A heat pump water heater heats water by pulling heat from the air around it. This guide explains how these units work and what DOE's 2024 rule means for electric storage tanks made on or after May 6, 2029. It also covers ENERGY STAR criteria, the space a unit needs and two utility rebate examples.
How a heat pump water heater works
The Building America Solution Center guide to heat pump water heaters comes from Pacific Northwest National Laboratory for the U.S. Department of Energy. It was last updated July 11, 2024. It says "an HPWH works by pulling heat from the surrounding air and moving it to the water stored in the tank." HPWH stands for heat pump water heater. The guide also says "most HPWHs on the market today are hybrid models, which supplement the heat pump with one or more electric resistance (ER) heating elements."
The guide says HPWHs "are at least three times more energy efficient than the most efficient electric-resistance or combustion (natural gas, propane, or oil) water heaters." DOE's 2022 Energy Saver Guide gives a different figure. It says they "can be two to three times more energy efficient than conventional electric water heaters."
The Building America guide says HPWHs have a uniform energy factor (UEF) above 1.0, "typically 3.5 – 4.0." It says the reason is that most of their heat comes from the air around them, not from the electrical supply. The guide also lists these differences from other water heaters:
- They make cool, dry exhaust air.
- They make condensate (water) that must be drained away.
- They make more sound than other types of water heaters.
- They are larger than other types of water heaters.
DOE's 2024 rule for water heaters made on or after May 6, 2029
In a final rule published May 6, 2024, DOE adopted "amended energy conservation standards for consumer water heaters." The rule took effect July 5, 2024. DOE says compliance "is required on and after May 6, 2029."
DOE adopted a standard level it calls TSL 2. For electric storage water heaters, DOE says this level "includes standards for larger products that are met through the use of heat pump technology while leaving standards for smaller products that can be met through the use of electric resistance heating." Elsewhere in the rule, DOE says that at the final rule level, "all electric storage water heaters, excluding small electric storage water heaters, would need to incorporate heat pump technology."
In 2024, DOE estimated that "approximately 3 percent of current electric storage consumer water heater sales are heat pump units." The rule also says "gas-fired water heaters will still be available as an option to consumers at the levels adopted in this final rule."
The 2029 levels in the federal regulation
The eCFR text of 10 CFR 430.32 is up to date as of October 1, 2026. It sets the uniform energy factor "of water heaters manufactured on or after May 6, 2029." Electric storage water heaters from 20 to 55 gallons have a minimum of 2.30, not counting small electric storage water heaters. That minimum applies to each draw pattern: very small, low, medium and high. For tanks over 55 and up to 120 gallons, the minimum is 2.50.
Federal minimum UEF for electric storage water heaters from 20 to 120 gallons, made on or after May 6, 2029
- 20 to 55 gallons (excluding small electric storage)2.3 UEF
- Over 55 to 120 gallons2.5 UEF
Small electric storage water heaters, from 20 to 35 gallons, have their own row in the table. Their minimums are formulas based on effective storage volume (Veff): 0.8808 − (0.0008 × Veff) for the very small draw pattern and 0.9254 − (0.0003 × Veff) for the low draw pattern.
Where the rule stands as of October 2026
The 2029 table is in the current eCFR. We searched DOE's Federal Register documents that mention water heaters. We looked at those published since January 22, 2025. We found no action amending or delaying these consumer water heater standards as of October 2026. A search result is not proof that no action exists, so check the rule's status before you rely on the date. A separate April 2026 notice is about a petition on consumer furnaces and commercial water heating equipment. It does not cover consumer water heaters. Our furnace guide covers that petition.
ENERGY STAR criteria for heat pump water heaters
ENERGY STAR's water heater criteria page lists these requirements for electric heat pump water heaters:
| Requirement | ENERGY STAR level |
|---|---|
| Integrated HPWH | UEF of at least 3.30 |
| Integrated HPWH on a 120 Volt / 15 Amp circuit | UEF of at least 2.20 |
| Split system HPWH | UEF of at least 2.20 |
| First hour rating | At least 45 gallons per hour |
| Warranty | At least 6 years on the sealed system |
Space and temperature needs
Sources give different room-size figures. ENERGY STAR's heat pump water heater page says HPWHs "should be installed in interior spaces that remain between 40° to 90° F year-round, and provide 1,000 cubic feet of air space around the water heater." PSE also says they typically need "a space with at least 1,000 cubic feet of air volume." The Building America guide gives a smaller figure. It says that inside the home's thermal envelope, "a room of 700 cubic feet or more (for example, an 8 x 12-ft room with an 8-ft ceiling) provides a sufficient thermal resource."
Garages and crawlspaces are examples of unconditioned spaces. In spaces like these, the guide says "the plumbing must never be at risk of freezing, and it is best if air temperatures do not regularly fall below 50°F."
ENERGY STAR says HPWHs "generally don't operate as efficiently in colder spaces, and can cool the spaces they are in." It adds, "If possible, consider installing in a space with excess heat, such as a furnace room." ENERGY STAR says that in colder places with colder incoming water, HPWHs "may need to go temporarily into a back-up standard electric water heating mode." It says this will increase energy use in those months. HPWHs "may also require annual maintenance, including changing air filters," according to ENERGY STAR.
Heat pump water heater rebate examples
Some utilities offer rebates. The examples below are as of October 2026. Programs change, so confirm with your utility.
| Utility | Rebate as of October 2026 | Conditions on the utility's page include |
|---|---|---|
| Austin Energy (Austin, Texas) | $1,000 for a qualifying ENERGY STAR certified hybrid/heat pump water heater | ENERGY STAR hybrid electric water heater with an Energy Factor of 2.0 or better; stores at least 40 gallons; apply within 90 days of purchase; gas water heaters not eligible; an existing HPWH being replaced must be at least 10 years old |
| Puget Sound Energy (Washington State) | $1,000 on qualifying Tier 3 or Tier 4 heat pump water heaters; $1,100 through PSE's Efficiency Boost program for income-qualified customers | Model must be on PSE's qualified product list; install on or after January 1, 2026; apply within 30 days of installation; one rebate per qualified single-family residence; for PSE electric customers |
Austin Energy's page was last reviewed or modified July 2, 2026. It says funding is limited and "Offerings are subject to change without notice." PSE's page is undated.