What’s a Heat Pump Hot Water System and what are the benefits of switching to one?

Have you heard of "Heat Pumps" but don't know how they work? Up until a few months ago I had heard the term but I didn't really understand the benefits over traditional gas/electric hot water systems. As part of my quest to "get off gas" and make my home as energy efficient as possible, I did some investigating.

Water heating products are the second largest users of energy out of all household appliances, accounting for up to 30% of the total energy usage. Using a Heat Pump can reduce this by up to two thirds.

After recently changing my space heating (the number one guzzler of household energy) from gas to a split-cycle air conditioning system, I am now keen to switch to a more efficient hot water system too. I have rooftop solar so it makes sense that all of my appliances are electric - making the most of that beautiful free power that the sun is supplying me.

How a Hot Water Heat Pump Works

  • A heat pump hot water system uses a small amount of electricity together with the heat from our environment, instead of electricity elements or gas flames to heat your home's water.
  • It heats water by transferring heat from a source, rather than creating new heat. The heat source can be from the surrounding air, water or geothermal energy stored in the ground.
  • This heat is absorbed by a refrigerant which flows through the evaporator.
  • The refrigerant is then compressed into a vapour which raises the temperature and pressure.
  • Condenser coils transfer the heat to the water in the tank.
  • Think of it like your fridge, but in reverse. Producing heat rather than cooling.
  • These systems typically use around 60 to 75% less electricity than a conventional electric hot water system.

Source: City of Hayward

Two Different looking Heat Pump Hot Water Systems

  • Integrated system - tank and compressor combined in a single cylinder unit.
  • Split system - tank and compressor separate (If you don't have the physical space to put both together in the one location)

The Benefits to you

  • Lowers running costs - You will save up to 70% on your water heating costs.
  • Lower consumption of power - A heat pump uses some electricity but up to ⅔ less than conventional hot water systems. This is because a heat pump only uses electricity to drive the compressor and the fan, instead of using electricity to heat the water directly with an electric element.
  • Reduces your home's greenhouse gas emissions
  • Performs particularly well in warmer climates, because they're pulling in hot air from the environment.
  • Use a Heat Pump to store excess power from your Rooftop Solar - If, like me, you don't have a storage battery for your solar yet, you can maximise the potential of a heat pump by syncing it with your solar power system. You will need to choose a heat pump with a built-in smart timer which will offset any excess power to the heat pump - further reducing your power costs.

Any downsides to Heat Pump?

Upfront costs of purchasing the heat pump system are generally higher than traditional hot water systems. However, there are some great government rebates to help you to pay for a hot-water changeover. Check with your installer to see which energy efficiency or renewable energy rebates you are eligible for. The supplier will help you access these rebates as part of their package.

Heat pumps work in all climates, but operate best in warmer climates. Check with your supplier that the model you are looking at is suited to the lowest temperatures in your location.

Government Rebates to help you make the switch

  • In Australia (and possibly other countries) the state and federal governments are offering generous rebates to encourage people to change their gas and electric hot water to energy saving alternatives.
  • To reduce upfront installation costs, the Australian government is issuing STCs (small-scale technology certificates) to create a financial incentive to install small-scale renewable energy systems.
  • The dollar amount you will receive in a rebate will depend upon what your current hot water system is, that you are upgrading from. Note that the government rebates are higher if you are upgrading from an electric tank system.
  • For example, I currently have an instantaneous tankless gas system, so I only qualify for one small-scale technology certificate (STC) which equates to AUD912.
  • If you are changing over an electric hot water system with a storage tank, your rebate could be in excess of AUD2000.
  • As well as the rebate schemes, Australian Home owners will soon be able to access cheaper bank loans to pay for solar panels, electrification and other climate-friendly renovations after the federal government expanded an energy ratings tool (natHERS certificates) to apply to existing houses.

Buy quality

As with all appliances, they will vary in quality and price, buy the best quality your budget allows. Make sure that you choose one with a decent warranty period.

Why is it better for the environment than your current Gas or Electric Hot Water System?

What about Solar Hot Water?

  • Solar hot water is another environmentally friendly option that harnesses the sun's energy, utilising roof-mounted solar panels that transfer energy directly to the water heater.
  • Solar hot water systems consist of solar panels or evacuated tubes, and a storage tank unit which is either installed on the roof or at ground level.
  • In areas with less Winter sun and long cold nights, solar hot water units may require a booster using gas or electricity.
  • The upfront purchase and installation costs are quite high, however they are cheap to run.
  • In Australia the STC rebate system applies to the installation of home Solar Hot Water systems which helps to lower the upfront costs of purchase.

If you live in the US you might have already taken advantage of new tax incentives to improve energy efficiency in your home and installed a heat pump. The Inflation Reduction Act, which the US Congress passed in 2022, provides nearly $369 billion for renewable energy equipment and energy efficient home improvements. The good news is that this money will be available for the next decade, so you don't need to rush your project to take advantage of the latest home energy tax credits and incentives. Read more about it here.

Research in the US has shown that if all residential electric water heaters were replaced with heat pump water heaters, the energy cost savings would jump to US12 billion annually, and 140 billion pounds of greenhouse gas emissions would be prevented annually. That's the equivalent of emissions from 13 million vehicles!

If you live in other parts of the world, let us know in the comments about any energy saving rebates and incentive schemes that your government is offering. Or any other information you have to share.

Stay tuned for our #1MREADY campaign. 1 Million Women are taking 500 women on a journey, electrifying their homes and learning how to reduce our carbon emissions and cut our energy bills. Heat pumps are one of the solutions that we will explore. We will be sharing with you everything we learn along the way.

1 Million Women are so proud to be partnered with Reclaim Energy who are leading the way in innovative, intelligent CO2 heat pump solutions in Australia!

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