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How Do Heat Pump Water Heaters Work?

How Do Heat Pump Water Heaters Work?

Last updated on September 28, 2025

The recent trends in home energy in Australia clearly reflect a shift. The number of households giving up on their electric or gas water heaters is increasing with each passing day.

What are they opting for instead? Heat pump water heaters.

Why are people switching to heat pump water heaters?

It’s a valid question with a very straightforward answer. People want lower power bills, greener choices, and technology that actually makes sense for the future.

That’s precisely why!

Just think about it: most of the energy consumed by a household, especially in cold regions, is used for water heaters. While you enjoy the hot water, the energy being wasted by a typical electric heater goes unnoticed.

Such energy-wasting electric water heaters, consequently, raise your electricity bills in a very subtle manner. 

A heat pump water heater can significantly reduce those expenses, often by as much as 60%. This represents a long-term change in the way we handle energy, not just a small saving.

Savings, however, represent only one aspect of this switch. There are others, too:

  • Greenhouse gas emissions are reduced when power is used less. This is a huge triumph for homeowners who care about the environment.
  • Installing energy-efficient technologies can now result in tax credits or refunds in several regions of Australia. This implies that you save money not only today but also in the future.
  • Houses with heat pump systems are probably going to be more valuable in the long run as energy regulations change. So, this shift today helps with future-proofing.
gas water heater conversion to heat pump water heater

The Basic Working Principle of a Heat Pump Water Heater 

To understand the cost savings with heat pumps better, we must also understand how the heat pump water heating system operates and what distinguishes it from traditional water heaters.

This new, trending system that keeps your showers warm on chilly mornings doesn’t create heat like the traditional water heaters do. 

In simple words, without any technical details, it would suffice to say that heat pump water heaters use electricity to move around the surrounding heat rather than generating more heat.

For a more technical understanding, however, you may compare it to a refrigerator in reverse.

Much like a refrigerator that transmits heat from inside the appliance to its surroundings, a heat pump uses a fan and a compressor to use heat from the surrounding air to heat the water tank.

Key Components

key component of heat pump water heater

It might help to know the parts inside a heat pump water heating system in order to match it with the step-by-step process and understand how it actually works. The following are the key components:

Fan

The unit has a fan integrated into the system, which is used to draw in air from the surroundings and begin the entire process. If there is no air intake, there is no heat to be extracted. The built-in fan, therefore, ensures a constant airflow over the evaporator coils.

Evaporator coil 

It is filled with a special refrigerant that absorbs the heat from the warm air that passes over it. It is designed to capture even small amounts of heat energy from the air.

Compressor

The refrigerant moves into the compressor once it absorbs the heat and is squeezed by the compressor, such that the pressure and temperature rise. Compressing the refrigerant turns low-grade warmth into usable heat energy that can easily heat up the water.

Condenser coil

The condenser coil is what the hot refrigerant then flows through. This condenser coil usually wraps around the tank or runs inside it. It is also called the heat exchanger because it helps transfer heat from the refrigerant to the water.

Step-by-Step Process

Now that the key components and their roles within the system are clear, let’s take a quick look at the step-by-step process:

  1. Air from the surrounding space is drawn into the system, be it the utility room, the garage, or the basement.
  2. A refrigerant inside the device takes in heat from the surrounding air. Consider this to be the opposite of the process that a refrigerator employs.
  3. The refrigerant is then compressed in order to raise its temperature.
  4. That heat is then transferred to the water in the tank.
  5. The system then releases the cool air back into the surrounding air. 

Energy Efficiency Factor

The phrase energy efficiency is frequently used when discussing the benefits of heat pump water heaters. But how is it gauged?

The Uniform Energy Factor, or UEF, is used to grade heat pump water heaters. Let’s shed some light on what it really means.

It calculates how much hot water is produced for every unit of energy used. Greater efficiency is indicated by higher UEF values.

The ideal UEF of conventional electric resistance water heaters is 1; however, heat loss causes practical units to be lower.

This implies that in an ideal scenario, you receive around one unit of hot water energy for every unit of electricity that it consumes. Practically, however, they are found to be less energy efficient than that.

In contrast, the efficiency factor of a heat pump water heater can be two to three times higher. This means that the hot water it delivers is two to three times more than the electricity that is consumed.

The system makes it possible by transferring ambient heat into the water tank rather than using electricity to generate heat. Moving energy is far cheaper than generating it.

That is why homeowners utilising this system tend to save significantly more on their energy bills.

Operating Conditions for heat pump water heater

A heat pump water heater’s performance is significantly dependent on its environment, much like any other technology. It is, therefore, important to understand the operating conditions for your system if you want to get the best out of it.

Suitability of the climate: The ideal operating temperatures for heat pump water heaters are mild to warm, usually between 40°F and 90°F (5°C and 32°C).

Although efficiency may decrease in colder climates, modern versions can still operate in cooler air.

This is exactly why a lot of units are built as hybrids, automatically switching to conventional electric heating when more assistance is required.

Space requirements: Heat pump water heaters require greater breathing room than conventional tanks because they suck air in and expel cooled air. A well-ventilated area, like a utility room, garage, or basement, guarantees optimal system performance.

Final Call: Heat Pump Water Heater Working Mechanism

Why pick a water heater with a heat pump?

Heat pump water heaters don’t produce heat directly; instead, they transfer heat using electricity. As a result, their energy efficiency can be two to three times higher than that of traditional electric water heaters.

What is the lifespan of a heat pump water heater?

The longevity of a heat pump water heater is actually one of its advantages. It can last ten to fifteen years, and perhaps more, with regular maintenance that includes cleaning the air filter and flushing the tank.

Are heat pump water heaters noisy?

They make a soft humming sound, like a refrigerator, which is hardly disruptive for the majority of households.

Is it necessary for a heat pump hot water system to be outside?

The ideal location for hot water heat pumps is usually outside, where they will have access to fresh air. Some variants, however, can be installed indoors, such as in a garage, and if you opt for a split system, the tank can be installed indoors.

Is maintenance necessary for heat pump water heaters?

Heat pump water heaters need regular maintenance, much like other water heaters. By scheduling routine servicing, you may prolong the life of your heat pump water heater and reduce efficiency loss.

In Australia, are heat pump water heaters worth the investment?

Heat pump hot water systems are more costly to purchase than traditional electric hot water systems, but they will ultimately save you money. Without including installation, heat pump hot water systems range in price from approximately $3000 to $4000.

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E-Green Electrical

E-Green Electrical is a top tier energy efficiency company based in Sydney. We focus on utilising government rebates to help reduce our clients energy consumption by installing energy efficient solutions. E-Green boasts a rich heritage within the realm of energy efficiency, consistently staying up to date with cutting-edge technologies to deliver optimal results for our valued customers.

We don't just sell products and services; we also provides tips and information on how to help reduce energy consumption. We believe in using energy wisely and teaching others how to do the same. For E-Green, it’s important to share knowledge with the community. That's why we regularly write articles about saving energy, new government rebates available and increasing sustainability.

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