Home Energy Decisions

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Water heating

Heat pump water heaters, tankless, and sizing basics—how to cut water-heating cost without sacrificing showers.

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What this topic covers

Water heating is often 15–25% of a home’s energy use. That makes it a great target for meaningful savings—especially when your existing heater is aging.

The best option depends on where the water heater lives (garage/basement/closet), your household size, and what you value most: lowest operating cost, unlimited hot water, or simplest install.

Quick wins (highest ROI moves)

If your tank is old, plan the replacement before it fails (you get to choose the best option).
Heat pump water heaters often deliver the biggest operating-cost drop when installed in a suitable space.
Don’t size tankless by marketing claims—size it to your simultaneous hot-water demand.
Insulate hot-water pipes where accessible and set a sensible temperature setpoint.

A sensible sequence

1) Measure current cost

Use a bill breakdown to estimate your baseline. Water heating is less seasonal than space heating, so changes show up as a steady shift over time.

2) Choose the right technology

Heat pump water heaters lower operating cost but need air volume and produce cool exhaust. Tankless can reduce standby loss and provide long runs, but it can require bigger gas lines, venting, or electric service upgrades.

3) Size for your household

For tanks, size for peak use (morning showers, laundry). For heat pump models, pay attention to “heat pump only” vs hybrid modes and recovery rates.

4) Optimize install details

Location, condensate handling, noise, and drain pan safety matter. Small install mistakes can negate the benefit or create annoying day-to-day issues.

Tools to run the numbers

Use these to turn guidance into a personalized plan.

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Water Heater Compare

Compare options and tradeoffs with a practical decision flow.

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Bill Breakdown

Estimate your baseline so savings aren’t guesswork.

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My Plan

Sequence water-heating upgrades alongside the rest of your roadmap.

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Recommended reading

Hand-picked guides that go deeper on the common decisions.

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Heat pump water heater ROI

When HPWHs shine and what to check before you buy.

Read →

Tankless vs tank water heater

A homeowner comparison of cost, comfort, and complexity.

Read →

How to read your utility bill

Get to the rates and fees that determine your real operating cost.

Read →

FAQ

Is a heat pump water heater worth it?

Often, yes—especially if your heater is in a garage/basement where it can pull heat from ambient air. The payback depends on electric rates and install cost, but the operating-cost reduction is usually meaningful.

Tankless or tank: which is better?

Tankless can be great for long hot-water runs, but it’s more install-sensitive (gas line, venting, scaling). A tank (especially a heat pump tank) is simpler and often cheaper to operate.

Will a HPWH make my basement too cold?

It can cool the space it draws from. In many basements/garages that’s fine, but in tight interior closets it can be a problem. Placement and ducting options matter.

Want the fastest path to action?

If you want a now/next/later roadmap tailored to your home, start with the My Plan tool.

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