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Tankless Versus Heat Pump Water Heaters

tankless water heating

Why Is Efficient Water Heating Important?

Water heating is a major component of residential energy use, often ranking as the second-largest user of energy in the home and accounting for 14 percent to 25 percent of overall household energy consumption. Every home uses hot water, making cost-effective water heating a highly desirable feature in new homes and a primary goal of retrofit projects. To lower ownership costs, construction professionals have begun to favor two water-heating technologies: tankless systems and heat pump water heaters (HPWHs). This fact sheet (link below) is intended to help professionals decide which system is the better choice when considering upfront investment, long-term energy cost, service life, homeowner satisfaction, and environmental benefit.

Before you choose: Is an HPWH even appropriate?

When you compare tankless and HPWH systems, the first question is whether an HPWH is a viable option. For example, HPWHs have a larger physical footprint, requiring higher vertical clearance and at least 1,000 cubic feet of space around them. Without external venting, an HPWH will cool the air within that surrounding space, potentially increasing the demand on the space-heating system. In general, HPWHs are inefficient in colder climates or when installed in cooler areas of the home, such as a garage.

Key findings

Tankless Versus Heat Pump Fact SheetDownload the fact sheet that explains more fully the methods and data behind our claims. (pdf).

Propane tankless systems incur lower upfront costs. Accommodating an HPWH's exacting installation requirements comes at a cost. The study found that HPWHs cost 34 percent more to install in new homes and 18 percent more in retrofits. These costs climb if the surrounding space must be enlarged or the unit vented.

Propane tankless systems have lower cost of ownership. Although the study showed that annual energy bills for HPWHs were $40 less than for propane tankless systems, full cost of ownership was 18 percent higher in the new homes and 13 percent higher in the retrofit projects modeled by the study. This was largely due to the longer service life of tankless units: about 20 years, compared with 15 years for an HPWH.

Propane tankless systems provide additional benefits. Tankless water heaters offer more than just easier installation and lower costs. They have flow rates that are three times that of HPWHs and are not limited by storage capacity. Plus, HPWHs operate at the cost of significant carbon dioxide (CO2) emissions, while CO2 emissions for tankless water heaters are 39 percent lower than for HPWHs.

The Ultimate Guide to Tankless Water Heaters Vol. 2
Home/ Research & Training/ Compare Water Heating/ Tankless Versus Heat Pump Water Heaters