NREL is a national laboratory of the U.S. Department of Energy

Office of Energy Efficiency & Renewable Energy

Operated by the Alliance for Sustainable Energy, LLC

This report is available at no cost from the National Renewable Energy

Laboratory (NREL) at www.nrel.gov/publications.

Contract No. DE-AC36-08GO28308

Energy Savings and Breakeven 

Cost for Residential Heat Pump 

Water Heaters in the United 

States

Jeff Maguire, Jay Burch, Tim Merrigan, and 

Sean Ong

National Renewable Energy Laboratory

Technical Report

NREL/TP-5500-58594

July 2013
NREL is a national laboratory of the U.S. Department of Energy

Office of Energy Efficiency & Renewable Energy

Operated by the Alliance for Sustainable Energy, LLC

This report is available at no cost from the National Renewable Energy

Laboratory (NREL) at www.nrel.gov/publications.

Contract No. DE-AC36-08GO28308

National Renewable Energy Laboratory

15013 Denver West Parkway

Golden, CO 80401

303-275-3000 • www.nrel.gov

Energy Savings and 

Breakeven Cost for Residential 

Heat Pump Water Heaters in 

the United States 

Jeff Maguire, Jay Burch, Tim Merrigan, and 

Sean Ong

National Renewable Energy Laboratory

Prepared under Task No. SH12.1000

Technical Report

NREL/TP-5500-58594

July 2013
NOTICE

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Cover Photos: (left to right) photo by Pat Corkery, NREL 16416, photo from SunEdison, NREL 17423, photo by Pat Corkery, NREL 

16560, photo by Dennis Schroeder, NREL 17613, photo by Dean Armstrong, NREL 17436, photo by Pat Corkery, NREL 17721.

 Printed on paper containing at least 50% wastepaper, including 10% post consumer waste. 
iii

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Acknowledgments

The authors thank Craig Christensen, Bethany Sparn, Kate Hudon, Eric Wilson, Jenny Melius, 

Billy Roberts, and Nathan Clark of NREL, Moncef Krarti of the University of Colorado Boulder, 

and Hannah Cassard of Abengoa (formerly of NREL) for their reviews and other contributions.
iv

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Nomenclature

AC Air conditioner 

ASHP Air source heat pump

BA Building America

COP Coefficient of performance 

COPsys System coefficient of performance

cp Specific heat

d Discount rate 

DF Discount factor 

DHWESG Domestic hot water event schedule generator

e Fuel escalation rate

Econs Consumed site energy

Ecool Space cooling energy 

Edel Delivered site energy 

Eelem Heat added by electrical element

Eheat Space heating energy

Ehp,tank Heat added by a heat pump

Enrmlz Normalization energy 

EWH Water heater energy consumption 

EF Energy factor

FEF Fuel escalation factor

ER Electric resistance

HPF Heat pump fraction 

HPWH Heat pump water heater

HVAC Heating, ventilation, and air conditioning

ICbase Base case water heater net installed cost

ICHPWH Heat pump water heater net installed cost

m Mass

MC Heat pump water heater maintenance cost

n Study length 

NPB Net present benefit

NPC Net present cost
v 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

NPV Net present value

PTC Personal tax credit

SRP State rebate program

URP Utility rebate program

WH Water heater

$saved Annual utility bill savings 

Tout Water heater outlet temperature

Treq Required outlet temperature

η Efficiency
vi 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Executive Summary

Heat pump water heaters (HPWHs) have recently reappeared in the U.S. residential market and 

have the potential to provide homeowners with significant energy savings over traditional 

electric resistance (ER) water heaters (WHs). HPWHs typically have a rated efficiency at least 

twice as high as typical electric WHs. However, questions remain about their actual performance 

and energy savings potential, especially in unconditioned space, and their impact on space 

heating and cooling loads when they are located in conditioned space. To help answer these 

questions, a 50-gal HPWH was simulated in both conditioned and unconditioned space at more 

than 900 locations across the continental United States and in Hawaii. Base cases of typical 

residential gas and electric WHs were also simulated so the energy savings of an HPWH relative 

to both technologies could be calculated. 

Simulations included a Building America benchmark home and several combinations of space 

heating and cooling equipment to quantify the HPWH’s impact on a home’s annual energy 

consumption. A mixed draw profile, consistent with the hot water use level of a three-bedroom 

home in the Building America House Simulation Protocol, was used. The tempered draws 

allowed for variations in the hot water usage level, with a low draw volume of about 45 gal in 

locations with warm mains water and 60 gal for locations with cold mains water. All energy 

savings calculations were done on a source energy basis to account for the net savings in any 

mixed fuel cases. The breakeven cost (the required net installed cost of an HPWH to make it cost 

neutral with a traditional WH) was calculated for all cases to show their cost savings potential.

The HPWH can save some source energy savings relative to a typical electric WH in all cases 

considered here, although the source energy savings are often lower than expected based on the 

rated efficiency of the HPWH. The largest source energy savings are seen in the southern regions 

of the United States, especially in the hot-humid climate. For all-electric homes with high 

efficiency space heating equipment (an air source heat pump [ASHP]), higher source energy 

savings are seen when the HPWH is installed in conditioned space in heating-dominated 

climates; for cases with low efficiency space heating (ER heat) installations in unconditioned 

space have higher source energy savings. The source energy savings for a case with an ASHP

when the HPWH is installed in unconditioned space is shown in Figure ES–1. When comparing 

to gas WHs, positive source energy savings are only realized in the Southeast, parts of southern 

California and Arizona, and Hawaii. This is true for installations in conditioned and 

unconditioned space, although higher source energy savings are seen in conditioned space. 
vii 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Figure ES–1. Source energy savings of an HPWH versus an electric WH in 

unconditioned space for a home with an ASHP

The 50-gal HPWH has a favorably high breakeven cost compared to an electric WH in most of 

the country, except the Pacific Northwest and parts of the northern Mountain region when 

located in conditioned space for homes with highly efficient space conditioning equipment. The 

highest breakeven costs occur in California, the South, and the Northeast. For homes with less 

efficient space heating equipment, the breakeven costs are significantly reduced across the 

country and high breakeven costs are most common in locations with the smallest heating loads. 

When installing in unconditioned space (see Figure ES–2), the HPWH may break even in most 

locations except the Pacific Northwest, most of the Mountain census region, and the northern 

Midwest, depending on its actual net installed cost. When comparing to gas WHs, breakeven is 

only likely in parts of the Southeast, central Washington, and Hawaii. However, when federal 

and local incentives are factored in, HPWHs become cost effective in several more locations.
viii

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Figure ES–2. Breakeven cost of an HPWH versus an electric WH in 

unconditioned space for a home with an ASHP

To account for differences in potential energy savings and breakeven costs for different sized 

HPWHs, an 80-gal HPWH was also modeled and presented in Appendix B. In the 80-gal case, 

higher source energy savings and breakeven costs are possible, particularly in colder regions. 

Although this study does examine regional variations in HPWH performance and savings, it 

looks at only one hot water usage level and one home. The parameters chosen for this study were 

assumed to be roughly representative, but actual savings will vary significantly with hot water 

use, the overall efficiency of a home, and the actual HPWH installed. 
ix

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Table of Contents

Acknowledgments ..................................................................................................................................... iii

Nomenclature ............................................................................................................................................. iv

Executive Summary................................................................................................................................... vi

1 Introduction......................................................................................................................................... 12

1.1 Heat Pump Water Heaters Versus Traditional Water Heaters .................................................... 12

1.2 Heat Pump Water Heater Efficiency, Reliability, and Cost ........................................................ 13

1.2.1 Source Energy Efficiency............................................................................................... 14

1.2.2 Cost ................................................................................................................................ 15

2 Technical Approach ........................................................................................................................... 16

2.1 Space Conditioning Equipment................................................................................................... 17

2.2 Domestic Hot Water.................................................................................................................... 18

3 Heat Pump Water Heater Performance ............................................................................................ 20

4 Energy Savings Potential .................................................................................................................. 24

5 Heat Pump Water Heater Breakeven Cost ....................................................................................... 31

6 Conclusions ........................................................................................................................................ 40

References................................................................................................................................................. 41

Appendix A: Regional Variations in Water Heating Fuel by Census Region...................................... 44

Appendix B: 80-Gallon Heat Pump Water Heater Modeling Results ................................................... 45

Appendix C: Components of Net Source Energy Savings ................................................................... 60

Appendix D: Breakeven Cost Calculation Methodology....................................................................... 65

Appendix E: Breakeven Costs for Cases Replacing a Functioning Water Heater............................. 67

Appendix F: Incentives Used in This Study ........................................................................................... 71
x 

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List of Figures

Figure ES–1. Source energy savings of an HPWH versus an electric WH in unconditioned space for a 

home with an ASHP............................................................................................................... vii

Figure ES–2. Breakeven cost of an HPWH versus an electric WH in unconditioned space for a home 

with an ASHP........................................................................................................................ viii

Figure 1. Schematic of an HPWH............................................................................................................... 12

Figure 2. Distribution of fuel types for installed residential WHs by census region (EIA, 2009).............. 14

Figure 3. Share of residential foundations by state (Labs, et al., 1988)...................................................... 17

Figure 4. Sample daily draw profile............................................................................................................ 18

Figure 5. Simulated annual water heating load for the assumed draw profile and mains water 

temperatures........................................................................................................................... 19

Figure 6. HPF of the 50-gal HPWH in (a) conditioned and (b) unconditioned space ................................ 21

Figure 7. COPsys of the HPWH in (a) conditioned and (b) unconditioned space........................................ 23

Figure 8. Source energy savings of an HPWH relative to an electric WH for a home with an ASHP when 

the WH is in (a) conditioned and (b) unconditioned space .................................................... 26

Figure 9. Source energy savings of an HPWH relative to an electric WH for a home with ER heat/AC 

when the WH is in (a) conditioned and (b) unconditioned space .......................................... 28

Figure 10. Source energy savings of an HPWH relative to a gas WH for a home with a furnace/AC when 

the WH is in (a) conditioned and (b) unconditioned space .................................................... 30

Figure 11. (a) Natural gas and (b) electricity rates used in this study......................................................... 32

Figure 12. Breakeven cost of a 50-gal HPWH relative to an electric WH for a home with an ASHP when 

the WH is in (a) conditioned and (b) unconditioned space .................................................... 33

Figure 13. Breakeven cost of a 50-gal HPWH relative to an electric WH for a home with ER heat and an 

AC when the WH is in (a) conditioned and (b) unconditioned space.................................... 34

Figure 14. Breakeven cost of a 50-gal HPWH relative to a gas WH for a home with a furnace and an AC 

when the WH is in (a) conditioned and (b) unconditioned space .......................................... 35

Figure 15. Breakeven cost with incentives of a 50-gal HPWH relative to an electric WH for a home with 

an ASHP when the WH is in (a) conditioned and (b) unconditioned space .......................... 37

Figure 16. Breakeven cost with incentives of a 50-gal HPWH relative to an electric WH for a home with 

ER heat/AC when the WH is in (a) conditioned and (b) unconditioned space ...................... 38

Figure 17. Breakeven cost with incentives of a 50-gal HPWH relative to a gas WH for a home with a 

furnace/AC when the WH is in (a) conditioned and (b) unconditioned space....................... 39

Figure 18. Water heating fuel use by census region, further subdivided for the 16 most populous states 

(EIA, 2009) ............................................................................................................................ 44

Figure 19. HPF of the 80-gal HPWH in (a) conditioned and (b) unconditioned space .............................. 46

Figure 20. COPsys of the 80-gal HPWH in (a) conditioned and (b) unconditioned space........................... 48

Figure 21. Source energy savings of an 80-gal HPWH relative to an electric WH for a home with an 

ASHP when the WH is in (a) conditioned and (b) unconditioned space ............................... 50

Figure 22. Source energy savings of an 80-gal HPWH relative to an electric WH for a home with ER 

heat/AC when the WH is in (a) conditioned and (b) unconditioned space ............................ 51

Figure 23. Source energy savings of an 80-gal HPWH relative to a gas WH for a home with a furnace/AC 

when the WH is in (a) conditioned and (b) unconditioned space .......................................... 52

Figure 24. Breakeven cost of an 80-gal HPWH relative to an electric WH for a home with an ASHP 

when the WH is in (a) conditioned and (b) unconditioned space .......................................... 54

Figure 25. Breakeven cost of an 80-gal HPWH relative to an electric WH for a home with ER heat and an 

AC when the WH is in (a) conditioned and (b) unconditioned space.................................... 55

Figure 26. Breakeven cost of an 80-gal HPWH relative to a gas WH for a home with a furnace and an AC 

when the WH is in (a) conditioned and (b) unconditioned space .......................................... 56

Figure 27. Breakeven cost with incentives of an 80-gal HPWH relative to an electric WH for a home with 

an ASHP when the WH is in (a) conditioned and (b) unconditioned space .......................... 57
xi 

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Figure 28. Breakeven cost with incentives of an 80-gal HPWH relative to an electric WH for a home with 

ER heat and an AC when the WH is in (a) conditioned and (b) unconditioned space........... 58

Figure 29. Breakeven cost of an 80-gal HPWH relative to a gas WH for a home with a furnace and an 

AC when the WH is in (a) conditioned and (b) unconditioned space.................................... 59

Figure 30. BA climate zones (Pacific Northwest National Laboratory and Oak Ridge National Laboratory, 

2010) ...................................................................................................................................... 60

Figure 31. Breakeven cost of an HPWH replacing a functioning electric WH for a home with an ASHP 

when the WH is in (a) conditioned and (b) unconditioned space .......................................... 68

Figure 32. Breakeven cost of an HPWH replacing a functioning electric WH for a home with ER heat and 

an AC when the WH is in (a) conditioned and (b) unconditioned space ............................... 69

Figure 33. Breakeven cost of an HPWH replacing a functioning gas WH for a home with a furnace and an 

AC when the WH is in (a) conditioned and (b) unconditioned space.................................... 70

List of Tables

Table 1. EF and Source Efficiency of Each WH Considered Here............................................................. 15

Table 2. Components of Source Energy Savings by BA Climate Zone, Conditioned 

Space/ASHP/Replacing an Electric WH with a 50-Gal HPWH............................................ 61

Table 3. Components of Source Energy Savings by BA Climate Zone, Unconditioned 

Space/ASHP/Replacing an Electric WH with a 50-Gal HPWH............................................ 61

Table 4. Components of Source Energy Savings by BA Climate Zone, Conditioned Space/ER Heat and 

AC/Replacing an Electric WH with a 50-Gal HPWH ........................................................... 61

Table 5. Components of Source Energy Savings by BA Climate Zone, Unconditioned Space/ER Heat and 

AC/Replacing an Electric WH with a 50-Gal HPWH ........................................................... 62

Table 6. Components of Source Energy Savings by BA Climate Zone, Conditioned Space/Furnace and 

AC/Replacing a Gas WH with a 50-Gal HPWH.................................................................... 62

Table 7. Components of Source Energy Savings by BA Climate Zone, Unconditioned Space/Furnace and 

AC/Replacing a Gas WH with a 50-Gal HPWH.................................................................... 62

Table 8. Components of Source Energy Savings by BA Climate Zone, Conditioned 

Space/ASHP/Replacing an Electric WH with an 80-Gal HPWH .......................................... 63

Table 9. Components of Source Energy Savings by BA Climate Zone, Unconditioned 

Space/ASHP/Replacing An Electric WH with an 80-Gal HPWH......................................... 63

Table 10. Components of Source Energy Savings by BA Climate Zone, Conditioned Space/ER Heat and 

AC/Replacing an Electric WH with an 80-Gal HPWH ......................................................... 63

Table 11. Components of Source Energy Savings by BA Climate Zone, Unconditioned Space/ER Heat 

and AC/Replacing an Electric WH with an 80-Gal HPWH................................................... 64

Table 12. Components of Source Energy Savings by BA Climate Zone, Conditioned Space/Furnace and 

AC/Replacing a Gas WH with an 80-Gal HPWH.................................................................. 64

Table 13. Components of Source Energy Savings by BA Climate Zone, Unconditioned Space/Furnace 

and AC/Replacing a Gas WH with an 80-Gal HPWH........................................................... 64

Table 14. Complete List of Local Incentives Used in This Study .............................................................. 71
12 

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1 Introduction 

1.1 Heat Pump Water Heaters Versus Traditional Water Heaters

Water heating is a significant energy use in U.S. homes (EIA, 2009). It accounts for 17.7% of the 

total energy consumed, or 1.8 quads annually. The U.S. residential water heater (WH) market is 

dominated by storage type WHs. Gas and electric resistance storage WHs comprised about 94% 

of residential WH shipments in 2009 (U.S. Department of Energy, 2010). Although conventional 

gas and electric storage WHs are the cheapest and most common options, many higher efficiency 

water heating options are available. One such option that has recently reappeared on the U.S. 

market is the integrated heat pump water heater (HPWH) (see Figure 1), which takes heat from 

the ambient air and adds it to a hot water storage tank via a vapor compression refrigeration 

cycle. These units are much more efficient than conventional electric WHs, with a rated 

efficiency (energy factor [EF], defined as the average efficiency over a standard 24-h test) of 2–

2.5; typical electric WHs have an EF of ~0.9. 

Figure 1. Schematic of an HPWH 

(Illustration by Marjorie Schott/NREL)

HPWHs in the United States typically feature both a heat pump and at least one electric 

resistance element for heating. The electric resistance element(s) are activated if the heat pump 

cannot keep up with the load, or if the ambient air conditions prevent the heat pump from 

running. Each manufacturer has its own control logic (designed to work with its particular 

HPWH) for determining when to switch to the backup electric resistance element(s). How often 

these element(s) have to be used is heavily dependent on climate and hot water use and has a 

large impact on overall efficiency. 
13 

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1.2 Heat Pump Water Heater Efficiency, Reliability, and Cost

The heat pump efficiency (coefficient of performance [COP], defined as the amount of energy 

delivered divided by the amount of energy consumed) depends heavily on the temperature of 

water adjacent to the condenser, ambient air temperature and humidity, set point temperature, hot 

water draw profile, and operating mode. All these factors can cause efficiency to vary widely, 

particularly if the unit is in unconditioned space where the ambient air temperature can vary 

significantly over the course of a year. This unit will cool and dehumidify the space it is in while 

the heat pump is running, which may be either a net benefit or a detriment, depending on the 

climate and the efficiency of the space conditioning equipment. An HPWH could be ducted to 

the outdoors or to an unconditioned space to offset the heating penalty associated with running 

the heat pump; however, many HPWHs are not configured for ducting. Ducting was not 

simulated in this study, but may provide some benefits to HPWH performance in some locations. 

HPWHs have historically seen poor market penetration, although they have been sporadically 

available for many years. The main reason for this is the high first cost, which can be several 

times as high as a comparable electric storage WH. This presents a significant barrier to market 

entry. HPWHs are also perceived by some to have reliability issues (Dubay, Ayee, & Gereffi, 

2009), based on experience with earlier generations of HPWHs. Although the current generation 

has not yet shown any of the problems previous generations had, people who were aware of 

previous HPWH pilot programs may still be skeptical. Several large manufacturers have recently 

entered the market and currently have ENERGY STAR®-qualified HPWHs available, which may 

bode well for improved reliability. Also, new residential WH efficiency standards, which go into 

effect in 2015, will effectively require all new electric WHs larger than 55 gal to be HPWHs 

(U.S. Department of Energy, 2010), which should increase market penetration. 

Fifty-two percent of U.S. homes use natural gas as the primary water heating fuel and 41% use 

electricity (EIA, 2009). The rest use other fuel sources such as fuel oil, propane, wood, and solar. 

Figure 2 shows the distribution of WH fuels by census region. A more detailed breakdown, 

including a state-by-state breakdown of water heating fuel for the 16 most populous states, is 

provided in Appendix A.
14 

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Figure 2. Distribution of fuel types for installed residential WHs by census region (EIA, 2009)

To determine the in-use efficiency of an HPWH in the United States, annual simulations were 

performed of an HPWH at Typical Meteorological Year 3 sites (Wlicox & and Marion, 2008) 

across the continental United States and in Hawaii. A sub-hourly hot water draw profile, 

described in further detail in Section 2.2, was used for this study. This draw profile is intended to 

represent typical hot water use and has an average daily draw volume of 45–60 gal/day, 

depending on mains water temperature. For every simulation, a home was also modeled to 

quantify the interaction between the HPWH and the space heating and cooling equipment. 

Simulations were performed with the WH located in both conditioned and unconditioned space 

for two sets of space conditioning equipment (a furnace/air conditioner [AC] combination and an 

air source heat pump [ASHP]); postprocessing calculations were done to create a case with 

electric resistance (ER) space heating and an AC. Simulations of standard gas and electric 

storage WHs were also performed to determine savings.

1.2.1 Source Energy Efficiency

An HPWH could be installed as a replacement for either electric or gas storage WHs. However, 

several factors come into play when considering a switch from natural gas to electricity for water 

heating. One key factor is the difference between site and source energy. Source energy takes 

into account all the primary energy that must be consumed to provide energy to a home; site 

energy takes into account only the energy consumed at the home. To calculate how much source 

energy is consumed by a WH in this study, national average source to site ratios of 3.365 for 
15 

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electricity and 1.092 for gas are used throughout (Hendron & Engelbrecht, Building America 

House Simulation Protocol, 2010). Although the EF of an HPWH is much higher than that of a 

gas storage WH (EF ≈ 0.6 for typical natural draft units), EF is defined in terms of site energy. 

Source efficiency, calculated as EF divided by the source to site ratio, provides a more general 

metric for determining how efficient switching fuel would be. Table 1 shows the EF and source 

efficiency of each WH considered here. 

Table 1. EF and Source Efficiency of Each WH Considered Here

Water Heating Technology EF Source Efficiency

Natural draft gas storage 0.60 0.55

Electric storage 0.91 0.27

HPWH 2–2.5 0.59–0.74

1.2.2 Cost

It is also important to consider the relative cost of natural gas and electricity when looking at fuel 

switching scenarios. In 2010, national average residential electricity rates were $33.81/MMBtu 

($0.1153/kWh); average residential gas rates were $11.13/MMBtu ($1.11/therm) (EIA, 2012). 

Gas costs about one third of what electricity costs per unit of site energy, so an HPWH needs to 

provide significant energy savings to be cost effective. In retrofit scenarios, it is generally easier 

to not switch fuels, as additional costs may be incurred. 

The HPWH’s breakeven was also calculated to determine its economic viability as a replacement 

for a typical gas or electric WH. Breakeven cost is the net system cost that achieves cost 

neutrality with the current water heating technology. Breakeven cost is used as the primary 

metric for economic analysis in this study because HPWHs are relatively new to the U.S. market 

and their installation costs and economic value are not fully understood. Capital costs may 

change quickly if their adoption was to rapidly increase and site-specific considerations may 

cause installation costs to vary significantly from household to household. Identifying the 

HPWH breakeven costs provides a benchmark that may be used as a point of comparison for 

fluctuating HPWH system prices. The breakeven costs here were calculated using the same 

methodology that has previously been applied to residential photovoltaic systems (Denholm, 

Margolis, Ong, & Roberts, 2009) and residential solar WHs (Cassard, Denholm, & and Ong, 

2011). 
16 

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2 Technical Approach

All modeling was done using TRNSYS (Klein, 2010), a modular energy simulation environment 

that provides a large library of models and allows new models to be easily created. The HPWH 

model used here is based on one 50-gal unit with an EF = 2.35 that recently appeared on the U.S. 

market. An 80-gal HPWH with an EF = 2.3 was also modeled to determine if greater savings 

could be achieved by installing a larger HPWH. Results are presented in Appendix B. The 

HPWH models used here are based on extensive laboratory testing of several HPWHs (Sparn, 

Hudon, & Christensen, 2011); each model is based on one specific HPWH. Both units were 

modeled as operating in the factory default mode, which attempts to balance efficiency with 

providing adequate hot water at the default set point temperature of 120°F. Performance curves 

for power and capacity were taken directly from laboratory testing results. The 50-gal HPWH 

was chosen and presented here because of its performance during laboratory testing and its size, 

which is comparable to a typical electric WH and would allow this unit to be easily installed in 

retrofit scenarios. Because the available HPWHs show considerable variations, a “typical” 

HPWH is difficult to define. However, this unit had roughly average performance during the 

laboratory testing compared to the other tested HPWHs. 

Base cases of electric and gas storage WH were also simulated to determine the potential source 

energy savings from replacing one of these units with an HPWH. Both were 50-gal units with 

typical rated efficiencies for the technology (EF = 0.60 for gas, EF = 0.91 for electric). The 

model parameters for each were derived from its rated efficiency (Burch & Erikson, 2004). 

These units had the same set point temperature (120°F) as the HPWH. For an electric WH, all 

tank losses were assumed to go to the ambient air. For a gas WH, one third of the losses were 

assumed to go out the flue and two thirds to the ambient air. This split was determined based on 

the estimated impact of a flue damper on the overall tank loss coefficient of a gas WH (U.S. 

Department of Energy, 2001). 

The TRNSYS house model used here is based on the Building America (BA) program 

Benchmark home (Hendron & Engebrecht, 2010), which is consistent with current building 

practices. The model is generally consistent with the BA specifications; however, some 

simplifications were made for this study. In general, these simplifications lead to the space 

heating and cooling loads (and corresponding energy consumption) being approximately 5%–

30% larger than what is seen in a Benchmark home simulated in BEopt. A detailed description of 

the building model along with a list of differences between a Benchmark home and the building 

used here is provided in (Maguire, 2012). The home is a 2500-ft2

, two-story, single-family 

residence with three bedrooms, two bathrooms, and a 420-ft2 attached garage. The envelope and 

all walls, floors, and ceilings separating conditioned and unconditioned spaces have insulation 

consistent with 2009 International Energy Conservation Code requirements (ICC, 2009)and the 

amount of insulation changes depending on which climate zone the home is modeled in. The 

foundation type (slab on grade, basement, or crawlspace) for each house was assumed to be 

consistent with regional building practices and was modeled as whatever is most common in 

each state (Labs, et al., 1988) (see Figure 3). When the WH is located in unconditioned space, 

that space is defined as a basement if a home has one or the garage if it has a slab or crawlspace. 

Basements were assumed to have insulation on the ceilings, and a small amount of infiltration 

was modeled to avoid scenarios where the heat pump could reduce the humidity to zero (because

the basement model had no other moisture source). If the basement insulation had been applied 
17 

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only to the walls and there was no infiltration, the basement temperature would have approached 

the conditioned space temperature (which would benefit the HPWH in colder climates, where 

most basements are located.) However, an HPWH located in such a basement would have a 

greater impact on the home’s space heating and cooling loads (which would be a net detriment in 

colder climates). 

Figure 3. Share of residential foundations by state (Labs, et al., 1988)1

From Building Foundation Design Handbook, 

ORNL/Sub-86-72143/1, Oak Ridge National Laboratory/US Dept. of Energy.

2.1 Space Conditioning Equipment

Two sets of space conditioning equipment were explicitly simulated here: a gas furnace and AC 

and a reversible ASHP. This home was modeled without ducts for simplicity. The furnace has an 

annual fuel utilization efficiency of 0.78 and the AC has a seasonal energy efficiency ratio of 13. 

The ASHP has a heating season performance factor of 7.7 and a seasonal energy efficiency ratio 

of 13. In addition to these two sets of equipment, a case of ER (baseboard) space heating with an 

efficiency of 1.00 and an AC was analyzed based on postprocessing of the results from the 

furnace/AC case. TRNSYS has no autosizing method for space heating and cooling equipment, 

 

1 For this study, whichever foundation had the largest share in a state was assumed for all homes in that state. 

Homes in Hawaii were assumed to have a slab-on-grade foundation.
18 

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so all equipment was oversized to ensure the space conditioning equipment would be able to 

meet the load in any climate. The furnace had a capacity of 100 kBtu/h and both the AC and the 

ASHP had a capacity of 5 tons. The capacity of the ER space heating was the same as the 

furnace.

2.2 Domestic Hot Water

An event-based domestic hot water draw profile was used for this study. The HPWH model 

needs a subhourly draw profile to accurately capture how the control logic for this WH responds 

to large draws. A 1-min time step was used for the draw profile to ensure this was captured. The 

BA Domestic Hot Water Event Schedule Generator (DHWESG) was used to provide the 

necessary discrete draw profile (Hendron & Burch, 2007). The DHWESG is a statistical tool that 

generates discrete events based on a probability distribution of draw events corresponding to the 

average distribution of hourly hot water use included in the Building America House Simulation 

Protocols (Hendron & Engebrecht, 2010). The DHWESG is based on studies of residential hot 

water use and uses separate probability distributions for each end use (showers, baths, clothes 

washing, dishwashing, and sinks) (Mayer, 1999). For each day, a number of discrete events for 

each end use are assigned based on distribution functions for each fixture. The DHWESG

assigns these events to different times of day to account for the study results, including clustering 

for events of the same end use, differences in weekday and weekend hot water use, and several 

vacation periods per year. Vacations occur for three days in May, one week during August, and 

four days in December. A sample day of draws with all end uses aggregated is compared to the 

House Simulation Protocols draw event probability in Figure 4. 

Figure 4. Sample daily draw profile

For sink, shower, and bath draws, events have a specified mixed flow rate, which is what an 

occupant would actually use. Appliances that use hot water (clothes washers and dishwashers) 

0

0.5

1

1.5

2

2.5

3

0 3 6 9 12 15 18 21 24

Flow Rate (gpm)

Hour

Example Daily Draw Profile

From the DHWESG 

Draw Event Probability (not to scale)

Event Generator
19 

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have a specified hot flow rate because these devices generally do not temper the incoming hot 

water to any specific temperature. For mixed events, a homeowner will temper the hot water 

with cold mains water to a useful mixed draw temperature. The mains water temperature used 

here is calculated based on an algorithm developed at the National Renewable Energy 

Laboratory (Burch & Christensen, 2007). The mixed draw temperature is defined as 105°F. 

Tempered draws comprise about 80% of the volume of hot water drawn annually (Hendron & 

Burch, 2007). Specifying a mixed flow rate as opposed to a hot flow rate allows the amount of 

hot water drawn to vary with mains water temperature, which leads to different volumes of water 

being drawn at different locations. The annual mains water temperature also influences the load 

that the WH needs to meet, as more energy is required to bring colder water up to the set point 

temperature. Figure 5 shows the simulated water heating load at various locations. 

Figure 5. Simulated annual water heating load for the 

assumed draw profile and mains water temperatures
20 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

3 Heat Pump Water Heater Performance 

Two metrics were used to evaluate the performance of an HPWH: heat pump fraction (HPF) and 

system COP (COPsys). HPF is defined as the amount of heat added to the tank by the heat pump 

divided by the total amount of heat added by the heat pump and the backup electric elements. It 

is expressed as:

HPF = Ehp,tack

Ehp,tack+Edddm

where,

Ehp,tank = the heat added to the storage tank by the heat pump and 

Eelem = the heat added to the storage tank by the electric elements

This gives a metric for how often the heat pump can be used to meet the water heating load. The 

COPsys metric is defined as the amount of energy delivered by the HPWH divided by the net 

energy consumed (from the heat pump, electric elements, fan, and standby controls) by the 

HPWH and is expressed as: 

COPsys = Eddd

Ecccc

where,

Edel = the delivered site energy and 

Econs = the consumed site energy

The COPsys metric is calculated similarly to the efficiency (including the rated efficiency, EF) of 

traditional gas and electric WHs. Although COPsys and HPF are related, the HPF metric provides 

information about how often the heat pump can run and COPsys gives the overall efficiency of 

the HPWH. Neither accounts for any impacts on a home’s heating, ventilation, and air 

conditioning (HVAC) energy use.

The performance of this HPWH is not necessarily representative of all available HPWHs, which 

vary in storage tank volume, heat pump design, control logics, and other factors. Thus, the HPF 

and COPsys can vary significantly between units. However, the unit modeled here performed 

reasonably well during laboratory testing (Sparn, Hudon, & Christensen, 2011) and provides 

approximately typical performance for a 50-gal HPWH. The 50-gal unit is first analyzed here as 

units of this size are easier to install in retrofit scenarios (where they would often replace a 50-

gal WH) and have been more widely available. Appendix B provides simulation results for an 

80-gal HPWH.

Figure 6 shows the HPFs for this HPWH in both conditioned and unconditioned space. The HPF 

is generally much higher in conditioned space than in unconditioned space. If the ambient air 

temperature in unconditioned space is outside the range where the heat pump can run (45°–

120°F for this particular HPWH), the HPWH uses the electric resistance elements to meet the 

water heating load. This happens in unconditioned space for part of the year in very cold 

locations, leading to low HPFs in these regions. The heat pump capacity (which is a function of 

(1)

(2)
21 

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wet bulb temperature and mains temperature) and tank control logic determines whether the heat 

pump can heat the tank quickly enough after a draw event or whether the electric elements need 

to turn on to provide faster recovery. In colder locations, the colder mains water temperature 

creates a larger load and the lower ambient air temperatures cause the heat pump’s capacity to 

decrease. These factors lead to higher electric element use and a reduced HPF. 

(a)

(b) 

Figure 6. HPF of the 50-gal HPWH in (a) conditioned and (b) unconditioned space
22 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Figure 7 shows the COPsys in conditioned and unconditioned space. HPF and COPsys are closely 

related metrics, so the same trends of higher performance in conditioned space and more 

variability in unconditioned space case are seen. COPsys is an efficiency metric that can be 

compared with the rated efficiency, because it is similarly calculated. This particular HPWH has 

a rated EF of 2.35, which is higher than even the highest COPsys seen in this study. The 

discrepancy between rated and simulated performance has also been seen in field studies 

(Amarnath & Bush, 2012) and is due to differences in the operating conditions used in the EF 

test procedure (which has an unrealistic draw profile) and what was simulated. There are also 

large variations in the COPsys, especially when the WH is installed in unconditioned space, 

which indicates the difficulty in trying to use a single number (EF) to represent an HPWH’s 

efficiency in all U.S. locations. 

These metrics help to evaluate the performance of the HPWH; however, neither accounts for the 

change in a building’s space conditioning energy consumption that comes from installing an 

HPWH. These factors are taken into account in Section 4. 
23 

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(a)

(b) 

Figure 7. COPsys of the HPWH in (a) conditioned and (b) unconditioned space
24 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

4 Energy Savings Potential

When comparing WHs in the same location, several factors besides the WH energy consumption 

need to be considered. To keep the comparison as even as possible, all WHs should meet the 

same load. Because the heat pump has a lower heating capacity relative to a typical gas burner or 

electric resistance element, the HPWH outlet temperature sags more in high demand situations. 

To ensure all WHs met the same load, their energy use was normalized to account for unmet 

load. In actual use there would be no normalization energy, although homeowners may change 

their hot water use, the set point temperature of their WHs, or the operating mode if they 

frequently experience unacceptable sag in the outlet temperature. However, including 

normalization energy ensures WHs that frequently have sag in the outlet temperature do not 

receive an efficiency benefit from this sag without assuming exactly how occupants will deal 

with sag. The normalization energy is defined as the additional thermal energy required to meet 

the load divided by the efficiency of the WH during the time step (see Equation 3):

Ennnnn = ncp�Tcut−Trdq�

η

where,

Enrmlz = the normalization energy consumption, 

m = the mass of water drawn during the time step,

cp = the specific heat of water,

Tout = the water heater outlet temperature, 

Treq = the required outlet temperature to meet the load, and

η = water heater efficiency 

The efficiency is defined (Equation 4) as:

η = Eddd

Ecccc

where,

Edel = the delivered site energy and 

Econs = the consumed site energy

The normalization energy was calculated for any time step when the outlet temperature was 

lower than that required to meet the load (105°F for mixed draws and 120°F for hot draws). All 

the WHs required some normalization energy for very high demand situations, but the HPWH 

required significantly more than either of the conventional WHs considered here. Although the 

normalization energy is quantified here to ensure a fair comparison, the outlet temperature sag is 

a thermal comfort issue for homeowners. It may be dealt with in several ways, some of which 

will have impacts on the HPWH’s annual energy consumption. For example, a homeowner could 

(4)

(3)
25 

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raise the HWPH set point to compensate for the sag, but this would increase standby losses and 

reduce the heat pump’s efficiency, leading to higher energy consumption than what is predicted 

here.

The energy savings of an HPWH over either a gas or electric conventional WH is calculated as:

Esssss,HHHH = ∆E + ΔEnnnnn + ∆Eh e + ∆Eccc

where,

ΔEWH = the change in water heater energy consumption, 

ΔEnrmlz = the change in normalization energy consumption, 

ΔEheat = the change in space heating energy consumption, and 

ΔEcool = the change in space cooling energy consumption. 

In all cases, the change in energy consumptions was calculated as the energy consumed by a 

conventional WH minus the energy consumed by the HPWH. To ensure a fair comparison in 

cases where both gas and electricity were used all energy savings were calculated on a source 

energy basis. To demonstrate the impact of each factor considered in Equation 5 on the net 

source energy savings, the value of each term is given by climate zone for all cases in Appendix 

C.

Figure 8 shows the source energy savings of an HPWH relative to an electric WH for an allelectric home with an ASHP. In this case, there are source energy savings at all U.S. locations, 

even the worst-case scenario (installed in unconditioned space in a very cold climate). The 

HPWH saves significantly more energy in conditioned space than unconditioned space, 

especially in colder regions. This is due to the much higher HPF in conditioned space and the 

relatively high efficiency of the ASHP for heating. Installing in conditioned space allows the 

HPWH to operate using the heat pump for the entire year (except during high demand situations, 

when the electric elements will come on to provide faster recovery) and the high COP of the 

ASHP significantly reduces the HPWH’s impact on increasing the space heating energy 

consumption. The lessened impact on the space heating equipment also leads to less variation in 

source energy savings across the United States. In cooling-dominated climates, the HPWH 

provides a net cooling benefit. Its impact is greater than the boost in performance the HPWH 

receives from being located in unconditioned space in hot locations, leading to higher energy 

savings in hot climates when the WH is located in conditioned space. 

(5)
26 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

(a)

(b) 

Figure 8. Source energy savings of an HPWH relative to an electric WH for a home with an ASHP 

when the WH is in (a) conditioned and (b) unconditioned space
27 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

If the ASHP is replaced by ER heating and an AC, HPWHs compare less favorably to electric 

WHs (see Figure 9). Although the source energy savings potential is lower in this case, especially 

when the WH is installed in conditioned space in heating-dominated climates, there are always 

some positive source energy savings. If the WH is located in unconditioned space, the change in 

HVAC energy consumption is slight. Interactions between unconditioned and conditioned space 

are relatively small for these homes because the walls and floors separating conditioned and 

unconditioned space are relatively well insulated. However, if these boundaries were not 

insulated, the interactions could be larger, although the space temperatures would also have 

fewer variations. The interactions are especially small when the WH is located in a garage, which 

is the predominant unconditioned space location in warmer climates. In colder climates where 

basements are more common, the impact of changing HVAC equipment is greater because of the 

higher levels of interaction between the basement and conditioned space. 

For WHs located in conditioned space, cases with ER heat and an AC have significantly lower 

source energy savings than those with an ASHP. This is due to the lower efficiency of the ER 

heat (η=1) compared to an ASHP. The ASHP heating efficiency varies from 1 to 3 (the average 

efficiency across all climates is about 2) depending on climate. The lower efficiency of the ER 

heating means that it can take up to three times as much energy for ER heating equipment to 

meet the space heating load imposed by the HPWH on the conditioned space. Although the 

source savings decrease across the country (except for Hawaii and southern Florida, which has a 

negligible space heating load), the greatest change is along the west coast, particularly in the 

Pacific Northwest. This region has a marine climate, which is relatively mild but has a small 

heating load for much of the year. This means that the HPWH will have a greater detrimental 

effect as it imposes a net heating load all year long when it is located in conditioned space.
28 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

(a)

(b) 

Figure 9. Source energy savings of an HPWH relative to an electric WH for a home with ER 

heat/AC when the WH is in (a) conditioned and (b) unconditioned space
29 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

When comparing an HPWH to a gas WH, the HPWH provides positive source energy savings 

only in the southernmost parts of the United States (see Figure 10). The source to site ratio for 

natural gas (1.092) is much smaller than that of electricity (3.365), so the site energy savings 

from the HPWH must be significant to reduce source energy consumption. There are thus net 

source energy savings only in Hawaii, the southeastern United States, and parts of Arizona and 

southern California, where the HPWH is most efficient and has the largest space conditioning 

benefit. 

Although the HPWH does save a modest amount of source energy compared to a gas WH in 

some southern regions, these regions predominantly use electricity for water heating. Gas water 

heating is much more common in California and the northern and Mountain regions. The overall 

national source energy savings potential of replacing gas WHs with HPWHs is thus even lower 

than suggested in Figure 10. 
30 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

(a)

(b) 

Figure 10. Source energy savings of an HPWH relative to a gas WH for a home with a furnace/AC 

when the WH is in (a) conditioned and (b) unconditioned space
31 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

5 Heat Pump Water Heater Breakeven Cost

The HPWH breakeven cost is the net installed cost that achieves cost neutrality with a current

water heating technology. It depends on climate, incentives, local utility rates, and other factors. 

In the United States, where these factors vary substantially across regions, breakeven costs vary 

significantly. Breakeven cost was used as the primary metric for economic analysis in this study, 

because these units are relatively new to the market. Their installation costs are thus not well 

known and the capital costs could change relatively quickly if their adoption were to rapidly 

increase. Installation costs may also vary significantly from household to household as some 

installations may incur additional costs associated with condensate drains, louvered doors, 

venting, or other site-specific considerations. Additional costs associated with fuel switching (for 

example, capping a gas line or adding a new circuit for the HPWH) may also be incurred if a gas 

WH is replaced by an HPWH. Recent estimates for the net installed cost (the cost of the WH

plus all installation costs) of HPWHs with this efficiency range from $1300 to $2200; the

estimated average net installed cost is about $1500 (U.S. Department of Energy, 2010). 

The HPWH breakeven cost is defined as the point at which the net present cost (NPC) of the 

HPWH equals the net present benefit (NPB) realized to its owner—the difference between the 

NPB and NPC yields the net present value (NPV) of the system. By definition, an HPWH system 

is at (or better than) breakeven when its net installed cost falls below the breakeven value. For 

example, in an area with a breakeven cost of $2000, all HPWH systems that have an installed 

cost of less than $2000 are at—or better than—breakeven. Equations for the NPC, NPB, and 

breakeven cost are presented in Appendix D. 

The NPC includes all capital costs, installation costs, maintenance costs, and incentives; the NPB 

is the cumulative discounted benefit of reduced electricity or gas bills. The NPC assumes a 

system purchased with cash (no financing) and a discount rate of 5% per year. Future fuel price 

escalation was also considered in the cash flow calculation. Both electricity and gas had a real 

price escalation of 0.5% per year. The HPWH was assumed to have a maintenance cost of $100 

every 5 years for the heat pump; the typical gas and electric WHs were assumed to have no 

maintenance. Because the HPWH was assumed to be installed in either new construction or 

replacing a recently failed WH, the cost of a typical gas or electric WH factored into the 

breakeven cost. Typical gas and electric storage WHs were assumed to have net installed costs of 

$1,080 and $590, respectively (U.S. Department of Energy, 2010). These costs are the average of 

new construction and retrofit scenarios weighted by the annual number of new construction and 

retrofit installations. Breakeven costs for a case where the HPWH is replacing a functioning WH

with remaining useful life are provided in Appendix E. 

The evaluation period for this analysis was 15 years, which was assumed to correspond to the 

full lifetime of an HPWH or a typical gas or electric WH. Although this lifetime is slightly 

longer than the typical life of a gas or electric WH (13 years (U.S. Department of Energy, 

2010)), a 15-year life makes any future comparisons to solar WHs (which have a lifetime of 30 

years) (Cassard, Denholm, & and Ong, 2011) easier. The HPWH is assumed to have the same 

life as a typical gas or electric WH; however, the current generation of HPWHs has been on the 

market for only a few years and their actual lifetime is still unknown.
32 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

The breakeven costs were calculated using state average annual gas rates for 2010 (EIA, 2012) 

and utility-specific annual average electricity rates from the same year (EIA, 2012). These rates 

will fluctuate, so the breakeven costs here are only a snapshot of the recent market. Significant 

changes to utility rates (for example, the sharp decline in natural gas rates over the past few 

years) will change the breakeven results presented here. Figure 11 shows the gas and electricity 

rates used in this study.

(a)

(b) 

Figure 11. (a) Natural gas and (b) electricity rates used in this study
33 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Figure 12 shows the breakeven cost for an HPWH relative to an electric WH for a home with an 

ASHP and no incentives. The breakeven cost depends on the net energy savings and local utility 

rates and varies significantly across the country. However, it is higher in conditioned space than 

in unconditioned space, because the energy savings for this case are always greater in 

conditioned space. In the conditioned space case, the highest breakeven cost is seen in Hawaii, 

California, Florida (because of high energy savings and high electricity rates for Hawaii and 

California) and New England (because of high electricity rates). When the WH is installed in 

unconditioned space the breakeven cost drops throughout most of the country. 

(a)

(b) 

Figure 12. Breakeven cost of a 50-gal HPWH relative to an electric WH for a home 

with an ASHP when the WH is in (a) conditioned and (b) unconditioned space
34 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Figure 13 shows the breakeven costs for the case where an HPWH is replacing an electric WH in 

a home with ER heating and an AC. Because the space heating equipment is less efficient, the 

space heating penalty is significantly larger and the breakeven costs in the conditioned space 

case drop across the country. In many cases the space conditioning penalty was large enough to 

make installing in unconditioned space more cost effective. The breakeven costs in 

unconditioned space are largely unchanged from the case with an ASHP, because the space 

heating and cooling interactions are relatively small.

(a)

(b) 

Figure 13. Breakeven cost of a 50-gal HPWH relative to an electric WH for a home with ER heat 

and an AC when the WH is in (a) conditioned and (b) unconditioned space
35 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

When looking at the breakeven costs of an HPWH relative to a gas WH, very few regions are 

likely to break even (Figure 14). For both the conditioned and unconditioned cases, the HPWH is 

likely to be economically viable only in parts of the Pacific Northwest, the Southeast, Arizona, 

and Hawaii. Both the Pacific Northwest and the Southeast are dominated by electric water 

heating, so the market for replacing gas WHs with HPWHs in these regions is relatively small. 

(a)

(b) 

Figure 14. Breakeven cost of a 50-gal HPWH relative to a gas WH for a home with a furnace and an 

AC when the WH is in (a) conditioned and (b) unconditioned space
36 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Cases with incentives were also considered to show the impact of current incentives on the 

breakeven cost of an HPWH. There are currently a $300 federal tax incentive and numerous 

local incentives for all HPWHs with an EF ≥ 2.0. All local incentives were taken from the 

Database of State Incentives for Renewable Energy (Interstate Renewable Energy Council, 2012)

and a complete list of incentives is provided in Appendix F. Some are case specific and may 

apply only to situations where either a gas or electric WH is replaced or if the HPWH is installed 

in unconditioned space. Because the residential water heating market is dominated by retrofit 

situations, incentives that applied only to new construction scenarios were not considered here. 

Most incentives that applied to HPWHs were rebates, although a few states offered personal tax 

credits. To account for the delay in receiving a rebate or tax credit, all incentives were assumed 

to apply one year after the HPWH was installed and were discounted appropriately. 

Figure 15 through Figure 17 show cases with incentives. Local incentives are distributed across 

the country; utilities in 35 states offer some incentives for HPWHs. Four states also offer some 

incentive for purchasing an HPWH. Although the federal incentive causes breakeven costs to rise 

everywhere, noticeable increases from large local incentives combined with the federal 

incentives are seen in several locations, including most of Massachusetts, Montana, Arkansas, 

Pennsylvania, and Kentucky. 
37 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

(a)

(b) 

Figure 15. Breakeven cost with incentives of a 50-gal HPWH relative to an electric WH for a home 

with an ASHP when the WH is in (a) conditioned and (b) unconditioned space
38 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

(a)

(b) 

Figure 16. Breakeven cost with incentives of a 50-gal HPWH relative to an electric WH for a home 

with ER heat/AC when the WH is in (a) conditioned and (b) unconditioned space
39 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

(a)

(b) 

Figure 17. Breakeven cost with incentives of a 50-gal HPWH relative to a gas WH for a home with a 

furnace/AC when the WH is in (a) conditioned and (b) unconditioned space
40 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

6 Conclusions

The energy and cost savings potential of HPWHs as replacements for gas and electric WHs is 

examined in this paper. HPWHs have a significant potential to save energy as replacements for 

standard electric WHs; annual source energy savings of 18 MMBtu are possible in the most 

favorable situations. Savings are highest in hot and humid locations and gradually decrease with 

colder locations, although positive source energy savings relative to an electric WH are possible 

in every situation considered here. If a home has high efficiency electric space heating 

equipment, installations in conditioned space can save more than those in unconditioned space 

because the HPWH performance increases from conditioned space in colder locations 

outweighing the HVAC penalty. In the case of lower efficiency electric space heating equipment, 

the HVAC penalty imposed by the HPWH is large enough that installing equipment in 

unconditioned space can save more energy. 

To determine the economic viability of HPWHs, breakeven costs are also calculated. Local 

variations in utility rates cause the breakeven costs to vary significantly, even in regions with 

similar climates. In general, the highest (and most favorable) breakeven costs are seen for 

installations in conditioned space replacing an electric WH in homes with high efficiency electric 

space heating equipment. For cases with lower efficiency electric space heating equipment and 

installation in unconditioned space, the breakeven costs drop because of a larger space heating 

penalty from the lower equipment efficiency. An HPWH can likely be a cost-effective and 

energy-efficient replacement to an electric WH in many situations. However, local utility rates 

and the actual net installed cost of an HPWH vary significantly and the economic viability of an 

HPWH as a replacement for an electric WH will vary significantly on a case by case basis.

When comparing HPWHs to gas WHs, positive source energy savings are possible only in some 

locations in the South, and the HPWH is likely to break even in only a few southern states. Given 

that most WHs in these locations are electric, the potential national source energy and economic 

savings associated with replacing a gas WH with an HPWH are low. 

This study demonstrates the regional variations in the efficiency and economic viability of an 

HPWH across the continental United States for several installation locations. However, this 

study considered only one HPWH (although an additional 80-gal unit is considered in Appendix 

B), subjected to a “typical” hot water draw profile, in one particular home. The efficiency, 

energy savings potential, and economic viability of an HPWH as a replacement for a typical gas 

or electric WH may vary significantly depending on the installation location, HPWH, and draw 

profile.
41 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

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Department of Energy. Retrieved May 7, 2013 

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Energy. Retrieved August 1, 2012 

EIA. (2012). Annual Energy Report. Washington, DC: U.S. Department of Energy. Retrieved 

August 1, 2012 

EIA. (2012). Natural Gas Monthly. Washington, DC: U.S. Department of Energy. Retrieved 

August 1, 2012 

Hendron, R., & Burch, J. (2007). Development of Standardized Domestic Hot Water Event 

Schedules for Residential Buildings. Energy Sustainability. NREL/CP-550-40874 Long 

Beach: National Renewable Energy Lab. Retrieved May 7, 2013, from 

http://www.nrel.gov/docs/fy08osti/40874.pdf 
42 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Hendron, R., & Engelbrecht, C. (2010). Building America House Simulation Protocol.

NREL/TP-550-49426 Golden, CO: National Renewable Energy Laboratory. Retrieved 

May 7, 2013, from http://www.nrel.gov/docs/fy11osti/49246.pdf 

ICC. (2009). International Energy Conservation Code. Falls Church, VA: International Code 

Council. 

Interstate Renewable Energy Council. (2012, March 2). U.S. National Database of State 

Incentives for Renewables and Efficiency (DSIRE). (Intersate Rnewable Energy Council) 

Retrieved May 7, 2013, from DSIRE: http://www.dsireusa.org/ 

Klein, S. e. (2010). TRNSYS 17: A TRaNsient System Simulation Program, User Manual. 

Labs, K., Carmody, J., Sterling, R., Shen, L., Huang, Y., & Parker, D. (1988). Building 

Foundation Design Handbook. ORNL-Sub-86-72143/1 Oak Ridge, Tennessee: Oak 

Ridge National Laboratory/US Dept. of Energy. 

Lowes.com. (2013). Lowes water heaters. Retrieved March 25, 2013, from Heat Pump Water 

Heaters: http://www.lowes.com/Plumbing/Water-Heaters/Hybrid-Heat-Pump-WaterHeaters/_/N-1z0zp1j/pl?Ns=p_product_qty_sales_dollar|1&cm_sp=RoughPlumbing-_-

Plumbing|PopularCat-_-Merch|PopCat_WaterHeaters_Hybrid&cm_cr=Water+Heaters-_-

Web+Activity-_-Water+Heaters+TF+Po

Maguire, J. (2012). A Parametric Analysis of Residential Water Heaters. Master's Thesis. 

Boulder, CO: University of Colorado Boulder. Retrieved from 

http://disexpress.umi.com/dxweb#download?&type=pdf&dpubno=1511987 

Mayer, P. a. (1999). Residential End Uses of Water. Boulder CO: Aquacraft, Inc. Retrieved May 

7, 2013, from http://www.waterrf.org/PublicReportLibrary/RFR90781_1999_241A.pdf 

Pacific Northwest National Laboratory and Oak Ridge National Laboratory. (2010). Building 

America Best Practice Series-Guide to Determining Climate Regions by County. 

PNNL-17211 Richland, WA: PNNL. Retrieved May 7, 2013, from 

http://apps1.eere.energy.gov/buildings/publications/pdfs/building_america/ba_climategui

de_7_1.pdf 

Sparn, B., Hudon, K., & Christensen, D. (2011). Laboratory Performance Evaluation of 

Residential Integrated Heat Pump Water Heaters. NREL/TP-5500-52635 Golden, CO: 

National Renewable Energy Laboratory. Retrieved May 7, 2013, from 

http://www.nrel.gov/docs/fy11osti/52635.pdf 

U.S. Department of Energy. (2001). Residential Water Heater Final Rule Making Technical 

Support Document. Washington, DC: U.S. Department of Energy. Retrieved December 

10, 2011 

U.S. Department of Energy. (2010). Energy Star Water Heater Market Profile. Washington, DC: 

U.S. Department of Energy. Retrieved May 7, 2013, from 

http://www.energystar.gov/ia/partners/prod_development/new_specs/downloads/water_h

eaters/Water_Heater_Market_Profile_2010.pdf 

U.S. Department of Energy. (2010). Residential Heating Products Final Rule Technical Support 

Document. Washington, DC: U.S. Department of Energy. Retrieved May 7, 2013, from 
43 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

https://www1.eere.energy.gov/buildings/appliance_standards/residential/heating_products

_fr_tsd.html 

Wlicox, S., & and Marion, W. (2008). Users Manual for TMY3 Data Sets. NREL/TP-581-43156 

Golden, CO: National Renewable Energy Laboratory. Retrieved May 7, 2013, from 

http://www.nrel.gov/docs/fy08osti/43156.pdf 
44 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Appendix A: Regional Variations in Water Heating Fuel 

by Census Region

Figure 18 shows the number of households using gas, electricity, or other fuels for water heating. 

The “other” category includes propane, fuel oil, solar, wood, and any other fuels that may be 

used for water heating. For each census region, any available state-specific data are also provided 

to show the breakdown of water heating fuels in a region. This can be especially useful for 

census regions such as the Pacific, which are dominated by one populous state.

Figure 18. Water heating fuel use by census region, 

further subdivided for the 16 most populous states (EIA, 2009)

0 5 10 15 20 25

New England

MA

CT, ME, NH, RI, VT

Middle Atlantic

NY

PA

NJ

East North Central

IL

MI

WI

IN, OH

West North Central

MO

IA, MN, ND, SD

KS, NE

South Atlantic

VA

GA

FL

DC, DE, MD, WV

NC, SC

East South Central

TN

AL, KY, MS

West South Central

TX

AR, LA, OK

Mountain North

CO

ID, MT, UT, WY

Mountain South

AZ

NM, NV

Pacific

CA

AK, HI, OR, WA

Millions of Households

Primary Water Heating Fuel for U.S. Households by Census 

Region with the 16 Most Populus States Subdivided

Gas

Electricity

Other
45 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Appendix B: 80-Gallon Heat Pump Water Heater

Modeling Results

An 80-gal HPWH was also simulated; the model used here was also based on laboratory testing 

(Sparn, Hudon, & Christensen, 2011) and captures the actual performance of one tested unit. 

There are differences in the control logic, heat pump specifications, tank insulation, and element 

sizes and location between the two units. In particular, the control logic for this unit does not use 

the electric elements to fully recover any time an element turns on. Instead, if demand is large 

enough to trigger an electric element, the element will stay on until the tank has recovered to the 

set point that triggered it, then the heat pump will complete the remainder of the recovery. This 

control logic is much more efficient than the elements for full recovery, which further boosts the 

efficiency of this unit compared to the 50-gal HPWH.

Figure 19 shows the HPF of an 80-gal HPWH installed in conditioned and unconditioned space. 

For the conditioned space case, there is only slight variation in the HPF and it is above 0.95 for 

every location. In this case, the electric elements are rarely needed because the increased storage 

volume can provide enough hot water to meet the load. During high demand scenarios when the 

elements are triggered, the control logic of the 80-gal unit uses the elements for partial recovery

only, which further increases the HPF. 

In unconditioned space, regional variations in the HPF are considerable. Climate and installation 

location are particularly important. The heat pump could be used to meet almost the entire load 

in conditioned space; however, in unconditioned space the ambient air temperature can go 

outside its operating range (45°–120°F). The frequency of this occurrence has a strong impact on 

HPF, as the heat pump could otherwise meet most of the load. As ambient air temperature 

decreases, the heat pump capacity decreases, so the electric elements are required more often. 

For garage installation, the ambient air temperature is much more likely to go outside the heat 

pump’s operating range for some part of the year. Basements have much less variation in space 

temperature, which is mostly dependent on ground and conditioned space temperatures. This 

results in a higher HPF for homes where the HPWHs are installed in basements instead of 

garages, even if the homes are in similar climates.
46 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

(a)

(b) 

Figure 19. HPF of the 80-gal HPWH in (a) conditioned and (b) unconditioned space
47 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Figure 20 shows the COPsys for an 80-gal HPWH in conditioned and unconditioned space. In 

conditioned space, the COPsys tends to increase as the mains temperature decreases because the 

lower mains water temperature leads to higher energy demand. In a lower energy demand 

situation, a larger portion of the heat from the heat pump goes to making up standby losses 

instead of meeting the load, which decreases overall efficiency. This same trend of higher 

efficiency at higher load is seen in gas and electric storage WHs. However, it is not seen in the 

case of a 50-gal HPWH because the HPF is lower in regions with high load: the heat pump 

cannot fully meet the load with only 50 gal of storage and the control logic between the two units 

varies significantly. The ambient humidity also has an impact on the COPsys. The heat pump 

performance is affected by the storage tank temperature and the ambient wet bulb temperature. 

Although the conditioned space temperature is controlled, the humidity is not, which lowers wet 

bulb temperatures and reduces heat pump COP in drier locations such as the western United 

States. The lower wet bulb temperature and slight HPF variations with location lead to COPsys in 

the locations with the highest loads being lower than locations such as the Pacific Northwest and 

New England, which have slightly lower loads but higher humidities. In unconditioned space, the 

COPsys follows similar trends to the highly variable HPF, which is the primary driver of COPsys. 

The EF of this 80-gal HPWH is 2.3. The COPsys is not always this high, but the unit can achieve 

a COPsys ≥ 2.3 for most of the country when it is installed in conditioned space. However, the 

COPsys does not account for normalization or any changes in HVAC energy consumption, which 

may significantly impact the overall energy savings associated with installing an HPWH. 
48 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

(a)

(b) 

Figure 20. COPsys of the 80-gal HPWH in (a) conditioned and (b) unconditioned space
49 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Figure 21 shows the source energy savings for a home with an electric WH and an ASHP in 

conditioned and unconditioned space. In the conditioned space case, the potential source energy 

savings are relatively constant across the United States; savings are slightly higher in the East. 

Northern climates show high savings for the energy required to heat water because of the high 

heat pump COP and the larger load, but there is a correspondingly higher space conditioning 

penalty. Warmer locations receive a net space conditioning benefit from running the HPWH, but 

the smaller load leads to lower savings in the energy required to heat water. The net result of the 

space conditioning impact and variations in the load leads to the roughly constant savings across 

the country. 

In unconditioned space, the source energy savings follow many of the same trends seen in the 

COPsys plot. Although the space conditioning impact in this case is relatively small (especially in 

garage installations), the water heating load has a significant impact. The locations with the 

highest COPsys (Hawaii and southern Florida) do not have the highest savings because the load is 

relatively low. Interestingly, the highest savings are seen in coastal Washington. This location 

has both a high COPsys (because the unit is installed in a basement in a relatively mild climate 

with high ambient humidity) and a high load. Even though this is a heating-dominated climate, 

the relatively mild winters allow the ASHP to use the heat pump for most of the year, which 

lessens the HPWH’s impact on the space conditioning load. 
50 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

(a)

(b) 

Figure 21. Source energy savings of an 80-gal HPWH relative to an electric WH for a home with an 

ASHP when the WH is in (a) conditioned and (b) unconditioned space
51 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Figure 22 shows the source energy savings for a home with an electric WH and ER heat/AC in 

conditioned and unconditioned space. For these homes the efficiency in conditioned space is 

significantly lower than the ASHP case in all locations that have some heating load. ER heat is 

significantly less efficient than an ASHP, so this drop is expected. The largest drops in savings 

are seen along the west coast, which has a mild climate but a small heating load for much of the 

year, especially in northern locations. The heat pump provides a small amount of cooling year 

round, so the space conditioning penalty is largest in these locations. However, positive source 

energy savings are possible in all locations. In unconditioned space, the efficiency is slightly 

lower for cases with ER heat than with an ASHP. The effect is more pronounced in locations 

with basement installations, which also tend to have a higher heating requirement. 

(a)

(b) 

Figure 22. Source energy savings of an 80-gal HPWH relative to an electric WH for a home with ER 

heat/AC when the WH is in (a) conditioned and (b) unconditioned space
52 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Figure 23 shows the source energy savings for a home with a gas WH and a furnace/AC in 

conditioned and unconditioned space. Even in the case of an 80-gal HPWH, positive source 

energy savings are limited to the South in conditioned and unconditioned space. The region 

where positive source energy savings are possible is larger in the 80-gal HPWH case than in the 

50-gal case. However, this region still predominantly uses electric WHs.

(a)

(b) 

Figure 23. Source energy savings of an 80-gal HPWH relative to a gas WH for a home with a 

furnace/AC when the WH is in (a) conditioned and (b) unconditioned space
53 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

The breakeven costs for the case of an 80-gal HPWH were also calculated. The net installed cost 

of an 80-gal HPWH will be higher than that of a 50-gal HPWH. The 80-gal HPWHs are 

significantly more expensive than the 50-gal units (more than $1800 retail) (Lowes.com, 2013). 

This is higher than some estimates of the average net installed cost of the 50-gal unit and a 

significant premium, although it would be reasonable to expect that this cost will decrease as 

more manufacturers start offering multiple sizes of HPWHs. There may also be additional 

installation costs for the 80-gal HPWH, especially in retrofit scenarios where size is a factor. The 

current net installed cost of an 80-gal HPWH is thus higher than the 50-gal case and likely 

exceeds $2000 in many cases with current prices. 

To emphasize the differences in net installed cost between the 50- and 80-gal cases and to better 

capture the range of likely net installed costs for an 80-gal HPWH, a new scale was used for 

these breakeven maps. However, all the details of how the breakeven cost was calculated are 

identical to the case of the 50-gal HPWH. Figure 24 shows the breakeven costs for an 80-gal 

HPWH in conditioned and unconditioned space when replacing an electric WH in a home with 

an ASHP. Many of the same trends that were seen in the 50-gal case are apparent here since the 

utility rates in both cases are the same. However, the breakeven cost is generally higher because

the 80-gal case shows greater savings. In particular, there are greater savings in the northern 

Mountain region, which leads to significantly higher breakeven costs than the 50-gal case.
54 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

(a) 

(b) 

Figure 24. Breakeven cost of an 80-gal HPWH relative to an electric WH for a home 

with an ASHP when the WH is in (a) conditioned and (b) unconditioned space
55 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Figure 25 shows the breakeven costs for replacing an electric WH in a home with ER heat and an 

AC. The difference between this case and that of an ASHP is much more drastic for conditioned 

space. Nevertheless, in unconditioned space many regions had their breakeven costs drop by at 

least one scale level, particularly in locations with basements. In the conditioned space case, 

there is a significant drop in breakeven costs and only a few locations have breakeven costs that 

exceed $2000. 

(a)

(b) 

Figure 25. Breakeven cost of an 80-gal HPWH relative to an electric WH for a home with ER heat 

and an AC when the WH is in (a) conditioned and (b) unconditioned space
56 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Figure 26 shows the breakeven costs for the case where the HPWH is replacing a gas WH in a 

home using a furnace/AC. In this case the breakeven costs are generally very low, although there 

are high breakeven costs in a few locations such as southern Florida. However, because gas WHs 

are uncommon in locations with high breakeven costs, the number of installations where it may 

be economically viable to replace a gas WH with an HPWH is low, even with the larger and 

generally more efficient 80-gal HPWH.

(a)

(b) 

Figure 26. Breakeven cost of an 80-gal HPWH relative to a gas WH for a home with a furnace and 

an AC when the WH is in (a) conditioned and (b) unconditioned space
57 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Figure 27 through Figure 29 show cases where incentives are considered. The same incentives 

that were used in the 50-gal case (including the $300 federal incentive) are applied here. Current 

incentives can frequently make the 80-gal HPWH significantly more attractive, although even 

with incentives installing an 80-gal HPWH is often still unattractive. For example, when 

replacing a gas WH, favorably high breakeven costs are still seen only in the South and a few

parts of Washington. 

(a)

(b) 

Figure 27. Breakeven cost with incentives of an 80-gal HPWH relative to an electric WH for a 

home with an ASHP when the WH is in (a) conditioned and (b) unconditioned space
58 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

(a)

(b) 

Figure 28. Breakeven cost with incentives of an 80-gal HPWH relative to an electric WH for a home 

with ER heat and an AC when the WH is in (a) conditioned and (b) unconditioned space
59 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

(a)

(b) 

Figure 29. Breakeven cost of an 80-gal HPWH relative to a gas WH for a home with a 

furnace and an AC when the WH is in (a) conditioned and (b) unconditioned space
60 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Appendix C: Components of Net Source Energy 

Savings

Table 2 through Table 13 show the source energy savings that comes from normalization energy, 

space heating and cooling interactions, and actual WH savings. To show the impact of climate on 

each factor, the results are split up by BA climate zone (Pacific Northwest National Laboratory 

and Oak Ridge National Laboratory, 2010) (see Figure 30). Tables were created for the 50-gal 

HPWH presented in the main body of this paper and the 80-gal HPWH presented in Appendix B 

to demonstrate the differences. All the tables provide the net annual source energy savings (in 

MMBtu); negative savings indicate an increase in source energy consumption when switching to 

an HPWH. Although the data are divided by climate region, there may be significant variations 

from site to site in a particular climate region.

Figure 30. BA climate zones (Pacific Northwest National Laboratory and Oak Ridge National 

Laboratory, 2010)
61 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Table 2. Components of Source Energy Savings by BA Climate Zone, Conditioned 

Space/ASHP/Replacing an Electric WH with a 50-Gal HPWH

BA Climate Zone ΔEWH ΔEheat ΔEcool ΔEnrmlz

Net Source Savings

(MMBtu)

Hot-Humid 16.98 –1.90 3.65 –1.19 17.54

Mixed-Humid 19.78 –4.17 2.54 –1.77 16.38

Hot-Dry 17.50 –2.79 2.15 –1.49 15.37

Mixed-Dry 19.19 –4.28 1.79 –2.05 14.64

Marine 21.13 –5.28 0.59 –1.90 14.53

Cold 21.41 –6.16 1.68 –2.24 14.69

Very Cold 22.84 –8.09 1.03 –2.59 13.20

Table 3. Components of Source Energy Savings by BA Climate Zone, Unconditioned 

Space/ASHP/Replacing an Electric WH with a 50-Gal HPWH

BA Climate Zone ΔEWH ΔEheat ΔEcool ΔEnrmlz

Net Source Savings

(MMBtu)

Hot-Humid 15.64 –0.05 0.18 –1.33 14.44

Mixed-Humid 14.63 –0.28 0.36 –1.75 12.95

Hot-Dry 15.22 –0.05 0.08 –1.76 13.49

Mixed-Dry 12.24 –0.08 0.11 –2.08 10.18

Marine 16.46 –0.31 0.06 –2.14 14.06

Cold 11.67 –0.32 0.35 –2.06 9.63

Very Cold 9.76 –0.29 0.23 –2.28 7.41

Table 4. Components of Source Energy Savings by BA Climate Zone, Conditioned Space/ER Heat 

and AC/Replacing an Electric WH with a 50-Gal HPWH

BA Climate Zone ΔEWH ΔEheat ΔEcool ΔEnrmlz

Net Source Savings

(MMBtu)

Hot-Humid 16.59 –5.44 3.14 –1.18 13.10

Mixed-Humid 19.38 –10.08 2.22 –1.73 9.79

Hot-Dry 17.08 –8.32 1.90 –1.47 9.19

Mixed-Dry 18.79 –9.97 1.62 –2.00 8.44

Marine 20.72 –15.44 0.52 –1.86 3.94

Cold 21.01 –12.66 1.49 –2.17 7.67

Very Cold 22.47 –14.95 0.91 –2.51 5.92
62 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Table 5. Components of Source Energy Savings by BA Climate Zone, Unconditioned Space/ER 

Heat and AC/Replacing an Electric WH with a 50-Gal HPWH

BA Climate Zone ΔEWH ΔEheat ΔEcool ΔEnrmlz

Net Source Savings

(MMBtu)

Hot-Humid 15.26 –0.16 0.10 –1.31 13.89

Mixed-Humid 14.25 –0.82 0.29 –1.72 12.00

Hot-Dry 14.84 –0.19 0.06 –1.73 12.98

Mixed-Dry 11.85 –0.24 0.08 –2.02 9.66

Marine 16.07 –0.97 0.04 –2.08 13.06

Cold 11.28 –0.99 0.30 –2.00 8.58

Very Cold 9.36 –1.01 0.20 –2.22 6.33

Table 6. Components of Source Energy Savings by BA Climate Zone, Conditioned Space/Furnace 

and AC/Replacing a Gas WH with a 50-Gal HPWH

BA Climate Zone ΔEWH ΔEheat ΔEcool ΔEnrmlz

Net Source Savings

(MMBtu)

Hot-Humid 3.64 –2.81 4.07 –1.23 3.67

Mixed-Humid 2.09 –5.21 2.80 –1.90 –2.22

Hot-Dry 2.53 –4.31 2.48 –1.55 –0.85

Mixed-Dry 0.41 –5.28 2.08 –2.21 –5.01

Marine 1.97 –7.88 0.67 –2.04 –7.28

Cold –0.02 –6.59 1.87 –2.48 –7.23

Very Cold –1.64 –7.75 1.13 –2.96 –11.22

Table 7. Components of Source Energy Savings by BA Climate Zone, Unconditioned 

Space/Furnace and AC/Replacing a Gas WH with a 50-Gal HPWH

BA Climate Zone ΔEWH ΔEheat ΔEcool ΔEnrmlz

Net Source Savings

(MMBtu)

Hot-Humid 2.31 –0.10 0.14 –1.35 1.00

Mixed-Humid –2.91 –0.55 0.39 –1.89 –4.96

Hot-Dry 0.33 –0.12 0.08 –1.81 –1.52

Mixed-Dry –6.38 –0.18 0.12 –2.24 –8.68

Marine –2.53 –0.57 0.06 –2.25 –5.30

Cold –9.56 –0.82 0.41 –2.31 –12.28

Very Cold –14.47 –0.98 0.26 –2.65 –17.83
63 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Table 8. Components of Source Energy Savings by BA Climate Zone, Conditioned 

Space/ASHP/Replacing an Electric WH with an 80-Gal HPWH

BA Climate Zone ΔEWH ΔEheat ΔEcool ΔEnrmlz

Net Source Savings

(MMBtu)

Hot-Humid 17.63 –2.45 3.95 –0.52 17.63

Mixed-Humid 22.07 –5.66 2.77 –0.38 18.80

Hot-Dry 18.71 –3.62 2.23 –0.52 16.81

Mixed-Dry 22.06 –5.86 1.97 –0.44 17.73

Marine 23.97 –6.97 0.60 –0.34 17.27

Cold 25.64 –8.85 1.91 –0.30 18.40

Very Cold 28.90 –12.13 1.19 –0.23 17.74

Table 9. Components of Source Energy Savings by BA Climate Zone, Unconditioned 

Space/ASHP/Replacing An Electric WH with an 80-Gal HPWH

BA Climate Zone ΔEWH ΔEheat ΔEcool ΔEnrmlz

Net Source Savings

(MMBtu)

Hot-Humid 16.01 –0.04 0.12 –0.70 15.38

Mixed-Humid 17.88 –0.53 0.35 –0.81 16.88

Hot-Dry 16.13 –0.03 0.01 –0.85 15.27

Mixed-Dry 14.39 –0.12 0.07 –1.12 13.22

Marine 19.95 –0.45 0.04 –0.84 18.69

Cold 15.99 –0.65 0.37 –1.04 14.67

Very Cold 13.51 –0.59 0.25 –1.10 12.07

Table 10. Components of Source Energy Savings by BA Climate Zone, Conditioned Space/ER Heat 

and AC/Replacing an Electric WH with an 80-Gal HPWH

BA Climate Zone ΔEWH ΔEheat ΔEcool ΔEnrmlz

Net Source Savings

(MMBtu)

Hot-Humid 17.24 –7.06 3.40 –0.51 13.08

Mixed-Humid 21.69 –13.59 2.43 –0.35 10.18

Hot-Dry 18.31 –10.77 1.97 –0.50 9.01

Mixed-Dry 21.68 –13.73 1.79 –0.41 9.34

Marine 23.59 –20.27 0.53 –0.31 3.54

Cold 25.27 –18.01 1.70 –0.26 8.70

Very Cold 28.54 –22.18 1.05 –0.18 7.23
64 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Table 11. Components of Source Energy Savings by BA Climate Zone, Unconditioned Space/ER 

Heat and AC/Replacing an Electric WH with an 80-Gal HPWH

BA Climate Zone ΔEWH ΔEheat ΔEcool ΔEnrmlz

Net Source Savings

(MMBtu)

Hot-Humid 15.63 –0.14 0.03 –0.69 14.84

Mixed-Humid 17.49 –1.32 0.28 –0.79 15.67

Hot-Dry 15.75 –0.10 0.00 –0.83 14.82

Mixed-Dry 14.00 –0.29 0.04 –1.09 12.67

Marine 19.56 –1.25 0.03 –0.82 17.53

Cold 15.60 –1.66 0.32 –1.00 13.26

Very Cold 13.12 –1.64 0.23 –1.05 10.66

Table 12. Components of Source Energy Savings by BA Climate Zone, Conditioned 

Space/Furnace and AC/Replacing a Gas WH with an 80-Gal HPWH

BA Climate 

Zone ΔEWH ΔEheat ΔEcool ΔEnrmlz

Net Source Savings

(MMBtu)

Hot-Humid 3.75 –3.48 4.33 –0.55 4.05

Mixed-Humid 3.88 –6.68 3.01 –0.52 –0.31

Hot-Dry 3.18 –5.33 2.55 –0.58 –0.18

Mixed-Dry 2.68 –6.84 2.25 –0.62 –2.54

Marine 4.35 –9.89 0.68 –0.48 –5.34

Cold 3.66 –8.82 2.08 –0.58 –3.65

Very Cold 3.81 –10.76 1.26 –0.62 –6.30

Table 13. Components of Source Energy Savings by BA Climate Zone, Unconditioned 

Space/Furnace and AC/Replacing a Gas WH with an 80-Gal HPWH

BA Climate Zone ΔEWH ΔEheat ΔEcool ΔEnrmlz

Net Source Savings

(MMBtu)

Hot-Humid 1.96 –0.09 0.07 –0.73 1.22

Mixed-Humid –0.63 –0.76 0.39 –0.96 –1.96

Hot-Dry 0.33 –0.08 0.02 –0.91 –0.65

Mixed-Dry –5.52 –0.20 0.08 –1.30 –6.94

Marine –0.02 –0.69 0.05 –0.99 –1.65

Cold –6.54 –1.10 0.43 –1.31 –8.51

Very Cold –12.20 –1.24 0.30 –1.48 –14.62
65 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Appendix D: Breakeven Cost Calculation Methodology

The breakeven cost of an HPWH is defined as the point where the NPC of the system equals the 

NPB to its owner: 

NPC = NPB

The NPC is the cumulative discounted cost of the system, including initial cost, financing, tax 

impacts, incentives, and O&M, equal to the sum of the cost in each year multiplied by the 

discount factor in that year. The NPC is: 

NPC = ICHHHH − ICbsss +�(MCi − Ii)DFi

n

i=0

where:

ICHPWH = the net installed cost of the HPWH, 

ICbase = the net installed cost of the base case water heater,

 n = the study length (15 years), 

MCi = the maintenance costs in year i ($100 every 5 years),

 Ii = the incentives in year i, and 

DFi = the discount factor in year i. 

The discount factor can for any given year is: 

DFi = 1

(1+s)i

where d is the discount rate (5%).

The NPB is the discounted cumulative benefits of reduced electricity bills over the evaluated 

period or the sum of the benefits in each year multiplied by the discount factor. The NPB is: 

NPB = �$sssss,i ∙ DFi

n

i=0

∙ FEFi

where:

 n = the study length (15 years), 

$saved,i = the annual bill savings in year i, and 

FEFi = the fuel escalation factor in year i.

The fuel escalation factor for any given year is:

FEFi = (1 + e)i

(6)

(7)

(8)

(9)

(10)
66 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Where e is the fuel escalation rate (0.5%).

To calculate the breakeven cost of the HPWH, Equations 6–9 are combined and solved for 

ICHPWH, the breakeven cost. 
67 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Appendix E: Breakeven Costs for Cases Replacing a 

Functioning Water Heater

The maps presented here show cases where a functioning WH is replaced by a 50-gal HPWH 

when no incentives are considered. In this case, the existing WH is assumed to have no value, 

even though it may have several years of useful life remaining; it is unlikely (although not 

impossible) that the used water heater will be sold. Thus, the breakeven costs in this case are all 

lower than when a failed WH is replaced or an HPWH is installed in new construction. Despite 

this, in a few locations (notably Hawaii, in New England, Florida, and California), it may make 

sense to replace a functioning electric WH with an HPWH when a home has an ASHP and the 

WH is installed in conditioned space. This also applies to California for all-electric homes when 

the WHs are in unconditioned space. Figure 31 through Figure 33 show the breakeven costs for 

all cases where functioning WHs are replaced with HPWHs. 
68 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

(a)

(b) 

Figure 31. Breakeven cost of an HPWH replacing a functioning electric WH for a home with an 

ASHP when the WH is in (a) conditioned and (b) unconditioned space
69 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

(a)

(b) 

Figure 32. Breakeven cost of an HPWH replacing a functioning electric WH for a home with ER 

heat and an AC when the WH is in (a) conditioned and (b) unconditioned space
70 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

(a)

(b) 

Figure 33. Breakeven cost of an HPWH replacing a functioning gas WH for a home with a furnace 

and an AC when the WH is in (a) conditioned and (b) unconditioned space
71 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

Appendix F: Incentives Used in This Study

Table 14 provides the full list of incentives used in this study. This list was created on March 2, 

2012 and includes all incentives that were available at that time (Interstate Renewable Energy 

Council, 2012). The incentive type category indicates whether the incentive is a utility rebate 

program (URP), a state rebate program (SRP), or a personal tax credit (PTC). SRP and PTC 

incentives are statewide programs; URPs apply to the specific utility service territory. The notes 

indicate if the incentive applies to specific cases (for example, if it is available only for homes 

replacing a gas WH with an HPWH). The current $300 federal incentive was also applied to all 

locations for any case that includes incentives.

Table 14. Complete List of Local Incentives Used in This Study 

State Incentive Provider Incentive 

Type

Value 

($) Notes

AL Alabama Power URP 200 Replacing gas WH

AL Gulf Power URP 700

AZ Sulphur Springs Valley Electric Co–Op URP 100

AR Southwestern Electric Power Company URP 40

AR State SRP 200

CA City of Palo Alto URP 200

CA Lassen MUD URP 200

CA Modesto Irrigation District URP 25

CA California Pacific Power URP 40

CA Pacific Gas & Electric URP 30

CA Southern California Edison URP 30

CA San Diego Gas & Electric URP 30

CA Silicon Valley Power URP 1000

CA Truckee Donner Public Utility District URP 100

CO Empire Energy Association URP 250

CO Gunnison County Electric Association URP 70

CO Highline Electric Association URP 375

CO KC Electric Association URP 75

CO KC Electric Association URP 150

CO Morgan County Rural Electric 

Association URP 370

CO Mountain Parks Electric Association URP 20

CO Mountain View Electric Association URP 70

CO Poudre Valley Rural Electric 

Association URP 270

CO Sangre De Cristo Electric Association URP 100

CO San Miguel Power Association URP 100

CO San Isabel Electric Association URP 100
72 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

State Incentive Provider Incentive 

Type

Value 

($) Notes

CO Southeast Colorado Power Association URP 100 Replacing electric WH

CO Southeast Colorado Power Association URP 200 Replacing gas WH

CO Xcel Energy URP 450

CO Y–W Electric Association URP 350 Replacing electric WH

CO Y–W Electric Association URP 400 Replacing gas WH

CT Connecticut Light & Power URP 400 Replacing electric WH

CT Groton Utilities, Borzah L&P URP 500

FL Clay Electric Co–Op URP 175

FL Gainsville Regional Utility URP 200 Replacing electric WH

FL Gulf Power URP 700

FL City of Tallahassee Electric URP 600 Replacing gas WH

FL Orlando Utility Commission URP 650

GA Diverse Power URP 150 Replacing electric WH

GA Diverse Power URP 500 Replacing gas WH

GA Electric Power Board URP 50 Replacing electric WH

GA Georgia Power URP 250

GA Jackson EMC URP 525

GA Marietta Power & Water URP 250 Replacing gas WH

GA Walton EMC URP 200 Replacing gas WH

GA Sawnee Electric URP 100 Replacing electric WH

HI Hawaiian Energy URP 200

HI Kauai Island Utility Cooperative URP 300

ID Avista URP 50

ID Idaho Northern Lights Corp. URP 25

ID Rocky Mountain Power URP 50

IL Adams Electric Cooperative URP 75 Replacing gas WH

IL City Water, Light, and Power URP 200 Replacing gas WH

IL Corn Belt Energy URP 400

IL Rural Electric Convenience Cooperative URP 200

IL Southeaster Illinois Electric Cooperative URP 250

IL Wayne–White Electric Cooperative URP 400

IL Western Illinois Electric Cooperative URP 75

IN Bartholomew County REMC URP 400

IN Clark County REMC URP 400

IN Daviess–Martin County REMC URP 400

IN Harrison REMC URP 400

IN Henry County REMC URP 400

IN Jackson REMC URP 375

IN Johnson County REMC URP 50
73 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

State Incentive Provider Incentive 

Type

Value 

($) Notes

IN Lagrange County REMC URP 400 Replacing electric WH

IN Marshall County REMC URP 200

IN Orange County REMC URP 400

IN Parke County REMC URP 50

IN RushShelby Energy URP 400

IN Southeastern Indiana REMC URP 375

IN Southern Indiana Power URP 400

IN Tipmont REMC URP 400

IN United REMC URP 100 Replacing gas WH

IN Wabash Valley Power Association URP 400 Replacing electric WH

IN Whitewater Valley REMC URP 50

IN Win Energy REMC URP 400

IA Alliant Energy Interstate Light & Power URP 100

IA Butler County REC URP 300

IA Calhoun County REC URP 300

IA Consumer Energy REC URP 500

IA Clarke Electric Cooperative URP 500

IA Coon Rapids Municipal Utilities URP 100

IA East Central Iowa REC URP 500

IA Easter Iowa REC URP 500

IA Farmers Electric Cooperative URP 400

IA Franklin REC URP 300

IA Guthrie County REC URP 500

IA Linn County REC URP 500

IA Marquoketa Valley REC URP 500

IA MidAmerican Energy URP 50

IA Midland Power Cooperative URP 500

IA Pella Electric Cooperative URP 500

IA Raccoon Valley Electric Cooperative URP 300

IA Southwest Iowa REC URP 500

IA Spencer Municipal Utilities URP 500

IA TIP REC URP 600

KY State PTC 250

MD Delmarva Power URP 350

MD PEPCO URP 350

MD Southern Maryland Electric Cooperative URP 350

MA Cape Light Compact URP 1000

MA Nstar URP 1000

MA National Grid URP 1000
74 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

State Incentive Provider Incentive 

Type

Value 

($) Notes

MA Unitil URP 1000

MA Western Massachusetts Electric URP 1000

MI Alger Delta Electric Cooperative URP 100 Replacing electric WH

MI Coverland Electric Cooperative URP 100 Replacing electric WH

MI City of Escanaba URP 100 Replacing electric WH

MI Great Lakes Energy URP 100 Replacing electric WH

MI Homeworks Tri–County Electric URP 100 Replacing electric WH

MI Marquette Board of Light & Power URP 100 Replacing electric WH

MI Midwest Energy URP 100 Replacing electric WH

MI Presque Isle Electric & Gas URP 100 Replacing electric WH

MI Thumb Electric URP 100 Replacing electric WH

MN Dakota Electric Association URP 100

MN Marshall Municipal Utilities URP 500

MS Mississippi Power URP 300 Replacing gas WH

MS Pearl River Valley Electric Power 

Association URP 150 Replacing gas WH

MO Co–Mo Electric Cooperative URP 50 Replacing electric WH

MO Missouri Cuivre River Electric URP 50 Replacing electric WH

MO Independence Power & Light URP 300

MO Intercounty Electricity Cooperative URP 50 Replacing electric WH

MO Kirkwood Electric URP 100 Replacing gas WH

MO Missouri Rural Electric Cooperative URP 50 Replacing electric WH

MO Ozark Border Electric Cooperative URP 75 Replacing gas WH

MO Ozark Border Electric Cooperative URP 50 Replacing electric WH

MO White River Valley Electric Cooperative URP 50 Replacing electric WH

MT Montana PTC 350

MT Flathead Electric Cooperative URP 60

MT Yellowstone Valley Electric Cooperative URP 150

NM Central New Mexico Electric 

Cooperative URP 70

NY Central Hudson Gas & Electric URP 400

NY Consolidated Edison URP 400

NC Carteret–Craven Electric Cooperative URP 200

NC City of High Point Electric URP 150

NC City of Statesville URP 150

NC Lumbee River EMC URP 450

NC Progress Energy Carolinas URP 350

NC South River Electric Membership 

Corporation URP 200

OR Ashland Electric Utility URP 65
75 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

State Incentive Provider Incentive 

Type

Value 

($) Notes

OR Central Electric Cooperative URP 25

OR Central Lincoln People's Utility District URP 25

OR EPUD URP 30

OR EWEB URP 25

OR Forest Grove Light & Power URP 25

OR Mcminnville Water & Light URP 25

OR Monmouth Power & Light URP 25

OR Oregon Trail Electric Co–op URP 100

OR Salem Electric URP 60

OR Tillamook County PUD URP 50

PA PenElec URP 300

PA Penn Power URP 300

PA Met–Ed URP 300

PA West Penn Power URP 300

PA PECO URP 300

PA PPL Electric Utilities URP 300

SC Progress Energy Carolinas URP 350

SC Santee Cooper URP 35

SC South Carolina Gas & Electric URP 250

SD MidAmerican Energy URP 50

TN Cookeville Electric Department URP 100

TN Fort Loudoun Electric Cooperative URP 50

TN Middle Tennessee Electric Membership 

Corporation URP 200 Replacing gas WH

TN Middle Tennessee Electric Membership 

Corporation URP 50 Replacing electric WH

TN Mursfreesbro URP 100 Replacing gas WH

TN Mursfreesbro URP 25 Replacing electric WH

TN Southwest Tennessee EMC URP 200 Replacing gas WH

TN Southwest Tennessee EMC URP 50 Replacing electric WH

TN Tennessee Valley Authority URP 50

TN Upper Cumberland EMC URP 100

TN Winchester Utilities URP 100

TX Austin Energy URP 500 Replacing electric WH

TX CoServ Electric Co–op URP 25

TX Farmers Electric Cooperative URP 100

TX GVEC, Gonzales URP 300

TX Magic Valley Electric Cooperative URP 250

TX Tri–County Electric Cooperative URP 75

UT Dixie Escalante Power Company URP 500 Replacing gas WH
76 

This report is available at no cost from the National Renewable Energy Laboratory at www.nrel.gov/publications. 

State Incentive Provider Incentive 

Type

Value 

($) Notes

UT Dixie Escalante Power Company URP 150 Replacing electric WH

UT Rocky Mountain Power URP 50

VA City of Danville Utilities URP 100

WA Avista URP 50

WA Benton PUD URP 25

WA Clallam County PUD URP 25

WA Columbia REA URP 25

WA Cowlitz PUD URP 25

WA Grays Harbor PUD URP 25

WA Inland Power & Light Company URP 25 Replacing electric WH

WA Mason PUD URP 250

WA Modern Electric Water Company URP 25

WA Orcas Light & Power URP 25

WA Pacific Power URP 50

WA Peninsula Light Co URP 50

WA Port Angeles Public Works & Utilities URP 25

WA Puget Sound Electric URP 500 Unconditioned space

WA Richland Energy Services URP 25

WA Seattle Light & Power URP 250 Unconditioned space

WI Focus on Energy SRP 25

WI Riverland Energy Cooperative URP 300

WI Vernon Electric Cooperative URP 300

WY Cheyenne Light, Fuel & Power URP 75

WY Rocky Mountain Power URP 75