Heat Pump Water Heater Rebate (1600 × 415 px) (1)

Heat Pump Water Heaters

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Water heating is one of the biggest energy users in our homes. Heat pump water heaters (HPWH), also referred to as “hybrid electric hot water heaters”, are the most efficient water heating option available today. HPWH’s are up to 3 times more efficient than standard electric water heaters! That can save Bozeman residents about $2,800 on their electric bill over the life of the water heater. With the $500 City of Bozeman HPWH Rebate, you can save even more.

Heat pump water heaters use electricity and refrigerant to extract heat from the surrounding air and transfer it to heat the water in the storage tank. Most units also have electric resistance heat to supplement the heat pump when needed.

Hot Water Solutions is a great resource to learn more about heat pump water heaters.

Comparing Water Heaters

If you are in the market for a new water heater, selecting an efficient option can save you a significant amount of money on monthly utility bills for many years to come. Here's a snapshot of how different water heaters might impact your utility bill.

		Gal/Day: 50		Temp Rise: 70ºF
Water Heater Cost Comparison*
Type of Water Heater	Energy Unit	Cost/Unit	Energy Factor	Annual Cost	10-yr Cost
Natural Gas Instantaneous	therm	$0.943	0.95	$106	$1,056
Heat Pump Water Heater	kWh	$0.119	3.3	$112	$1,125
Natural Gas Storage Tank	therm	$0.943	.68	$148	$1,476
Electric Tank	kWh	$0.119	.945	$393	$3,927

*Cost per unit of energy reflect NorthWestern Energy's average monthly gas ($0.943/therm) and electric ($0.119) rates for Montana in 2022. Energy factors reflect ENERGY STAR© minimum efficiency criteria. The numbers were calculated using Efficiency Maine's Water Heater Calculator.

Selecting a HPWH

Consider rebates and tax credits that might be available to you. These incentives might have specific product requirements.

Check that your water heater is on the Air-Conditioning, Heating, and Refrigeration Institute (AHRI) Consortium for Energy Efficiency’s (CEE) Product Model Listing or NEEA’s Residential Unitary Heat Pump Water Heater Qualified Products List.

Installation Considerations

HPWHs are a freestanding unit for indoor locations. Because they pull air from the surrounding space, they need more airspace than the typical water heater. HPWHs require about 750 cubic feet of air space. However, there are many different ways the space can be configured for the heat pump to operate efficiently, including direct venting to the outside.
HPWHs are typically taller than conventional models.
HPWHs sound like a fan or air filter when running, so ensure that noise will not be an issue.
The most common type of HPWH available is a 240-volt unit. This may require electrical upgrades in your home. 120-volt units for smaller applications are newly available on the market.
Because HPWHs take in warm air and extract the heat, they vent a small amount of cool dry air. If HPWHs are not vented to the outside and installed in conditioned air spaces, it could decrease the performance of your HVAC system in the winter.
Garages, basements, and laundry rooms are typically great places for an installation. However, the air temperature should remain between 40° to 90° F year-round for the heat pump to operate efficiently.

Rebates, Tax Credits, and Financing

Tax credits for qualifying heat pump water heaters are currently available. The City of Bozeman offers a $500 rebate for qualifying heat pump water heaters. Through the Inflation Reduction Act, additional rebates for Heat Pump Water Heaters will be available in 2024 for qualifying products and residents! Learn more about rebates, tax credits, and incentive options.