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Technologies

The heat pump, and the one thing that decides it

By a wide margin the cheapest of the four to run, and the only one where a utility will currently pay you a meaningful amount to install it. It is also the fussiest. It needs space, air, electrical capacity and somewhere for condensate to go, and the electrical panel is usually what decides whether it is a good idea or a long payback.

How it works

It works like a refrigerator running backwards. Instead of making heat, it moves heat out of the surrounding air and into the tank, which is why it can deliver three or four units of heat for every unit of electricity it consumes. No combustion, no flue.

Because it takes its heat from the air around it, the air matters. Warmer surrounding air means better efficiency, and a Central Valley garage in summer is close to ideal. A sealed interior closet is close to the opposite, because the unit rapidly chills the small volume of air it has to work with.

Good fit when
  • A garage or utility room with room to breathe
  • Lower energy bills matter more than upfront cost
  • You already have solar, or you are heading that way
  • Your panel has capacity and sits near the install location
  • You are on a utility that pays a heat pump rebate
Think twice when
  • A tight interior closet will not work without ducting
  • Panel capacity and a condensate route both have to check out
  • Your gas tank has already failed and you need hot water today
  • The unit would sit next to a bedroom wall, because it makes noise

What it costs

We model the installed price from the equipment price, because you can look up the box and you cannot look up everything that gets added to it. Ranges only, and never a single average.

Rule of thumb
roughly 2.5 to 3 times the price of the unit
Equipment, retail
$1,600 to $3,000
Typical installed
$4,000 to $8,000
Time on site
3 to 6 hours, longer if an electrician is needed

What the work portion buys

  • Labour
  • Permit and inspection
  • Electrical work, the largest single variable
  • Condensate routing
  • Ducting where the space cannot draw air freely
Source: Water Heater Advisor price model, calibrated against Stanislaus County contractor pricingChecked 7 Aug 2026

What it costs to run

Between about $112 and $159 a year in Turlock, depending which TID tier your household lands in. That is roughly a third of what a gas tank costs to run and a quarter of an electric resistance tank.

Those figures come from our Turlock fuel model, which is the one market where we hold both published utility rates. They will be in the right region for anywhere nearby and they are not a national average, so treat them as a comparison between technologies rather than a prediction of your bill.

Who makes it

Brand comes after technology, always. Once you have settled on this one, these are the manufacturers we hold research for.

Solid entries have a page. Dashed entries are in the research but not yet written up, and we would rather show you that than link you nowhere. All brands

Ask your installer these

  • What capacity does my panel have left, and what does a circuit cost from there?
  • Will this space give it enough air, or does it need ducting?
  • Where does the condensate go?
  • How loud is it, and what is on the other side of that wall?
  • Which rebates are you filing, and which do I file myself?