Heat Pump Water Heater Running Cost
A heat pump water heater cuts water heating electricity by about 74% against a standard electric tank. See what that is worth at your own rate.
A heat pump water heater costs roughly $0.47/day, $14/month and $173/year for a household drawing 55 gallons of hot water a day — DOE’s medium-use draw pattern — at the US average electricity rate of 18.44¢/kWh. That saves about $485/year against a standard electric tank. ENERGY STAR’s published figure for a family of four is 3,760 kWh a year, worth about $693 at that rate.
Calculate Heat Pump Water Heater Savings
Heat Pump vs Electric vs Gas Water Heater
| Metric | Heat Pump WH | Electric Tank | Gas Tank |
|---|---|---|---|
| Monthly cost (55 gal/day) | ~$14 | ~$55 | ~$21 |
| Annual cost | ~$173 | ~$658 | ~$252 |
| Efficiency (UEF) | 3.50 | 0.92 | 0.64 |
| Annual saving vs electric tank | $485 | — | — |
| Annual saving vs gas tank | $79 | — | — |
| Installed cost | $2,500–$6,000 | — | — |
| Extra cost vs electric tank | $1,503 | — | — |
| Federal tax credit | None | None | None |
Electricity 18.44¢/kWh (EIA Electric Power Monthly, Table 5.6.A, May 2026); natural gas $1.44/therm (EIA, winter average, November 2025 - March 2026 (US); December 2025 - February 2026 (by state)). 55 gallons of hot water a day — DOE’s medium-use draw pattern — heated from 58°F to 125°F. Figures are Uniform Energy Factors: the gas tank rates 0.64 because UEF includes standby loss, even though its burner runs at about 80%. The heat pump UEF of 3.5 is our modelling assumption for a current ENERGY STAR unit in a warm space; a cold garage will do worse. Installed cost $2,500–$6,000 and the $1,503 incremental cost over a standard electric tank are ENERGY STAR’s own figures. There is no federal tax credit: §25C ended for property placed in service after 31 December 2025.
Is a Heat Pump Water Heater Worth It?
On running cost, comfortably. At about $14/month against about $55/month for a standard electric tank drawing the same 55 gallons of hot water a day, a heat pump water heater saves roughly $485 a year — about 74% of the electricity a resistance tank uses. ENERGY STAR’s own figure for a family of four is 3,760 kWh a year, which it values at $550 using 14.6¢/kWh; at the current US average of 18.44¢/kWh the same saving is worth about $693.
The upfront number is the part most sites get wrong. ENERGY STAR puts the unit alone at $1,500–$3,000 and labour and materials at a further $1,000–$3,000, so budget roughly $2,500–$6,000 installed. How fast that pays back depends on what you compare it against. Measured against ENERGY STAR’s incremental cost of $1,503 over the standard electric tank you would otherwise have bought, payback is about 3.1 years. Measured against the whole installed cost — the right test if your existing heater still works — it is roughly 5–12 years against a typical 13-year unit life. Utility and state rebates, where they exist, shorten both figures.
Heat pump water heaters take heat from the air around them, so they need a space that stays above about 40°F and has enough air volume to draw from — a basement, utility room or a garage in a mild climate. They cool and dehumidify that space as a side effect, which is welcome in a humid Southeastern basement and unwelcome next to a finished room in winter. In a cold garage the unit falls back on its resistance elements and the saving largely disappears, which is exactly the case where the figures above stop applying.
There is no federal tax credit for a heat pump water heater in 2026. The §25C Energy Efficient Home Improvement Credit, which covered 30% of cost up to $2,000, terminated for property placed in service after 31 December 2025. Any payback figure on this page is calculated without it. Check your utility and state programs, which are unaffected. Compare full running costs in our water heater cost calculator or see how your heat pump cost calculator stacks up for whole-home heating too.
Electricity 18.44¢/kWh — EIA Electric Power Monthly, Table 5.6.A, May 2026, a single month rather than an annual average. Running costs model 55 gal/day heated from 58°F to 125°F at UEF 3.50 for the heat pump and 0.92 for the electric tank. Equipment and incremental costs, and the 3,760 kWh saving, are ENERGY STAR’s published figures.
Heat Pump Water Heater — FAQs
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