Are Heat Pump Water Heaters Better Than Electric Water Heaters in 2023

Are you tired of chilly showers and ever-increasing energy bills? Well, we’ve got a hot topic for you today: heat pump water heaters VS electric water heaters. We all want a reliable and cost-effective solution for our hot water needs, but which one comes out on top?  

In this blog, we’re going to break it down for you, discussing the efficiency, financial impact, environmental considerations, and performance of these two contenders.  

So, whether you’re dreaming of a toasty shower or aiming to reduce your carbon footprint, join us as we unravel the debate and determine if heat pump water heaters are the champions or if electric water heaters still reign supreme.  

Let’s dive in and get your hot water game on point! 

The Mechanism of Each Water Heaters – How Do They Work?

Before jumping straight into a conclusion, let’s look at how each of the water heaters work. This way you will have a clearer perspective to take the ultimate and informed decision.

Electric Water Heaters

Here’s a simplified explanation of how a regular electric water heater works:
  1. Tank and Heating Elements: A regular electric water heater consists of a storage tank, typically made of steel or glass-lined, which holds the water. Inside the tank, there are one or more heating elements, usually electric resistance elements. 
  2. Cold Water Inlet: Cold water enters the tank through a dedicated inlet pipe, usually located near the bottom. This replenishes the tank as hot water is used. 
  3. Heating Process: The electric heating elements, powered by electricity, heat up the water in the tank. The elements are immersed in the water, and as electric current passes through them, they generate heat, raising the temperature of the water. 
  4. Thermostat Control: The water heater is equipped with a thermostat that senses the temperature of the water in the tank. When the water temperature drops below the desired set point, the thermostat signals the heating elements to activate and heat the water. 
  5. Hot Water Outlet: Hot water is drawn from the top of the tank through a dedicated outlet pipe, typically located near the top or side. It is then distributed to faucets, showers, or other fixtures in the building. 
  6. Temperature and Pressure Relief Valve: For safety purposes, a temperature and pressure relief valve is installed on the water heater. This valve opens to release excess pressure or temperature, preventing the tank from becoming over-pressurized or overheated. 
  7. Energy Consumption: The regular electric water heater operates by directly converting electricity into heat through the resistance heating elements. As the elements heat up, they consume electricity continuously until the desired water temperature is reached. 
  8. Standby Heat Loss: Regular electric water heaters may experience standby heat loss, where heat dissipates from the tank into the surrounding environment. This can result in energy wastage, especially in uninsulated or older models. 
electric vs heat pump water heater
That’s a basic overview of how a regular electric water heater functions. It’s worth noting that regular electric water heaters are typically less energy-efficient compared to heat pump water heaters, which utilize ambient heat from the surroundings to heat the water. 

Heat Pump Water Heaters

An energy-efficient electric hot water heat pump works on the same principles as a standard electric heat pump but is specifically designed to provide hot water for residential or commercial use. Here’s how it operates: 
  1. Heat Absorption: The hot water heat pump extracts heat from the surrounding air, ground, or water source using an evaporator coil. The evaporator coil contains a refrigerant that evaporates as it absorbs heat from the ambient source. 
  2. Evaporation and Compression: The refrigerant, now in a low-pressure gaseous state, is compressed by a compressor. Compression increases its temperature and pressure, further raising its energy level. 
  3. Heat Transfer: The high-pressure, high-temperature refrigerant then flows through a heat exchanger, typically a coil wrapped around a storage tank containing water. The heat from the refrigerant is transferred to the water in the storage tank, raising its temperature. 
  4. Condensation and Release: As the refrigerant releases its heat to the water, it condenses back into a liquid state, still under high pressure. The condensed refrigerant is then ready to repeat the cycle. 
  5. Heat Pump Operation: The heat pump system monitors the temperature of the water in the storage tank. When the water temperature drops below the desired set point, the heat pump activates, repeating the process to maintain a consistent supply of hot water. 
  6. Backup Heating Elements (if applicable): To ensure a sufficient supply of hot water during high-demand periods or in colder climates, many hot water heat pump systems include backup electric heating elements. These elements are activated when the heat pump alone cannot meet the required demand, providing additional heating power. 
SLA Heat pump water heater
By utilizing the ambient heat from the air, ground, or water source and transferring it to the water, the energy-efficient electric hot water heat pump minimizes the energy consumption required for heating water. This results in significant energy savings and reduced environmental impact compared to traditional electric resistance water heaters that directly convert electricity into heat. 

Heat Pump Water Heaters VS Electric Water Heaters

Here is the ultimate comparison table between electric and energy efficient heat pumps. 
CriteriaHeat Pump Water Heaters (HPWHs)Electric Water Heaters (EWHs)
EfficiencyHigher efficiency, producing more heat per unit of electricity consumedLower efficiency, directly converting electricity into heat
Energy ConsumptionConsumes less electricityConsumes more electricity
CostHigher upfront cost, but potential long-term energy savingsLower upfront cost, but higher long-term energy costs
Environmental ImpactLess greenhouse gas emissions, greener optionHigher greenhouse gas emissions
PerformanceRelatively slower recovery time, but constantly improving with technology advancementsRelatively quick recovery time, suitable for high hot water demands
Climate DependencePerforms well in moderate climates, may experience slightly reduced performance in colder climatesPerforms consistently in various climates
Backup Heating ElementsIncludes backup heating elements for high demand periodsN/A
Noise GenerationOperates quietly, minimal noise disturbanceQuiet operation but may produce some noise during heating cycles
MaintenanceRequires periodic maintenance, such as filter cleaning and refrigerant checksRegular maintenance requirements
LifespanGenerally longer lifespanAverage lifespan
Remember, these factors can vary depending on the specific make and model of the water heaters. It’s advisable to research different brands, read customer reviews, and consult with professionals to make an informed decision based on your unique needs and preferences. 

Cost of Heat Pumps

When comparing the costs of heat pump water heaters (HPWHs) and electric water heaters (EWHs), there are several factors to consider. Let’s explore them in detail.  

One significant aspect to assess is the upfront cost. HPWHs generally have a higher initial price compared to EWHs. This is primarily because HPWHs incorporate more advanced technology and additional components, such as compressors and refrigerant circuits. These components contribute to the higher overall cost of the system. 

However, it’s crucial to look beyond the upfront expense and consider the long-term operating costs. HPWHs are renowned for their energy efficiency. They work by transferring heat from the environment to heat the water, requiring less electricity in the process. On the other hand, EWHs rely on direct electrical resistance heating, which is less energy-efficient. As a result, HPWHs typically have lower operating costs and can lead to significant energy savings over time. 

If you’re considering the installation of a heat pump water heater in New South Wales (NSW) or Victoria, the cost can vary depending on your specific circumstances and the available government rebates. 

In Victoria, residents can enjoy a remarkable subsidy offered by the state government. If you’re looking to replace your current electric hot water system with a hot water heat pump, you’ll be pleased to know that it can be done at absolutely no cost to you. This subsidy aims to promote energy efficiency and incentivize residents to adopt more environmentally friendly heating options. 

Similarly, if you reside in New South Wales, there is a government-provided rebate available. You can have your electric hot water system replaced with a heat pump for a nominal fee of just $99. This subsidy serves as an encouragement for residents to embrace energy-efficient solutions and reduce their carbon footprint. 

Another consideration is the cost of electricity in your area. Utility rates can vary significantly depending on your location and provider. It’s essential to take into account the rates in your region when comparing the long-term operating costs of HPWHs and EWHs. Some utility companies offer specific incentives or time-of-use rates that can impact the overall cost analysis. 
heat pump water heaters price

The lifespan of the water heater is also a factor in cost comparison. HPWHs typically have a longer lifespan compared to EWHs. While the average lifespan of an EWH ranges from 10 to 15 years, HPWHs can last 15 to 20 years or more with proper maintenance. A longer lifespan can contribute to additional cost savings over time as you won’t need to replace the system as frequently. 

Lastly, it’s essential to consider the maintenance and repair costs associated with each type of water heater. Both HPWHs and EWHs may require occasional maintenance and repairs. HPWHs may need filter cleaning, refrigerant checks, or compressor servicing. EWHs may require periodic replacement of heating elements or thermostats. These maintenance costs should be factored into the overall cost analysis. 


In summary, while HPWHs may have a higher upfront cost, their energy efficiency and lower operating costs can lead to long-term savings. However, the specific cost comparison will depend on factors such as utility rates, usage patterns, and the lifespan of the water heater. Assessing your unique circumstances and considering both upfront and long-term costs will help you make an informed decision about whether a heat pump water heater or an electric water heater is the more cost-effective choice for you. 

If you’re interested in taking advantage of these rebates and transitioning to a heat pump water heater, we’re here to assist you. Feel free to get in touch with us by clicking here. Our team will be more than happy to provide you with further information and guide you through the process. 

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