Heat Pump Water Heaters

A Hot Idea That’s Overhyped
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Are you considering replacing your gas water heater with a heat pump water heater (HPWH)? If so, please allow me share a fresh perspective on the old-fashioned gas water heater (OGWH). You may find that an OGWH beats a HPWH in most ways, including total cost of ownership.

• OGWHs heat much faster than HPWHs.
• OGWHs are much quieter than HPWHs.
• OGWHs are much more reliable than HPWHs.
• OGWHs are easier to service than HPWHs and need less of it.
• OGWHs keep working when the power goes out. HPWHs do not.
• OGWHs may cost PG&E customers 37% more to heat water. Or not!
• OGWHs will almost certainly cost most PG&E customers a LOT less overall.
• OGWHs might have a 20% shorter lifespan than HPWHs, but that’s debatable.

The OGWH wins on performance, noise, reliability, serviceability, and resilience. Those five wins are so obvious that I’m not going to talk much about them. The HPWH might win monthly cost. However, for those converting from a OGWH, the total cost of owning a HPWH will probably be abysmal. Cost and service life are the only points up for debate, so let’s talk about them.

HPWHs Might Cost Less to Run

This 9/28/26 search says a family of four spends $25 to $40 per month heating water with a OGWH in PG&E’s service area. That’s my experience as well. My house has a gas dryer and an OGWH. The two of them have cost me $11.01 per person per month during the last four months. So we’ll stack the deck in favor of the HPWH and use $40 per month for our calculation.

At 27% less, the HPWH should cost a family of four $29 per month. Or not! That 9/28/26 search says a HPWH costs $25 to $45 per month. That might be right because, like central heat pumps, a HPWH’s actual efficiency is often less than its rated efficiency. OGWHs don’t have that problem. Even so, we’ll favor the HPWH again and assume that the $132 yearly savings is real.

Click here to learn where that 27% number comes from.

HPWHs Probably Cost a LOT More Overall

Including local tax, the aforementioned HPWH costs $2140 on 9/28/26 from Home Chepot. The OGWH costs $877. So it’d take 9.5 years to break even if homeowners install HPWHs themselves. That assumes the home’s occupants actually use a family of four’s worth of hot water and that the $132 savings actually manifests. Of course most homeowners hire a pro.

This search says OGWH to HPWH conversion costs $4500 to $8000. Rebates are mostly tapped out as of this writing, but we’ll be nice to the HPWH yet again and apply the MCE rebate. This search says OGWH replacement costs $1800 to $4500. Cutting those ranges down the middle means the HPWH may cost $2425 more. That’s an 18 year breakeven! It gets worse…

A HPWH is literally a water cooled air conditioner. It may have over 20 parts including 2 motors. A OGWH is a simple gas heater. It may have less than 10 parts and no motors. The latter is more reliable, period. If a HPWH only requires $500 more in maintenance and repair than an OGWH during its life, I’ll be surprised. Add 4 years to the breakeven.

Then there’s efficiency. OGWHs do a good job of operating at their rated efficiency. HPWHs don’t. If a HPWH is located in a basement or small garage* then it’s likely to operate at reduced efficiency. That also happens if it’s ducted to a cold environment. Such situations require more frequent use of its costly secondary heat. Add a year to the breakeven, probably more.

* A HPWH that’s installed in a garage or basement can make those areas extremely cold in the winter. If the walls or floors or ceiling separating the living space from the HPWH aren’t insulated, or maybe even if they are, your home’s heating system will have to run longer to compensate. Add another year or more to break even.

Finally, if your HPWH lasts 12 years, there will be a 12 year opportunity cost. If you can earn a fairly modest 5% on $2425 compounded annually, and if you’re in a 33.3% combined state and federal tax bracket, then you may net about $1200 over those 12 years. Add 9 years to the breakeven! If you’re good at investing, add more than that.

It could take over 30 years to break even on an OGWH to HPWH conversion. The HPWH won’t last that long and you probably won’t live there that long. Kind of grim, innit? And that’s with several assumptions in favor of the HPWH. Use less water, or keep most of your gas usage in Tier 1, or have higher maintenance costs on your HPWH, and it just gets worse and worse.

Debatable Lifespans

AI says OGWHs last 8-12 years and HPWHs last 10-15 years. That’s 25% longer for the HPWH. That’s certainly not my experience with OGWHs. Mine have lasted into their late teens and sometimes beyond. Many of you have experienced similar longevity with your OGWH. Flush its tank now and then, change its anode once in a while, and that can be anyone’s experience.

Google’s answer regarding water heater lifespan may be flawed because it polls the internet. The internet’s dominant narrative is “electricity good, fossil fuel bad”. There’s no doubt that narrative is influencing search results. Nevertheless, even if HPWHs do last longer, that one advantage doesn’t really offset the horrendous number of other problems that HPWHs have. 

Lies, Damned Lies, and Statistics

There are reasonable and unreasonable ways to play with the numbers and make HPWHs look better:

• If you bought a HPWH and a PV system under NEM1/2 so that you now get “free” hot water all year long, the HPWH may be great for you. That isn’t possible under NEM3.
• If huge rebates return and/or if your installation cost is a lot lower than average, then a HPWH may OK. I still doubt it because of the myriad of problems HPWHs have.
• If you use TONS of hot water, and if your HPWH actually runs at its rated efficiency, then it may be OK. I still doubt it. And you might want to do something about that water usage. :)
• If PG&E’s price for natural gas jumps dramatically (even though the US is fifth in the world for NG reserves) and/or if the price of electricity drops drastically… yeah, right.

If any of those four scenarios apply now or in the future and you convert, you’ll still lose out on superior performance, noise, reliability, serviceability, and resilience that a OGWH offers.

I’m sure that a OGWH to HPWH conversion is a great choice for some homes. I’m only here to push back on the idea that it’s a great choice for every home, or even most.