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Choosing Between Tankless vs Heat Pump Water Heater: A Comparative Guide

Heat Pump Water Heater vs Tankless

Choosing the best water heater for your home can be difficult, especially with many alternatives available today. Heat pump water heaters and tankless water heaters are two standard options that are frequently explored. While both choices provide efficient and environmentally beneficial solutions, they differ in ways that suit various households. In this blog post, we will compare the benefits and drawbacks of heat pumps and tankless water heaters to help you decide which is best for your needs and preferences.

For Your Information!
Heat pump water heaters transfer heat from the air, offering energy efficiency, while tankless water heaters provide instant hot water on demand.

A heat pump water heater is an energy-efficient device that transfers heat from the surrounding air to the water in a storage tank instead of generating heat directly. Similar to a refrigerator, but in reverse. The heat pump extracts heat from the air and uses it to heat the water, reducing energy consumption compared to traditional electric water heaters. You can read our detailed guide on Heat Pump Blowing Cold Air.

On the other hand, a tankless water heater, also known as an on-demand water heater, heats water only when needed. It has no storage tank but heats water as it flows through a pipe using a gas burner or an electric element. It provides a continuous hot water supply without wasting energy on standby losses.

Before we dive into the pros and cons of each type of water heater, let’s look at some essential factors you should consider before comparing. These factors include:

  • Purchase and installation cost
  • Operational expenses
  • Environmental impact
  • Energy efficiency
  • Performance

These factors will help you evaluate each water heater’s overall value and suitability for your home.

A heat pump water heater has many benefits, making it an attractive option for homeowners who want to save money and reduce their environmental impact. Some of these benefits are:

According to the US Department of Energy, a heat pump water heater can use up to 60% less electricity than a conventional electric water heater. This means you can save much money on your energy bills over time.

A heat pump water heater can also reduce greenhouse gas emissions by using less electricity from the grid, often generated by burning fossil fuels. According to a study by the National Renewable Energy Laboratory, a heat pump water heater can reduce CO2 emissions by 1.6 tons per year compared to a conventional electric water heater.

A heat pump water heater is generally less costly than a tankless water heater, both in purchase and installation costs. The average cost of a heat pump water heater is $1,200 to $3,500, while a tankless water heater costs $2,000 to $4,500.

A heat pump water heater may also qualify for federal, state, or local tax credits or rebates, depending on where you live and your chosen model. For example, the US federal government offers a tax credit of 10% of the cost of a heat pump water heater, up to $300, until December 31, 2023.

A heat pump water heater also has some drawbacks you should be aware of before buying one. Some of these drawbacks are:

A heat pump water heater needs a well-ventilated area, drawing heat from the air. The US Department of Energy recommends a space of at least 1,000 cubic feet. You may need help to install it in a small area, such as a closet or basement.

Heat pumps have a shorter lifespan than tankless water heaters because they have more moving parts. The average lifespan of a heat pump water heater is 10 to 15 years, while a tankless water heater is 20 to 30 years.

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A heat pump water heater may need to perform better, relying on air heat. If temperatures are too low, it may struggle to provide enough hot water or switch to backup heating, increasing energy consumption. The US Department of Energy recommends it for regions with an average annual temperature of at least 40°F.

Pros
  • Reduced energy consumption
  • Reduced carbon footprint
  • Less expensive option
  • Potential tax incentives
Cons
  • Not suitable for cold climates
  • Shorter lifespan
  • Requires a more prominent space

A tankless water heater has many benefits, making it an appealing option for homeowners who want a continuous and convenient hot water supply. Some of these benefits are:

A tankless water heater is much smaller than a heat pump water heater, as it does not have a storage tank. It can be mounted on a wall or installed in a closet or under a sink, saving you valuable space in your home.

A tankless water heater has a long lifespan, as it does not have a tank that can corrode or leak over time. It also has fewer parts that can break down or malfunction. The average lifespan of a tankless water heater is 20 to 30 years, which is twice as long as a heat pump water heater.

A tankless water heater is quieter than a heat pump water heater, as it does not have a fan or a compressor that can make noise. It also does not release cool air into the room, which can create a draft or a noise. A tankless water heater only produces a low humming sound when barely noticeable heating water.

A tankless water heater can heat water quickly, as it does not have to wait for a tank to fill up or reheat. It can provide hot water within seconds of turning on the faucet, which is convenient and satisfying. It can also deliver a consistent temperature and hot water pressure without fluctuations or drops.

A tankless water heater also has some drawbacks that you should consider before buying one. Some of these drawbacks are:

A tankless water heater costs $2,000 to $4,500, double a heat pump water heater. Installation costs vary based on fuel type, unit size, and plumbing/electrical complexity.

Tankless water heaters may need help with peak demand in large households or when multiple appliances use hot water simultaneously. Limited flow rate means potential drops in water temperature or pressure. Installing multiple units or choosing a larger size may be necessary to address this.

Switching to a tankless water heater from a tank-style one may require new plumbing. This includes a more extensive gas line or higher voltage electric circuit, potentially incompatible with existing plumbing. Installing new vents, pipes, valves, or pumps may also be necessary, adding to installation costs and complexity.

Pros
  • Smaller footprint
  • Long lifespan
  • Quieter operation
  • Water heats quickly
Cons
  • New plumbing may be Required.
  • Peak demand concerns
  • More expensive

The purchase and installation costs and the operational and maintenance costs determine the cost of a water heater. To compare the cost of a heat pump water heater vs tankless, you need to consider the following factors:

  • Energy consumption

    Heat pump water heaters are more energy-efficient than tankless ones, as they transfer heat from the air. They can save up to $250 per year on electricity bills compared to a conventional electric water heater. Tankless water heaters, on the other hand, can save around $100 per year on gas bills compared to a traditional gas heater.

  • Fuel type

    The water heater’s fuel type affects cost. A heat pump uses electricity, is widely available, and is stable in price. Tankless can use gas or electricity. Gas is cheaper and more efficient, but availability and price may vary. Electricity is expensive and less efficient but more accessible and reliable.

  • Maintenance

    Water heaters require maintenance, with heat pump ones needing more than tankless. Heat pumps require a regularly cleaned filter and compressor checks for leaks. Tankless heaters only need annual flushing to prevent mineral buildup and corrosion.

When choosing between a heat pump water heater and a tankless one, your specific needs should guide your decision. Suppose you prioritize energy efficiency and cost savings. In that case, a heat pump water heater can be the right choice as it can save up to 60% on electricity bills, has potential tax incentives, and has a generally lower upfront cost.

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On the other hand, if you prioritize space savings, longevity, and quick hot water delivery, a tankless water heater might be a better fit. It offers convenience and efficiency with a lifespan of 20 to 30 years, a smaller footprint, and virtually instant hot water. To make an informed decision aligned with your preferences, consider local climate, available fuel types, and household size.

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