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Heat Pump Water Heaters: Running Cost and Savings

A heat pump water heater moves heat from the air into the water instead of heating it directly. In a federal example, an ENERGY STAR model costs about $97 a year to run, compared with $340 for a less efficient electric model, and saves about $2,500 over its life.

What it costs

$97 a year

Example yearly running cost of an ENERGY STAR heat pump water heater, against $340 for a less efficient model [1]

These are federal example figures. Your cost depends on local electricity prices and how much hot water you use.

How efficient they are

Water heater efficiency is rated as UEF (uniform energy factor). In the federal example, the ENERGY STAR heat pump model has a UEF of 3.3 and the less efficient model 0.95. That gap is where the roughly $2,500 in lifetime savings comes from. [1]

Getting the most out of one

  • Set the temperature to 120°F
  • Clean the air filter regularly
  • Use the efficiency or hybrid mode rather than the electric-only mode
[1]

What to ask a plumber

  • Is there enough space and air around where the unit would go?
  • Does my electrical panel need any upgrade?
  • Where will the condensate drain?
  • What rebates or tax credits apply, and do you handle the permit?
  • What is the warranty on the tank and the heat pump parts?

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Questions

How much does a heat pump water heater cost to run?

In a federal example, an ENERGY STAR model costs about $97 a year, against $340 for a less efficient electric model.

How much can a heat pump water heater save?

The federal example puts lifetime savings at about $2,500.

What temperature should I set it to?

The Federal Energy Management Program recommends 120°F, with the efficiency or hybrid mode on.

Sources

  1. Purchasing Energy-Efficient Residential Water Heaters, U.S. Department of Energy FEMP

This guide is general information, not professional advice. It summarizes the sources above, which were last checked on October 22, 2026. Talk to a licensed plumber about your own situation.

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