Heat Pump Water Heaters

They can cost hundreds or even thousands more than they save.
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Are you considering replacing your Old-Fashioned Gas Tank Water Heater (OGWH) with a Heat Pump Water Heater (HPWH)? Well don’t dismiss the possibility installing a new OGWH just yet. The OGWH is the OG of water heaters. It beats the hyped-up HPWH by a country mile.

The OGWH is outstanding…

• It’s quieter.
• It’s smaller.
• It heats water faster.
• It’s simpler and more reliable.
• It’s easier to maintain and repair.
• It keeps working when the power’s out.
• The total cost of ownership may be a LOT less.

As for the HPWH…

• They say it lasts longer. I may convince you otherwise.
• It may save a family $9 per month on their PG&E bill. Or not.
• Parts of country with cheap electricity can save more than $9. Or not.

An OGWH wins on noise, size, performance, reliability, repairability, and resilience. A HPWH may or may not save you a few bucks on your PG&E bill. Even if it does, that’s unlikely to offset the colossal cost of converting from gas to electricity. That means the OGWH probably wins on total cost too. Cost and lifespan are the only points up for debate, so let’s talk about them.

Let's talk about the HPWH's appalling size and repairability too. Click here.

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 an OGWH in PG&E’s service area. That’s been my experience as well. My house has a gas dryer and an OGWH. My monthly gas cost for both of them was $11.01 per person during the last four months. So we’ll stack the deck in favor of the HPWH and use $40 per month for our calculation.

Theoretically a HPWH might save PG&E customers 22% per month on their water heating bill. In reality it may not. As discussed below, HPWHs can and do run below their rated efficiency. That may be why the preceding search says OGWHs and HPWHs cost about the same to run. We’ll be nice to the HPWH for now and just assume that it does save a family of four $9 per month.

Where does '22% less' come from? Click here.

HPWHs Probably Cost a LOT More Overall

Including tax, the OGWH mentioned in “Where does 22%…” above costs $1184 on 9/28/26 at Home Cheapot. The HPWH costs $2140, which is $956 more. If you spend $150 on other installation-related materials, and if the HPWH saves you $9 per month, then it’ll be 10 years before you “break even”. That assumes you install it yourself, but of course most don’t…

OG to HP conversion may cost $4500 – $8000. Rebates are mostly gone for now, but we’ll apply a $675 rebate that’s only for MCE customers. OG to OG replacement may cost $1800 – $4500. Average it out and an HPWH may cost $2425 more. Average this real world example out and it’s $3125 more. We’ll be nice to the HPWH again and call it $2425. That’s a 22.5 year breakeven.

A HPWH is literally a water cooled air conditioner. It may have over 20 parts including 2 motors. An OGWH is a simple gas heater. It may have less than 10 parts and no motors. An OGWH is more reliable. A HPWH could easily require $500 more in maintenance and repair during its life than an OGWH does. Add 4.5 years to your breakeven.

Finally, if your HPWH lasts for 12 years, you’ll pay for 12 years of missed opportunity. If you can earn a modest 5% on $2425 compounded annually, and if you’re in a 33.3% combined state and federal tax bracket, then you may net $1200 over 12 years. Add 11 years to your breakeven. Savvy and/or lucky investors can add even more years than that.

An OGWH to HPWH conversion might break even in 38 years. Kinda grim, innit? If you use less water than a family of four; or if you keep most of your gas usage in Tier 1; or if your HPWH runs at reduced efficiency; then it just gets worse. Speaking of worse, compare the HPWH to a more efficient OGWH like this and now the fam saves $6 per month. That’s a 57 year breakeven!

HPWH's can and do run at reduced efficiency. Click here.

 

Debatable Lifespans

AI says OGWHs last 8 to 12 years and HPWHs last 10 to 15 years. Call it 10 vs. 12.5 years. So OGWHs are expected to have a 20% shorter lifespan. If so, why do both OGWHs linked above have 20% longer warranties? My own OGWHs have lasted much longer than 12 years. I see that in my customers’ homes too. An OGWH is a simple gas heater. A HPWH is a water-cooled AC. Decades of repairing heaters and ACs have taught me the former usually outlasts the latter.

AI’s skewed results are predictable. It polls the internet. The internet’s dominant narrative is “electricity good, fossil fuel bad”. That internet includes plumbers’ websites. Plumbers love HPWHs because their higher cost and unreliability increase revenue. The last person you should ask about an OGWH’s life expectancy is the plumber who wants to sell as many HPWHs as possible. Yet, if you examine the screenshot of my search, you’ll see that’s exactly what AI did.

Lies, Damned Lies, and Statistics

There are reasonable and unreasonable ways to play with the numbers and make HPWHs look better in PG&E’s service territory:

• If you bought a HPWH and a PV system under NEM1/2 so that you get “free” hot water all year, the HPWH may be great for you. Year-round “free heat” isn’t practical under NEM3.
• If you don’t have NG service, or if you have propane service, then a HPWH might save you more than $9 per month. If huge rebates don’t return, it better be a LOT more than $9.
• Maybe huge rebates return and you break even at 10 years. If it lasts 12, your reward for suffering 12 years of noise, poor performance, etc. might be $1.00 to $1.50 per month.
• If you find a huge rebate; and if you use TONS of hot water; and if everything else works out; then maybe a HPWH isn’t so bad. Or maybe you could just curb the water usage.
• If PG&E’s price for natural gas jumps dramatically (even though the US ranks fifth in the world for proven NG reserves) or if its price for electricity drops drastically… yeah, right.

Conclusion

HPWHs are noisy and unreliable slackers compared to OGWHs. It doesn’t make sense to pay thousands more converting to one if it’s never going to pay you back. And even if you don’t have to pay more to convert due to some massive rebate, plenty of people from all over the country have seen their bills go sideways or even UP after conversion. So there’s a non-trivial chance you’ll still pay more in the end. If you believe that’s worth it for the environment, well…

HPWHs use more raw materials. They contain an air conditioner, so their materials are also more toxic. Most homes need upgrades to install them, thereby consuming still more materials. Much of the electricity they use comes from fossil fuels. Tradesmen will have to repair them more often, thereby consuming even more resources. And then, finally, they’ll probably have to be replaced more often. How on Earth is it reasonable to compel tax payers to subsidize that?