Reduction Act. 

Manufacturing Rebates for Hybrid Heat Pump Water Heaters

Federal tax credits are not the only incentives available. Manufacturers, utility companies, and state agencies also provide rebates, often exceeding the federal tax credit amount. These rebates can be claimed in conjunction with the tax credit. Energy Star Rebate Finder is a good place to start searching. Visit our Rebates page for more information.

Can You Get Hybrid Heat Pump Water Heater Warranties?

Hybrid heat pump water heaters have superior reliability, resulting in robust warranties. Make sure to check with the manufacturer to check if you can get a solid warranty for your water heater.

QuitCarbon can put you in touch with trusted contractors who can install your hybrid heat pump water heater. We have helped hundreds of homeowners install new appliances. Contact us for a free "Electrification Plan" that will identify places to electrify your home and save money. You can also make the planet a better place at the same time!