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Hybrid Water Heater | What Is It and How It Works

The water heater is the second largest consumer of electricity in most homes, only surpassed by the heating and cooling system. According to the US Department of Energy, water heaters account for about 18% of a home’s utility expenses. 

Hybrid water heaters utilize a unique technology that allows them to heat water without consuming as much energy as conventional water heaters. In this article, I provide a detailed explanation of how hybrid water heaters work and why they might be a nice addition to your home.

Hybrid water heaters use a heat pump to heat water with a backup electrical element. Air around the heater is pulled into the unit. Heat is absorbed by refrigerant coils. The refrigerant is compressed to further increase temperature. It is then sent through coils in the water to heat the water.

What Are Hybrid Water Heaters?

Hybrid water heaters also referred to as heat pump heaters are a variation of tanked water heaters. 

This type of water heater does not generate heat directly. Instead, it absorbs warmth from the surrounding air, converts it to heated gas, and uses this to heat the water

Hybrid white water heaters

They are referred to as hybrid water heaters because they combine the qualities of a standard electric water heater with the energy efficiency of heat pump technology. As a result, they do not consume as much electricity as conventional water heaters. 

Anatomy of a Hybrid Water Heater

A hybrid heater has two sections. The top section is responsible for drawing warm air into the unit and converting it to hot gas, which is used to heat the water in the lower portion of the tank.

This top section of the tank accounts for why the heat pump water heater is bigger than regular heaters. It contains the: 

  • Fan 
  • Condenser 
  • Evaporator 

The bottom portion comprises all the elements of a conventional water heater with the addition of a condenser:

  • Hot water outlet 
  • Temperature/pressure release valve
  • Upper thermostat
  • Anode 
  • Electric resistance heating element
  • Condenser
  • Lower thermostat
  • Cold water inlet
  • Insulation
  • Drain

Unlike regular heaters, the heating element in hybrid water heaters is a backup to the heat pump and isn’t the primary method of heating the water. They are only used when the room is too cold for the heat pump to work efficiently or when there is a larger than normal demand for hot water. 

How Hybrid Water Heaters Work

Unlike conventional water heaters that generate heat directly, hybrid water heaters convert ambient air temperature into heat. 

They work like refrigerators but in reverse. While a refrigerator extracts heat and sends it to the surrounding room, a hybrid water heater uses electricity to extract hot air from the room and sends it into the water heater tank. 

Their mode of heat generation makes them two to three times more energy efficient than conventional water heaters

Heat pump water heaters are to be installed in a location of at least 1,000 cubic ft. and with a temperature that ranges between 40 ºF and 90 ºF all year round.

Illustration of a hybrid water heater with a text saying "heat pump water heaters are to be installed in a location of at least 1000 cubic feet"

How they Work

  1. A fan at the top of the unit pulls ambient air across the evaporator coil.
  2. Heat in the air is absorbed by refrigerant inside the evaporator cool.
  3. The heat in the air converts the refrigerant to vapor.
  4. The compressor compresses the vapor, increasing its temperature and pressure. 
  5. The heated refrigerant flows through condenser coils and transfers the heat to the water in the tank. 
  6. Once the refrigerant has transferred the heat, it turns back to a liquid state and the cycle begins again. 

While transferring heat from the surrounding air to the unit, hybrid water heaters also cool and dehumidify the air in the room

Available Settings in Hybrid Water Heaters

  • Efficiency/economy mode: This setting uses only the heat pump to heat water. It is the most energy-efficient setting. 
  • Hybrid mode: The hybrid mode utilizes both the heat pump and conventional electric heating element to heat water. This setting is used when the demand for hot water is high.
  • Electric mode: This setting works the same as traditional water heaters. It uses only the electric heating element to heat the water. It’s usually adopted when the surrounding temperature is low or when the demand for hot water is extremely high. This setting consumes the most amount of energy. 
  • Vacation setting: This setting allows you to place the heater on what I like to call a sleep mode while you’re away from home. 

Benefits and Drawbacks of Hybrid Water Heaters

Tank-Style vs Hybrid


Electric tank-style water heaters are the least efficient water heaters on the market. Gas models do not use as much electricity but they still consume more energy than hybrid water heaters.  

Hybrid water heaters are two to three times more energy-efficient than conventional tank-style water heaters. An ENERGY STAR certified hybrid water heater consumes up to 50% less energy than tank-style electric water heaters.  


Tank-style water heaters are the cheapest models on the market. 

On average, storage tank water heaters cost between $800 to $1,300 to purchase and install, while the price of buying and installing a hybrid heater is about $1,200 to $3,500

But on the bright side, hybrid water heaters cost less to run and, according to a study by the US Department of Energy, using a heat pump water heater costs an average of $300 less than conventional units

Using a heat pump water heater costs an average of $300 less than conventional units

This means that you would most likely recover the difference in price in less than five years. So, it’s a great long-term investment. 


Hybrid water heaters cover a similar surface area as tank-style heaters. However, in addition to their size, they need about 1000 cubic ft. of air space so that there will be enough surrounding air to be drawn into the unit.


The heat pump in a hybrid water heater wouldn’t be able to provide hot water if the surrounding air is cool or during extremely high hot water demand. 

But this doesn’t mean that the heat pump water heater would not supply hot water in cool climates or during high hot water demand. What happens is that the electric heating element in the hybrid heater takes over, so your heater would basically work the same as a tank-style water heater. 

This does mean that they are not a prudent choice in cold climates because the heater might end up using the heating element a lot more than the heat pump, which negates the whole purpose of a hybrid water heater.


Both the electric and gas models of tank-style water heaters have a lifespan of 8 to 12 years.

Hybrid water heaters have a longer lifespan of 12 to 15 years

Additionally, storage tank water heaters typically come with a 6-year warranty while hybrid heaters come with a 10-year warranty. 

Tankless vs Hybrid


Both tankless and hybrid water heaters are more energy-efficient than tank-style heaters. 

Hybrid water heaters use less energy than electric tankless water heaters. However, tankless heaters come in electric and gas varieties and their gas models consume less energy than hybrid water heaters


The cost of installing a hybrid water heater is similar to that of tankless units. On average, you should expect to spend between $1,200 to $3,500 to purchase and install both hybrid and tankless water heaters.

Gas tankless water heaters cost less to run than hybrid water heaters. However, the electric models of tankless water heaters are more expensive to run than heat pump water heaters.  


Tankless water heaters have the upper hand in terms of space. They can be installed anywhere in the house and a large tankless water heater would only cover around 24″ of wall space. 

Hybrid water heaters are quite bulky and due to their manner of operation, they need to be installed in a room with a clearance of at least 1,000 cubic ft. 

Illustration of tankless water heater and a hybrid water heater with their difference in terms of space


Tankless water heaters do not store water like hybrid water heaters. Instead, they heat water on demand. 

Although they are designed to meet the hot water needs of regular households, tankless heaters can get overwhelmed when multiple appliances or taps are using hot water at once. 

As I stated earlier, even if the heat pump in hybrid water heaters cannot meet up with the hot water demand, hybrid water heaters would still provide hot water by utilizing the electric heating element


Tankless water heaters do not store water. Thus, they aren’t prone to problems like corrosion that are common with storage tank heaters.

Rheem RTEX-24 24kW 240V Electric Tankless Water Heater, Gray

Hybrid water heaters happen to be tank-styled albeit an improved version. So, they‌ are no match for a tankless unit in terms of longevity.

Tankless water heaters typically last between 15 to 20 years, while hybrid water heaters last for about 12 to 15. 

Who Sells Hybrid Water Heaters?

The heat pump water heater market has gained ground in recent years as many homeowners are opting for more energy-efficient appliances. But even with the increased demand, hybrid water heaters only cover a small share of the water heater market. 

According to the US International Trade Commission, the sales of hybrid water heaters in 2020 make up only 2% of the overall market. 

One of the factors preventing people from switching to hybrid heaters is the lack of knowledge and familiarity not only among the users but the installers as well. 

Due to their size, low demand, and small market presence, you might not find them in small home improvement or appliance stores.

I even checked amazon and couldn’t find a single hybrid water heater. 

If you are in the market for a hybrid water heater, the best places to begin your search are big home improvement stores like Lowes and Home Depot. You can also get expert installation at an added cost. 

Brands that manufacture hybrid water heaters include Rheem, A. O. Smith, GE, Bosch, and a host of others. 

You could also purchase a heat pump separately and add it to your conventional tank-style electric water heater. Doing this will produce the same result as an integrated heat pump water heater.


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