These superefficient water heaters can cut your bills by $600 a year — and you can get thousands in rebates

Not only are heat pump water heaters better for your wallet, but they're also more eco-friendly since they save energy.

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Tired of paying an arm and a leg for hot water that turns ice-cold halfway through your shower? Luckily, a nifty new technology on the market could help you save big on home energy bills while heating your water much more efficiently — the heat pump water heater.

If you've upgraded your HVAC system to a heat pump, you probably already know how a heat pump water heater works.

The technology uses electricity to transfer heat from one area to another instead of generating it, according to the U.S. Department of Energy. This energy-saving heating process makes heat pump water heaters up to three times more efficient than traditional electric water heaters.

These next-gen water heaters can save you more than $5,500 over a decade — or even up to $600 annually by one estimate, for replacing an oil or propane appliance. Yet the initial cost and installation can be pricey. Forbes reported that a typical heat pump water heater can run from $1,500 to $3,000 — double or triple the cost of a standard water heater.

However, thanks to the Inflation Reduction Act, you can get a 30% tax credit (up to $2,000 per year) on qualifying models, according to the DOE. In addition, low- and moderate-income households could be eligible for a rebate of up to $1,750 for an energy-efficient heat pump water heater.

Not only are heat pump water heaters better for your wallet, but they're also more eco-friendly since they save energy. Switching out old appliances for energy-efficient options is one of the most effective ways to reduce your home's environmental impact.

For example, a New Buildings Institute analysis found that replacing your water heater with a heat pump water heater can save over a ton of carbon pollution annually — the carbon dioxide equivalent of growing more than 17 trees for a decade.

While there are plenty of options to choose from, the tech company Cala has launched what it's calling the world's first "intelligent" heat pump water heater that can help you save even more on energy bills (preorders are now underway, with deliveries beginning in 2025).

Michael Rigney, Cala's CEO, told The Cool Down that its smart water heaters can "think ahead" to heat water exactly when it's needed, increasing your family's comfort while decreasing your energy bills.

"A Cala heat pump water heater should be like the most amazing maid of honor or best man at a wedding," Rigney said, explaining that the brand utilizes predictive technology to understand your household's water usage habits, all "without bothering anybody."

However, if you don't want to wait, the Department of Energy offers a free tool to help you through the decision-making process and find the right product for your home.

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