Heat-pump water heaters just keep getting better

Last November, Jonathan Cohen needed a new water heater for the house he and his wife had recently purchased.

The labor economist at Amazon was keen to get a heat-pump water heater, a superefficient electric technology that could save him money on his utility bills. Thorough by nature, he emailed 12 plumbers to ask how much it would cost to install Wirecutter’s top pick. He got few responses, none encouraging. Plumbers who were willing to install that model said the price would depend on an unknown quantity: subcontracted electrical work.

Cohen recoiled at the potential logistical nightmare. ​“You’re dealing with a plumber, and then they have to coordinate with an electrician, and they have to get separate quotes and pull the permits,” he explained. ​“I didn’t want to be a project manager.”

Then his brother-in-law told him about Reservoir, a new heat-pump water heater startup that has in-house tradespeople and competitive pricing that includes installation.

Cohen loved the idea of such a frictionless process, he said, as he walked around his Somerville, Massachusetts, neighborhood with a 6-month-old strapped to his chest. ​“They definitely catered to me.” In late 2025, Cohen had a Reservoir unit installed that cost him a little over $4,000 after federal and local incentives.

The Boston-based startup made a splash earlier this month when it announced it had raised $8 million in seed funding to grow beyond its roughly 100 local installations. And it’s just one of several companies offering new innovations to attract consumers to the climate-friendly appliance.

Why choose a heat-pump water heater? 

Heat-pump water heaters are about three times as efficient as gas-fired or electric-resistance varieties, cut planet-warming emissions, and often lower monthly utility bills. Switching from a resistance system can save a household almost $23,000 over the appliance’s 15-year lifetime. Because they move heat instead of generating it, heat-pump water heaters act like air conditioners and can replace dehumidifiers, saving homes with muggy basements hundreds of dollars each summer.

But the tech has yet to take off. While Americans bought 5 million electric water heaters in 2025, beating out the next most-popular option, gas-fired, only an estimated 214,000 were heat-pump water heaters, according to the decarbonization nonprofit New Buildings Institute.

“The biggest barrier is cost,” said Noah Gabriel, senior project manager at the institute. Consider the difference in two products from leading manufacturer Rheem: A 50-gallon heat-pump water heater has a list price of $1,699, while a highly rated electric-resistance model retails for just $799. The installation cost for a heat-pump version can be comparable to that for conventional systems, adding another $1,000 to $4,000 or more, depending on factors like tank size, a home’s electrical readiness, and local labor costs.

President Donald Trump and the Republican-led Congress have made transitioning to heat-pump water heaters more expensive. Last year, they eliminated a Biden-era federal tax credit that offered households a discount of up $2,000 on the appliance.

Some states, cities, and utilities continue to offer rebates on heat-pump water heaters — from $150 to a whopping $4,000. Meanwhile, though, manufacturers have been coming out with new models and features that could help make their products more affordable.

Although heat-pump water heaters typically plug into a 240-volt outlet, a few big brands — Rheem, A.O. Smith, and GE Appliances — now produce versions that conveniently use a normal 120-volt socket. They’re less powerful, but these options can work well for households of one to four people that would otherwise have to upgrade their electrical system. Last year, GE became the first to offer a product with a flexible voltage, which experts say could make emergency replacements much easier.

While most heat-pump water heaters need 400 to 700 cubic feet of air around them from which to pull heat and put in the tank, customers with tighter spaces can use what are known as split systems. These models move the heat-pump half of the water heater outdoors and leave the hot water tank indoors. Manufacturer SanCO2 has sold such a product for years, and this April, A. O. Smith came out with its own offering. This month, Midea won a national competition for its split-system prototype.

To help users save money more aggressively, most manufacturers have created apps so that households can schedule their heat-pump water heaters to use grid power when it’s cheapest. The appliances can also be set up to participate in local utility programs, like California’s WatterSaver, that reward customers for turning down energy use when the grid is stressed, according to Gabriel. However, some users have reported glitches with some of these scheduling systems.

To reduce the onus on customers, Reservoir and startup Cala Systems are embedding their products with onboard computers to automatically take advantage of cheap power. Each company’s software also learns how much hot water you need daily, and at what times, in order to deliver hot showers with minimal energy use. Most heat-pump water heaters have backup electric-resistance elements to heat water in a flash, but it’s much more efficient to run the heat pump slowly and steadily over a few hours. Cala Systems, which has sold nearly 400 units across 36 states, says it’s been able to reduce use of the backup element from the typical 35% of the appliance’s energy use to just 7%.

As for Cohen, he’s become something of an evangelist for his heat-pump water heater, recommending it to friends who have just bought their own homes. 

While Cohen’s basement used to have a whiff of gas, his Reservoir water heater lets him breathe easier, he said. ​“It’s really nicely designed.”