A heat pump water heater comprising: a water storage tank, including a side wall and a bottom wall; a heat pump, comprising a sealed system including a compressor, an evaporator, a condenser and a refrigerant configured for refrigerant flow from compressor to condenser to evaporator and back to the compressor, wherein the condenser is positioned in a heat exchange relationship with the water storage tank for heating the contents of the tank, a first electric resistance heater positioned proximate the upper region of the water storage tank; a first temperature sensor positioned proximate the top of the water storage tank; and a controller operatively connected to the first temperature sensor and including an event flow module, wherein the controller is operatively connected to the first electric resistance heater, the controller being further configured to automatically select and energize the first electric resistance heater in response to the temperature readings measured by the first temperature sensor, characterized in that the event flow module is configured to receive and process data representative of temperature readings measured by the first temperature sensor in order to determine if water is flowing from the water storage tank by using rate of temperature change information to detect a flow rate of water being withdrawn from the water storage tank; the controller is operatively connected to the heat pump; the controller being further configured to automatically select and energize the heat pump in response to the temperature readings measured by the first temperature sensor; the condenser includes a side portion wrapped around an exterior of the side wall of the water storage tank and a bottom portion arranged beneath and extending beneath and in a heat exchange relationship with the bottom wall of the water storage tank, wherein the bottom portion includes a condenser inlet, whereby the heat pump condenser is configured so that the refrigerant flows first through the bottom portion of the condenser before flowing through the side portion. a water storage tank, including a side wall and a bottom wall; a heat pump, comprising a sealed system including a compressor, an evaporator, a condenser and a refrigerant configured for refrigerant flow from compressor to condenser to evaporator and back to the compressor, wherein the condenser is positioned in a heat exchange relationship with the water storage tank for heating the contents of the tank, a first electric resistance heater positioned proximate the upper region of the water storage tank; a first temperature sensor positioned proximate the top of the water storage tank; and a controller operatively connected to the first temperature sensor and including an event flow module, wherein the controller is operatively connected to the first electric resistance heater, the controller being further configured to automatically select and energize the first electric resistance heater in response to the temperature readings measured by the first temperature sensor, characterized in that the event flow module is configured to receive and process data representative of temperature readings measured by the first temperature sensor in order to determine if water is flowing from the water storage tank by using rate of temperature change information to detect a flow rate of water being withdrawn from the water storage tank; the controller is operatively connected to the heat pump; the controller being further configured to automatically select and energize the heat pump in response to the temperature readings measured by the first temperature sensor; the condenser includes a side portion wrapped around an exterior of the side wall of the water storage tank and a bottom portion arranged beneath and extending beneath and in a heat exchange relationship with the bottom wall of the water storage tank, wherein the bottom portion includes a condenser inlet, whereby the heat pump condenser is configured so that the refrigerant flows first through the bottom portion of the condenser before flowing through the side portion.