Find out which is best for heating your water
Heat pump water heaters come with a 30% federal tax credit.
Tankless water heaters work best in homes where room is limited.
Heat pump water heaters are more energy-efficient.
Installing a tankless water heater often requires new plumbing.
Tankless water heaters have a longer life span.
Whether your old water heater has stopped working or you're looking to replace a conventional water heater with an energy-efficient one, you have options. But, choosing between a heat pump water heater versus a tankless water heater can prove challenging when each type comes with advantages and disadvantages that could make either one right for your home. This guide breaks down the pros and cons of these water heaters to help you decide.
A heat pump water heater, also called a hybrid water heater, uses electricity to transfer heat from the air or ground (geothermal heat pumps) into the water in the tank. Below are some of the biggest pros and cons of choosing a heat pump water heater.
When considering a heat pump water heater for your home, you’ll want to keep in mind all of the advantages that come with heat pumps, like reduced energy consumption, a lower carbon footprint, lower costs, and more. Here’s what you need to know.
While both heat pumps and tankless water heaters offer energy savings compared to conventional water heaters, heat pump water heaters take the cake as being the most energy-efficient water heaters on the market. The Department of Energy (DOE) states that heat pump water heaters are up to three times more energy efficient compared to a conditional electric water heater on average.
A quick look at gas versus electric water heaters shows that electric water heaters are far better for the environment. Heat pump water heater components give them a reduced carbon footprint because they do not use fossil fuels to work. Instead, heat pump water heaters run on minimal electricity thanks to the transferral of heat throughout the unit.
Heat pump water heaters cost between $1,200 and $3,500 on average. This puts these water heater types slightly below the cost of tankless water heaters, but you may be eligible for a 30% tax credit to further lower costs.
According to Energy Star, you can receive a 30% tax credit on eligible heat pump water heaters for up to $2,000 thanks to the Energy Efficient Home Improvement Tax Credit. This can greatly offset the cost of your heat pump water heater, putting actual costs once you've included the 30% tax credit between $850 and $2,450.
With all the benefits that come with heat pump water heaters, there are several disadvantages to keep in mind as you weigh your choices, including the size and lifespan of the unit.
The main downside to choosing a heat pump water heater is its size. Unlike a tankless water heater, which does not require a tank, heat pump water heaters do use a tank—like conventional water heaters. So, if you're looking to save space on your next water heater, then a heat pump may not be the right fit for your home.
Heat pump water heaters last an average of 10 to 15 years. Compared to traditional water heaters, they have a slight advantage in life span by two or three years, but they have a shorter life span than tankless water heaters.
A tankless water heater is an energy-efficient type of water heater that works by using one or two heating elements to heat your water on demand. Let's take a closer look at the pros and cons of tankless water heaters to see if a tankless water heater is worth it for your home.
Tankless water heaters offer several advantages that might put them on top when comparing your options. Some of the biggest benefits are their smaller footprint, longer lifespan, and quick heating mechanism.
Tankless water heaters, especially non-condensing tankless water heaters, take up significantly less room than water heaters that require a tank. This makes this type of water heater ideal for smaller homes.
Tankless water heaters are a good investment— even if they cost more upfront than their heat pump water heater competitors. Your tankless water heater lasts between 15 and 20 years if you keep up with maintenance and repairs. This is five to 10 years longer than a heat pump water heater.
Since tankless water heaters don’t have a tank, they tend to be much quieter than other water heaters that have tanks. Keep in mind that some traditional tankless water heaters may be louder than heat pumps, but newer models tend to be very quiet.
Since tankless water heaters heat water on demand, you don't have to worry about using up all the hot water in the tank and hopping into a cold shower or bath. Your tankless water heater will continue to heat water as you use it because it does not use a tank reservoir to hold hot water.
Even with all of these perks, tankless water heaters have a few disadvantages that could impact your choice. Check out the biggest cons below.
Tankless water heaters cost between $1,400 and $3,800 on average. While this is only $200 to $300 more expensive compared to your typical heat pump water heater, electric tankless water heaters do not come with a 30% federal tax credit, so you’ll need to pay in full for this installation. Tankless gas water heaters with ENERGY STAR ratings greater than 0.95 UEF can receive a 30% tax credit.
One of the biggest issues with tankless water heaters is that they can become overloaded if your demand for hot water is too high. Even if you adjust the temperature water heater temp, running the shower, the dishwasher, and the washing machine at the same time can cause lukewarm temperatures. You can avoid overloading your tankless water heater by choosing the right size tankless water heater.
Since tankless water heaters are installed on the wall, they may require new plumbing and ventilation, which can increase the cost of installation.
Overall, deciding on a tankless or a heat pump water heater is a personal decision. Many factors come into play that could make one a better choice for your home than the other, so it’s important to know which features are most important to you.
For example, if up-front costs are a major deciding factor, you might be better off choosing a heat pump. But, if long-term costs are a priority, then going for a tankless gas water heater would make you eligible for the 30% tax credit come next year’s tax return while also lasting longer than a heat pump. Your location is also worth considering. Heat pumps tend to work best in warmer regions, while tankless water heaters are more versatile.
Here is a breakdown of the differences between both types of water heaters to give you a better idea of which could be right for you.
| Type of Difference | Heat Pump Water Heater | Tankless Water Heater |
|---|---|---|
| Capacity | Dependent on tank size | Limitless but can get overwhelmed |
| Cost | $1,200 to $3,500 | $1,400 to $3,800 |
| Fuel source | Electric, gas, geothermal | Electric, gas, propane |
| Installation | Conventional | More complex |
| Life span | 10 to 15 years | 15 to 20 years |
| Location | Best in warm regions | Best in any region |
| Size | Requires more space | Takes up little space |
| Tax credit status | Eligible for 30% tax credit | May be eligible for 30% tax credit |
After rounding up all the pros and cons of heat pump water heaters vs. tankless water heaters, you might still be on the fence about which one is best for your home. In this case, working with a local water heater contractor can help you determine which of these types of water heaters fits the bill.
If your existing water heater is on the fritz and you suspect a leak, you should contact a plumber right away to fix the problem. An emergency plumber costs between $60 and $600 per hour, while a typical plumber costs between $45 and $200 per hour for a scheduled appointment.
Your contractor can also safely install your water heater so that you can start reaping energy savings ASAP.
Installing a water heater is a complex process best left to a licensed water heater contractor. You shouldn’t attempt to install a water heater on your own because it involves acquiring permits, passing an inspection, meeting building code requirements, and having knowledge of plumbing, electrical wiring, and carpentry. Failure to install your water heater correctly can cause electrical shock hazards, fires, and dangerous gas leaks.
Tankless water heaters more often than not decrease your electricity bill, saving you money in the long run. Energy.gov states that demand water heaters can save anywhere between 24 percent and 34 percent more energy than your traditional storage tank water heater.
A gas-powered tankless water heater especially saves on electric bills but will cost you more on your gas bill. Tankless water heaters are most energy efficient in warmer climates and room temperatures, so be sure to install your tankless water heater in a heated room, such as your boiler room, if you have the option.
In most cases, you can retroactively replace a tank water heater with a tankless water heater. Whether this replacement is easy or not, however, depends on the condition of your plumbing system, electric system, or gas lines, depending on which type of tankless water heater you choose. If your existing system doesn’t have the capacity to handle a tankless water heater, then your replacement may prove to be complex and costly.
