Hybrid hot water heaters: are they ready for prime time?

If you’re trying to reduce natural gas usage in your home, one of the biggest consumers is probably your hot water heater.

According to industry data, gas-powered hot water heaters represent 47% of the market and on average are the 2nd biggest consumer of gas in homes. This makes them an important appliance to focus on if you’re trying to reduce or even eliminate gas usage in your home.

Switching from gas to electric hot water is a less complex affair than going from a gas furnace to a heat pump: as long as an electrician is able to run an electric circuit to the heater, it will be a drop-in replacement as far as the plumbing connections go. Water heaters are generally pretty boring products that you probably don’t think much about until yours suddenly stops working. However, if you’re planning to switch to electric or upgrade your existing electric heater, one of the newest innovations are hybrid electric hot water heaters. They’re called hybrid because they can generate heat two ways: with a heat pump and an electric resistance heater.

Heat pumps aren’t new. Heat pumps for home heating have been around for decades, have a good track record, and consumers have plenty of products and installers to choose from.

That’s not the case for hybrid hot water heaters, which currently are much more of a niche product with a short track record. While using a heat pump for hot water needs is a great idea in theory and incentives reduce the overall cost, some installers have reported reliability issues. That may deter a lot of consumers.

However, the advantages are significant, especially if you already use electricity for hot water. You could save hundreds of dollars a year by choosing a high efficiency hybrid heater. There are environmental benefits, too.

In this article, we’ll take an in-depth look at the two types of electric hot water heaters, including the pros and cons of hybrid electric hot water heaters.

Why switch away from gas hot water heaters?

Gas-powered hot water heaters are very popular. They can be highly efficient, and are more powerful and can be cheaper to operate than electric units. However, if you have cheap electricity or solar panels, or want to make your home all-electric, an electric hot water heater could be the better choice.

There is also a small but noteworthy safety risk with gas models. They heat hot water by combustion: natural gas is burned in a chamber at the bottom of the tank, producing byproducts such as carbon monoxide and nitrous oxides that are vented outside the home through a flue.

With a correctly installed hot water heater, these combustion byproducts will be safely vented through the flue, which will exit out a chimney or exterior wall. If the flue becomes obstructed, these gases can flow back into your home, which is a dangerous situation known as backdrafting. If you have a gas hot water heater in your home, you should make sure that you have a carbon monoxide detector installed, as carbon monoxide is odorless and can sicken or even kill you.

Carbon monoxide poisoning is more common than you might think. According to the CDC, it causes more than 100,000 Americans to end up in emergency rooms every year.

Backdrafting can also occur in tightly-sealed homes that don’t have a ventilation system to balance the negative air pressure created when kitchen or bathroom exhaust fans are turned on. In a less tightly sealed home, this negative air pressure causes to air to be pulled in through cracks around windows, doors, and other holes. In a tight home that does not have a balanced ventilation system (such as an energy recovery ventilation unit), this negative air pressure can pull air in through the flue of a hot water heater or furnace. If the heater is operating while this is happening, the exhaust gases can be pulled into your home instead of exiting outside as they normally would.

There’s other environmental considerations too. In California and Utah, gas water heaters must meet ultra low nitrogen dioxide (ULN) emission standards. While ULN water heaters are available, you can expect to pay a price premium for them.

Types of electric hot water heaters

There are two types of electric hot water heaters. The most common uses electric resistance heating. This type of water heater is cheaper to purchase, but is less efficient and therefore more expensive to operate.

The other type is a hybrid hot water heater, which includes both a small heat pump and an electric resistance coil. The heat pump allows this type of heater to be highly efficient - as much 4 times better than a conventional electric heater. The electric resistance coil provides backup heating in situations where the heat pump can’t supply enough heat to keep up with demand, but at the expense of lower efficiency.

This high efficiency comes with a price: hybrid hot water heaters can cost twice as much as a conventional electric unit.

How hybrid and standard electric water heaters work

Most electric hot water heaters use electric resistance heating. This means that they pass electric current through a high resistance coil, causing it to heat up. This is the same method used in a hair dryer or electric kettle.

In fact, you can think of an electric hot water heater as a really big kettle.

One advantage of electric resistance heat is that it’s cheap to manufacture. However, it’s not cheap to operate in comparison with a heat pump, which is far more efficient. An electric resistance heater is considered to be 100% efficient: this means that all of the electricity it uses is turned into heat – 3,412 British thermal units of heat for every 1 kilowatt-hour of electricity, to be exact.

In contrast, an air-source heat pump that is used for heating a home will have an efficiency of anywhere between about 110% to 540%, depending on the outside temperature, with an average of about 300%. This means that a heat pump will generate an average of 3 times as much heat as an electric resistance heater for the same amount of electricity – about 10,000 BTUs for every 1 kWh of electricity.

Heat pumps work by using a set of refrigerant coils to extract heat from the surrounding environment. In fact, your refrigerator is a type of heat pump that takes heat from inside the refrigerator and moves it to the coils outside (which are usually underneath or behind the fridge).

Refrigerators, air conditioners, and heat pumps are all based on the refrigeration cycle, which is illustrated below:

Heat pumps for heating and cooling homes recently have become popular. You can read my article on home heating with heat pumps to learn more.

Hybrid hot water heater design

From the exterior, a hybrid hot water heater doesn’t look much different from a gas or standard electric model. The main distinguishing feature is a large grille near the top, which is the air intake and exhaust for the heat pump. Here’s an example of a Rheem 50 gallon hybrid hot water heater:

The heat pump components are located at the top of the unit, which uses the surrounding air to extract heat. Here’s a diagram of the inside of a typical heat pump hot water heater:

Heat pump components at the top tend to make hybrid units taller, but in other respects they look much the same as a conventional water heater.

Power requirements for hybrid hot water heaters

Any full-sized conventional electric water heater will require a 240v electrical service. Most hybrid hot water heaters do too, but because of their higher efficiency, they tend to have lower electrical demand. In fact, I found a 66-gallon hybrid hot water heater that only needs a 120v 15-amp connection. This limits the maximum heat the tank can generate using the resistance coil when the heat pump isn’t able to produce enough heat, which could limit the usefulness of a 120v tank in households with high hot water demands. Still, it can make installation less expensive if you already have a 120v outlet nearby.

How much hot water can a hybrid hot water heater deliver?

A hybrid hot water heater with a 240v electric service should be able to deliver a similar rate of hot water as a conventional electric with the same electrical rating. Electric hot water heaters will usually list their wattage, which will typically be 3,800 watts, 4,500 watts, or 5,400 watts. Hybrid models with only a 120v connection will have an output limit of around 1,500 watts, which is substantially lower and may not be able to keep pace with high demand unless the tank is large.

The wattage rating for a hybrid heater refers to its backup resistance coil rather than the heat pump. It’s more difficult to predict how much heat a heat pump alone can produce because it’s a function of both the rating of the heat pump and the temperature of the surrounding air.

To help you understand how much hot water a heater can produce, you can look for its first hour rating (FHR) rating, which is an estimate of the number of gallons of hot water per hour it can supply. Here’s the exact definition from the Department of Energy:

An estimate of the maximum volume of hot water in gallons that a storage water heater can supply within an hour that begins with the water heater fully heated. The FHR is measured at a 125°F outlet temperature in the Uniform Energy Factor test method.

The bottom line is that a hybrid hot water heater should be able to deliver just as much hot water as a conventional model, and you can look for its FHR rating to confirm. A caveat is that a hybrid heater might use its resistance heater instead of its heat pump to keep up during periods of high demand, which would negate its efficiency advantage. However, hybrid heaters generally are “smart” units that are programmable – often using a smartphone app – and will offer an option to run in heat pump-only mode. This will ensure that you are getting maximum efficiency, but at the expense of slower hot water delivery.

To find out the heat pump output for a hybrid heater, you can check its specification sheet to see if it includes a compressor rating. For example, Rheem lists the compressor rating of its Performance Platinum series as 4,200 BTU/hour. If you remember earlier, I said that 1 kWh of electricity translates to 3,412 BTUs of heat. This means that the power output of the heat pump in this Rheem series is about equivalent to a 1.2 kW resistance heater, which is a little less than an electric kettle.

That might seem low, but the smallest capacity tank in the Rheem Performance Platinum series is 50 gallons. Having a large tank acting as a buffer will make it more feasible for a heat pump to keep pace with demand, and it could mean that you will rarely need to use the resistance coil to deliver extra hot water.

Special installation considerations for hybrid hot water heaters

The heat pump in a hybrid hot water heater extracts heat energy from the surrounding air. It has a fan that blows over the evaporator coil, allowing the refrigerant inside to pick up heat from the air. The refrigerant flows through the compressor, raising its temperature, and then into the condenser coil, which dumps energy from the hot refrigerant into the water.

Because of the way heat pumps work, there are a couple considerations to keep in mind about the location in which a hybrid hot water heater is installed.

The first is that because a heat pump extract heats from the air, a hybrid hot water heater will release cold air into its surroundings. This can be a benefit during the summer when your air conditioner is running, because the hot water tank will release cold air for “free”. However, it will be detrimental during the heating season because your furnace will need to make up for the cold air the hot water heater releases. Even so, this will likely be less of an impact compared to a gas-powered unit that uses indoor air for combustion and then vents its exhaust outside, causing cold outdoor air to be pulled inside.

Another factor is that the room in which a hybrid heat pump in installed needs to have adequate cubic footage so that there’s enough air available from which to extract heat. This means that if the heater is going into a small utility closet, the closet will need to be ventilated: it will need to have a vent, or the door will need to have a large gap at the floor or a louver. Otherwise, the heater will lose efficiency as the room becomes colder.

There is a alternate installation method that may mitigate these installation challenges, which is to install ducts to allow the heater to use outdoor air for both the intake and exhaust. Manufacturers sell adapters that cover the intake and outlet vents of the heater and connect to 5"-8" ducts.

Using outdoor air could be a good solution in warm climates because the outdoor air temperature can be very high. For example, the average summer air temperature in Miami is around 90°F. At that temperature, a heat pump would only need to raise the temperature of its refrigerant by 40° to produce 130°F hot water. Compared to extracting heat from 70°F indoor air, that’s a lot less energy that the heat pump needs to generate. However, it also means that you will be losing out on getting cold air for free. Whether or not this will end up as a net energy gain or loss would be complicated to calculate, as it will vary depending on the outside temperature.

Outdoor venting will be much less desireable in cold climates - you don’t want to be using sub-freezing outdoor air for your heater intake.

The bottom line is that while outdoor venting could be a net benefit in warm climates, the small gain in efficiency most likely won’t make up for the additional cost of installing vents.

Uniform Energy Factor explained

To help you compare the energy efficiency of water heaters, there is an industry standard measure called the Uniform Energy Factor (UEF), with “uniform” indicating that UEF can be used to compare the efficiency of gas, electric, and hybrid water heaters.

I mentioned earlier than an electric resistance coil operates at 100% efficiency. Based on that alone, a conventional electric heater would have an UEF of 1. However, UEF also takes into account heat loss. The insulation in a water tank isn’t perfect, so the water inside will slowly get colder over time, requiring more energy input. This is why an electric water heater will typically have a UEF between about 0.85 and 0.92, with the differences primarily due to the insulation of the tank.

A hybrid hot water heater, on the other hand, will often have a UEF better than 3.5, which reflects the fact that a heat pump will typically be 3 or 4 times more efficient than a heating coil.

To help you compare the efficiency of different models, look for the UEF number as well as the yellow EnergyGuide label on the product.

Reliability problems may be a concern with hybrid heaters

Hybrid hot water heaters might have below average reliability. I don’t have concrete data to offer, but plumbers have anecdotally reported high failure rates among even the newest models of popular brands. This isn’t unexpected: compared to gas-fired and conventional electric water heaters, hybrid models are more complicated devices that can fail in more ways.

They’ve also been on the market for less time, and fewer manufacturers currently offer them. Being a less mature product, it’s reasonable if not all of the kinks have been worked out.

That said, you can also find plenty of reviews from satisfied customers, so a hybrid hot water heater could end up being a great purchase for you.

With limited data, I would say that your best bet is to check Consumer Reports, which bases its ratings on internal testing and consumer surveys. It’s the only publication I know of that does this for water heaters. Other “review” sites don’t actually test water heaters, but base their recommendations on specifications published by manufacturers.

It’s also a good idea to ask your plumber for a recommendation, but keep in mind that contractors often tend to steer customers toward tried-and-true products rather than those closer to the bleeding edge. That’s certainly not a bad thing, but if you want a recommendation on a hybrid heater, it would be a good idea to get quotes from more than one plumber.

Warranties can give you some confidence, but watch out for labor costs

Hybrid hot water heaters are a higher-end product and will tend to have good warranties. The models I checked all have 10 year product warranties. However, one thing to be aware of is that labor costs will typically be covered, but usually for a shorter period - only one year with the models I reviewed.

This means that if your hybrid hot water heater has a failure after two years, the manufacturer will cover the replacement cost, but not pay for the labor of installing the replacement unit. Because labor is a significant cost in any installation, the value of a 10 year warranty can be a little deceiving.

Big incentives are available for heat pump hot water heaters

The federal Inflation Reduction Act (IRA) included incentives for many renewable energy and energy efficiency technologies, including heat pump hot water heaters.

The potential savings are big: you can get a federal tax credit worth 30% of the project cost, up to a maximum of $2,000. This means that if the total cost (including labor) of installing a hybrid hot water heater is $1,500, you would end up paying only $1,050 after receiving the tax credit.

To qualify, you must select a heat pump hot water heater that is Energy Star rated. You can search the Energy Star website to find models that qualify.

To apply, refer to the IRS.gov page on the Energy Efficient Home Improvement Credit. An important detail to keep in mind is that this is a tax credit, and not a rebate. This means that you apply for the credit at tax time, and you will only be able to take advantage of it if you have some federal tax liability. If you don’t pay federal taxes (as some retired people do), you won’t benefit from this credit.

That’s not the only savings available either, as many states and local utilities offer incentives too. For example, NYSERDA in New York state has the Clean Heat rebate, which includes $700 on heat pump hot water heaters. Added together, these incentives can reduce or eliminate the higher price that you would normally expect to pay versus a conventional unit.

Bottom line: should you choose a hybrid hot water heater?

There’s a few reasons why a homeowners might want to switch away from either a gas-fired or conventional electric hot water heater. Reducing natural gas usage has environmental benefits, and can eliminate a small but real risk of carbon monoxide exposure in your home. Meanwhile, conventional electric heaters produce no pollution, but are less efficient than hybrid heaters.

Hybrid hot water heaters have the potential to save you a lot of money: Consumer Reports says that the average consumer could save as much as $300 per year compared to a conventional electric water heater.

On top of that, the federal tax credit and some local incentives can reduce the price premium that you would normally pay, making the financial payback even better.

The downside? Even though heat pumps are old technology, cramming them into a water heater is quite new. Because these products aren’t as mature as conventional electric and gas heaters, you might not get the kind of 10-15 year reliability that you should expect.

I’m sorry if this article doesn’t give you a concrete answer on whether or not you should buy a hybrid hot water heater: it’s intended to only give you guidance. Here’s a summary of the main points:

• Take advantage of the federal tax credit and research local and state incentives to save potentially even more
• Upgrading from an convention electric water heater will likely you money. Upgrading from gas might, depending on your utility costs.
• Research specific models on Consumer Reports and by getting multiple recommendations and quotes from plumbers who have experience with hybrid water heaters
• Potentially lower reliability is the main risk when choosing a hybrid water heater