A heat transfer system comprising: a water line for carrying water having a first predetermined flow direction, said water line being in fluid communication with at least one water supply (20, 22); a refrigerant line for carrying a refrigerant, said refrigerant line having a second predetermined flow direction opposite the first predetermined flow direction; a refrigerant evaporator in fluid communication with said refrigerant line; a vapor compressor in fluid communication with said refrigerant line; a condenser (38, 40, 42) in fluid communication with said refrigerant line and said water line; and an expansion device in fluid communication with said refrigerant line; a water pump in communication with said water line to pump water from the at least one water supply (20, 22) through said water line; a controller in communication with said vapor compressor to control capacity of said vapor compressor responsive to demand,; and at least one temperature sensor adjacent an outlet of said variable speed water pump and in communication with said controller, said controller being responsive to said at least one temperature sensor to vary capacity of said vapor compressor; wherein the refrigerant enters said refrigerant evaporator as a liquid and is warmed to cooled gas, wherein the refrigerant enters said vapor compressor as a cool gas and is heated to a superheated gas, wherein the refrigerant enters said condenser (38, 40, 42) as a superheated gas and is cooled to a cooled liquid, wherein the refrigerant enters said expansion device as a cooled liquid and is cooled to a bi-phase liquid, and wherein the refrigerant exits said expansion device and is passed to said refrigerant evaporator; and wherein the water enters said condenser (38, 40, 42), wherein heat is exchanged between the refrigerant and the water to warm the water to a predetermined water temperature, and wherein the water exits said condenser and is passed to at least one water storage member at the predetermined temperature; characterized in that said condenser (38, 40, 42) is a double walled heat exchanger to isolate the water from the refrigerant, the water pump is a variable speed water pump and said controller is remotely operable over a global communications network to control water flow through said water line responsive to water demand. a water line for carrying water having a first predetermined flow direction, said water line being in fluid communication with at least one water supply (20, 22); a refrigerant line for carrying a refrigerant, said refrigerant line having a second predetermined flow direction opposite the first predetermined flow direction; a refrigerant evaporator in fluid communication with said refrigerant line; a vapor compressor in fluid communication with said refrigerant line; a condenser (38, 40, 42) in fluid communication with said refrigerant line and said water line; and an expansion device in fluid communication with said refrigerant line; a water pump in communication with said water line to pump water from the at least one water supply (20, 22) through said water line; a controller in communication with said vapor compressor to control capacity of said vapor compressor responsive to demand,; and at least one temperature sensor adjacent an outlet of said variable speed water pump and in communication with said controller, said controller being responsive to said at least one temperature sensor to vary capacity of said vapor compressor; wherein the refrigerant enters said refrigerant evaporator as a liquid and is warmed to cooled gas, wherein the refrigerant enters said vapor compressor as a cool gas and is heated to a superheated gas, wherein the refrigerant enters said condenser (38, 40, 42) as a superheated gas and is cooled to a cooled liquid, wherein the refrigerant enters said expansion device as a cooled liquid and is cooled to a bi-phase liquid, and wherein the refrigerant exits said expansion device and is passed to said refrigerant evaporator; and wherein the water enters said condenser (38, 40, 42), wherein heat is exchanged between the refrigerant and the water to warm the water to a predetermined water temperature, and wherein the water exits said condenser and is passed to at least one water storage member at the predetermined temperature; characterized in that said condenser (38, 40, 42) is a double walled heat exchanger to isolate the water from the refrigerant, the water pump is a variable speed water pump and said controller is remotely operable over a global communications network to control water flow through said water line responsive to water demand.