Heat Pump Water Heaters: $300/Year Savings and a 2-3 Year Payback

Consumer Reports' updated analysis of heat pump water heaters shows an average annual savings of $300 versus electric resistance and $150 versus gas water heaters. With federal and state rebates, net installed cost ranges from $800 to $2,000 depending on location, yielding a 2-3 year payback. Top-rated models include the Rheem ProTerra ($1,800 MSRP), AO Smith Voltex ($1,700), and Bradford White AeroTherm ($1,900). The main installation consideration is space: HPWHs need 700+ cubic feet of air volume and produce cool, dehumidified exhaust air.