The working principle is very similar to a refrigerator but in reverse, generating heat - not cooling. An average HPWH is three to four times more efficient than conventional electric water heaters. Consider that 30% of the average power is dedicated to heating water, and do the maths.
There are two main types, an 'all-in-one' (or integrated system) and a 'split system'.
An all-in-one system has the heat pump attached to the top of the storage tank and a split system has the heat pump separate from the tank - generally outside.
All-in-one systems are available for both indoor and outdoor locations and are a good option when renovating, building new or replacing your old cylinder, whereas a split system can be retrofitted to your existing tank provided it is not too old.
Add it up
Heat-pump water heaters cost more at the outset than a standard electric water heater. Therefore, they require the initial capital cost to be recovered through energy savings, which is in proportion to the amount of hot water used by the purchaser. For households with a low hot water usage, it may well mean that your payback period is simply too long and you're better served by conventional water heaters. For moderate-to-high users though, payback times will be relatively short.
Split systems pricing ranges from $2500 to $4500 depending on size and brand. If the system cannot be plumbed into your existing hot water cylinder (generally those installed before 1988) you'll need to either pay for a new one ($750 to $1500) or opt for an all-in-one system.
All-in-one systems (which include the tank) cost $2400 to $4500 plus installation. All-in-one systems must be ducted outside to release cold air and moisture.
In calculating the cost-effectiveness, payback and return on investment of these systems compared to other water heating options, it is common to take out the "sunk costs" of installing or replacing a standard hot water cylinder, for example plumbing and electrical labour. In the case of all-in-one systems, this also means taking out the cost of a standard electric element cylinder, which is between $1100 and $2000. In these cases, the extra (marginal) cost of a heat-pump water heater is between $1000 and $3000. This extra cost is rapidly recaptured due to the high efficiency and cost savings of the unit.
Return on investment (ROI)
The ROI depends on the marginal cost of the system, and the quantity of hot water being used. In a new build environment, the payback period can be one to three years for a family of four or more. An annual energy saving of $600 to $700 is readily achieved, and can increase by $200 to $300 per additional resident.
In a retrofit environment, where an existing tank needs to be replaced, or the hot water system is being upgraded to mains pressure, the marginal cost is about $800 to $1000, which can provide a payback of 18 months to two years.
The marginal ROI for a family of four renovating or building a new home can range from 40 to 60% per year. When integrated with solar power, a heat pump water heater can increase the ROI of a solar PV power system from 10 to 30% per year for a combined system. Combined with a solar system, which provides the electrical energy needed to heat your water during the day, savings can be even greater.
Many companies offer statements which describe "savings up to" however companies which guarantee at least a minimum level of performance are considerably more realistic. Ask for that guarantee.
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