The Most Efficient Hot Water System: Why Heat Pumps Lead the Way

Last updated on April 8, 2025

Traditional water heaters, which have been in use for decades, not only have huge utility bills but also hurt the environment. In Australia, the Department of Energy claims that these systems account for 15-30% of total energy use and 25% of pollution per household!

Given these concerns, an affordable and renewable hot water system is necessary.

Among the options available, heat pump water heaters lead the way. This new technology is known for cost-savings and zero harmful impacts on the environment.

So, what exactly are they?

Our article seeks to define heat pumps, discuss their working mechanism, and compare them with other hot water systems, eventually helping you make an informed decision.

Comparing the Efficiency of Different Hot Water Systems

Heat Pump Water Heaters

HPWHs are the best hot water solution if you are looking to save on costs and the environment. They are currently the most sought-after water heating solution due to their various benefits:

Highly Energy-Efficient: HPWHs have a CoP of 3 to 4. This means that for every electrical unit, you get 3 to 4 joules of heat energy.

Cost Savings: Compared to traditional water heaters like electric heaters, HPWH can save you up to 75% on utility bills. So if your bill is $1000, you would pay $350 and save $750 on utility bills with HPWH.

Eco-friendly: HPWHs do not generate any harmful gasses to the atmosphere as they are not involved in the generation of heat. They just capture heat and move it using clear enclosed refrigerant.

Electric Storage Water Heaters

Electric storage water heaters are the most common type, with 50% of Australians having them in their households. These systems utilize resistance heating elements to heat water in an insulated tank.

However, their use is limited due to some inefficiencies:

Energy Consumption: The heating elements consume a significant proportion of electricity to bring the water to the required temperature.

Standby Heat Loss: Even in an idle state, hot stored water loses heat over time and, therefore, requires periodic reheating. This cycle continuously makes the electric storage water heaters consume additional energy, which in return increases the operating costs.

Efficiency Concerns: The combination of high energy use and standby losses means that electric storage water heaters often have increased costs compared to more sophisticated methods, such as heat pump water heaters.

Gas Storage Water Heaters

Like electric storage, gas storage water heaters employ a gas burner to heat water in a tank. Their swift heating capability makes them popular, especially in areas where natural gas is subsidized. However, they don’t come without disadvantages:

Efficiency: These heaters only convert 50-70% of the gas energy to usable hot water. The rest of the energy (30-50%) is wasted as heat. This means high operational costs.

Energy Loss: Even when hot water is not in use, heat continues to escape from the tank. This standby heat loss can go up to 15% a day making gas heaters highly inefficient.

Environmental Impact: Gas water heaters, though economical in regions where gas is cheap, produce a lot of emissions to the environment. They are therefore not eco-friendly.

Instantaneous (Tankless) Gas & Electric Water Heaters

Just as you can tell from their name, tankless water heaters have no tank to store hot water.

They warm the water when you need it and as it flows through them. Due to the absence of a storage tank in these heaters, they minimize standby losses.

However, they are not as efficient as heat pumps. Some concerns about them include:

Less Efficient: These devices are known to consume a lot of power when in use. The consumption and utility bills can be shocking in a house with high hot water demand.

Limited Flow Rate: In a house where multiple bathrooms or faucets operate simultaneously, electric instant water might struggle to meet demand.

Not Fully Dependable: These systems rely on electricity to heat water. Since they have no storage tanks for hot water, you will have no water amid blackouts.

Solar Hot Water Systems

Solar water heaters use solar collectors to collect the energy from the sun and use it to heat water. These systems are eco-friendly and very cheap to run, as you will never have to pay for any utility bills once you have solar water heaters installed. Unfortunately, they have some drawbacks:

Higher Upfront Costs: Installing a solar water heater costs more at first, but long-term energy savings and environmental benefits can make it a smart investment.

Reliant on Weather: Solar heaters can never work if the sun isn’t available. They are less effective in cold regions, and they only heat water during the day.

Needs a Backup: You will need an alternative hot water system like a gas or electric one to use on cloudy days when no sunlight is available. This is an added cost.

Why Heat Pumps Are the Most Efficient Choice

Heat pump water heaters are well-known to be the most efficient energy option for water heating due to the following reasons:

High Efficiency: Unlike other heating devices, heat pumps use the surrounding air instead of generating heat. As a result, for every unit of electricity consumed, they give out approximately 3-4 times more heat in return.

Low Costs On Operation: With such high levels of efficiency, heat pumps use much less energy in comparison to conventional water heaters. This directly translates to a lower electricity bill with time.

Government Subsidies: To encourage this process, Australia and numerous state governments and local bodies provide rebates and tax credits, thus making the pumps more economically viable and lessening their initial cost.

Less Pollution: Compared to gas and electric water heaters, heat pumps use renewable sources of electricity which means relying less on fossil fuels and subsequently emitting lower amounts of greenhouse gases.

Operates All Year: Current models of heat pump water heaters are effective in all climates, even when temperatures drop to 5°F (-20°C)

Factors Affecting Heat Pump Efficiency

Even if heat pump water heaters are remarkably efficient, some factors can affect their efficiency:

Climate Factors: The efficiency of the heat pump system is highly reliant on ambient air temperature. Heat pumps operate best in moderate climates and may require supplemental heating in extremely cold climates.

Installation and Regular Maintenance: Installation is important to ensure that the system operates normally. Also, periodic maintenance, such as cleaning out the filters and checking the refrigerant levels, is necessary to maintain performance.

System Size: Each customer has certain hot water needs that only a particular size and model can meet. A small unit may not fulfill hot water needs, while a too-big unit will inefficiently use energy.

Airflow/ Ventilation: Since heat pumps derive heat from air to warm water, placing them in a ventilated area will guarantee increased performance. Poorly ventilated areas will lower their performance.

What are Heat Pump Water Heaters?

Heat pump hot water systems are devices that work on a different principle than how normal water heaters work.

They do not generate heat directly, rather they make use of the heat present in the surrounding air to raise the temperature of the water. This makes them the most energy-efficient systems.

The Heat Pump Mechanism

A heat pump water heater has a refrigeration cycle at its center.

Instead of burning fuel or utilizing resistance elements, the system makes use of hot air. The process takes place as the refrigerant flows around a closed loop.

It all begins in the evaporator area, where the refrigerant absorbs heat from the air and is then brought to the compressor.

Here, the refrigerant temperature and pressure increase. The increase in temperature ensures enough heat is transferred to the water while pressure forces the refrigerant through the loop.

From the compressor, the refrigerant thereafter passes to the condenser.

At this point, it releases its heat to the water inside the storage tank. It then cools and is passed through an expansion valve where it goes through a phase change and is ready to absorb heat again.

Key Components and Their Functions

Refrigerant: Moves in the system absorbing heat and transferring it.

Fan: Pulls warm air and moves it over the evaporator.

Evaporator: Pulls heat from the surrounding air. This warms the refrigerant.

Compressor: Raises pressure and temperature of the refrigerant until it reaches suitable transfer heat for roughly half the heat exchange.

Condenser: Pulls heat out of the refrigerant. The heat goes to warm the water in a tank.

Expansion Valve: Prepares the refrigerant for return to the evaporator by dropping its pressure and temperature.

Ideal Conditions for HPWH Maximum Efficiency

For heat pumps to work at their peak, they require warm air.

As such, you will find these devices reaching their top performance in areas where temperatures reach 4°C to 32°C. Amid these temperatures, the air has sufficient warmth that the evaporator can trap and transfer to the system for heating water a bit quickly.

Below these temperatures, HPWH will still work.

However, their performance will be greatly lowered. The best way to achieve the most from them is to ensure you get the right size for your needs, keep your HPWH insulated, and install it in the right places.

Conclusion

So there you have it – the reasons why heat pumps lead the way as the best water heater. They save costs and the environment, giving you peace of mind.

If you are still using traditional water heaters, it is high time you rethink your decision, especially now that you have read this article and acquired the right information. Now make the most rewarding decision for your hot water. Go the heat pump way!