Tankless Vs. Heat Pump Water Heater: Which is Better?

If your current water heater is nearing the end of its lifespan or you want to get ahead of the 2027 gas water heater ban, you are likely considering tankless or heat pump water heaters as an alternative. Both are fantastic options when it comes to energy savings, reducing your utility bills over time and offering a strong supply of hot water. But is one system better than the other? In this article, we’ll explore the ins and outs of tankless and heat pump water heaters including how they operate, what they cost, their maintenance requirements, and more.

How Does a Tankless Vs. Heat Pump Water Heater Work?

Before deciding on your water heater replacement, the first step is looking at how each of these systems works differently to deliver hot water to your appliances.

Tankless Water Heaters

Rather than storing hot water in a tank and using power to continuously heat it, tankless water heaters heat water as needed. While tankless water heater installation cost may be higher, how they operate makes the future energy savings worth it. When you turn on a hot water appliance, water is passed through a heat exchanger powered by gas burners of electrical heating elements. The number of heating elements or the size of the gas burner can vary based on the flow rate of the unit, with higher flow rates made for homes with higher hot water demands.

Heat Pump Water Heaters

Like a typical air-to-air heat pump, a heat pump water heater extracts heat from the air, only this time using it to heat your water supply. This process significantly lowers energy uses because heat isn’t being created, just transferred. Electricity is needed to run the compressor, refrigerant pump, and fan, as well as backup heating elements for cases of high hot water demand. This is an extremely energy efficient water heater option.

Maintenance Requirements

Since maintenance is a vital part of keeping any water heater in fully operating condition and ensures they last the full extent of their lifespan, knowing the maintenance requirements is important in deciding which water heater upgrades are more appealing to you.

Tankless Water Heaters

Strict maintenance is required for tankless water heater efficiency. Cleaning the water and air filters is an essential step to perform every three months or so in order to avoid debris buildup. Condensate drains, which remove the water formed from the warmed air, and gas venting also need to be inspected once a year. One of the most important tasks is flushing out the system once a year to ensure there won’t be any harmful scale buildup. It is helpful to have a professional assist with these tasks.

Heat Pump Water Heaters

Since a heat pump water heater still uses a tank, flushing the tank out yearly is still required. The anode rod, responsible for preventing rust from forming in the water, should also be checked for corrosion and replaced when
needed. Air filters and condensate drains should be cleaned once or twice a year to prevent blockages. Annual maintenance from a professional is also recommended here.

Installation Cost

The cost of installation is probably one of the biggest factors you are considering when thinking about a water heater replacement. While the specific price will depend on the type of unit you get, other home upgrades you’ll need to make, etc., we can at least give you an idea of the upfront costs involved with these water heater options.

Tankless Water Heaters

Tankless water heater installation cost can range. Some standard units will cost around the same as your average tank water heater, but the installation cost itself can be much higher, particularly if you need to make any home upgrades to accommodate the new system (upgrading the gas line or the electrical supply, for example). Higher efficiency units will have higher installation costs but lower running costs.

Heat Pump Water Heaters

Heat pump water heaters will have a high initial cost of installation, but can be offset by many different local rebate programs in Sonoma and Marin County, as well as federal tax credits for installing an energy efficient water heater. Also, though you could pay up to three times more for a heat pump water heater than a traditional tank water heater, your energy savings over time will quickly pay it back.

Tankless and Heat Pump Water Heater Pros and Cons

Though these water heater upgrades have many benefits, there are always downsides to consider. Since every household has their own needs, a professional contractor can help you weigh the pros and cons of each system to determine which option will work best for you.

Tankless Water Heaters

Pros: Tankless water heater efficiency is up to 96%, long life expectancy of 15-20 years, heating water on-demand instead of constantly heating a water tank leads to greater savings on energy and larger hot water supply, compact design saves space inside, some units can even be installed outside of the house

Cons: Higher installation costs depending on hot water needs, electrical rewiring or gas line upgrades may be required if your house is not set up for a tankless water heater system

Heat Pump Water Heaters

Pros: Dramatically lower running costs and energy usage, 2-4x more efficient than traditional gas units, BAAQMD compliant, part of home electrification, eligible for many rebates

Cons: Much higher upfront cost, water tank requires large amount of surrounding space, units produce a low humming noise when working

Knowing the tankless and heat pump water heater pros and cons may give you a clearer picture of what you want for your water heater upgrade. But there are also unique household factors to take into consideration.

How to Choose the Best Water Heater

All in all, both tankless and heat pump water heater systems have significant advantages that make them each a viable option for a water heater replacement. But there are several factors you will have to consider from your own household that play a large part in determining which system is right for you.

Household size is an important one. How many people live in your home and your peak hot water demand is vital in determining the capacity needed for your water heater. How big your home is and how far some appliances will be from the water heater is also something to think about, since an option like a recirculating pump, which continuously moves hot water through your pipes so it is always at the ready, might be useful.

Outdoor temperature patterns in your area is also something to keep in mind for heat pumps in particular. Heat pumps will be less efficient the colder the air is because they work by extracting heat from the outside. Similarly, the colder the water is coming into the pipes, the longer it will take for a tankless water heater to heat it up.

Space is something to consider with a heat pump water heater especially because of the water tank. You can also consider the space you have for a tankless and the possibility of having the unit installed on the outside of your house if possible to save even more space inside.

Electrical panel capacity is important to think about when it comes to heat pump technology. The electrical requirements for a heat pump can put a strain on your panel if you also have other large electrical utilities, such as an EV charger. Adding a heat pump water heater may require a panel upgrade.

The age of your home can be important when thinking about adding a tankless water heater, since it is likely an older home will require many complicated upgrades in order to accommodate this type of system. You will want to keep in mind the possibility of rewiring electricity and having a larger gas line installed.

Who Can Help You Decide Between a Heat Pump or a Tankless Water Heater?

John Owens Services has been a licensed contractor working with all of the latest in water heating technology since 1986. Our technicians are water heater experts who can come out to your home and perform a simple analysis to determine what water heating upgrade will be the best fit for your household. Whether you have questions about tankless water heater installation cost or what size heat pump water heater will be right for your home, we have the answers. Get in touch with us today and we will work with you to find the perfect water heating solution that fits your household needs and your budget!

Key Takeaways

• Tankless water heaters heat water on demand, while heat pump water heaters use the heat from the air to heat water in a tank
• Both systems require diligent maintenance in order to keep them in good working condition and last the full extent of their expected lifespan
• Installation costs are higher than traditional gas tank units, but long-term energy savings and rebate programs offset the heavy costs
• Each water heater type has their pros and cons and a combination of budget, household size, and water heating needs will determine which benefits outweigh the costs
• Factors like household size, available space, climate, electrical panel capacity, and the age of your home also play a significant role in which energy efficient water heater will work best for you
• Licensed water heater technicians like those from John Owens Services are your best bet in getting an accurate evaluation of your water heating needs to determine the water heater that will serve you best