Heat Pump Water Heaters - What sets HPWH's apart?

Hold on. What’s a Heat Pump Water Heater Anyway?

Full interview with Pierre Delforge

Heat pump water heaters explained. How are they different? What are the advantages? 

A big reason Harvest was founded was to decarbonize the biggest energy hogs in the home: heating and hot water. We sat down with Pierre Delforge, a co-founder and Head of Product and Operations to talk about heat pump water heaters. The conversation was so rich we broke it into three parts. 

• In Part 1, we cover the basics. What defines heat pump water heaters, and why they’re key to the company’s groundbreaking smart thermal battery.  
• In Part 2, Pierre discusses available Federal and state incentives and how California rebates encourage a cleaner more affordable future. 
• In Part 3 Pierre forecasts the future of heat pump water heaters, their economics, and why they are instrumental in home decarbonization.

‍David Tuft: Let’s start with basic definitions. What's the difference between heat pumps and heat pump water heaters?

Pierre Delforge: The terms that are best known are heat pumps for HVAC and hybrid water heaters for water heating. That's how the big guys market their heat pump water heaters. But heat pumps for space heating come in different types: the most common are air-to-air; they use refrigerant to circulate heat and cool from the outdoor unit into the home. But there are also air-to-water heat pumps for hydronic space heating–heating and cooling homes with hot and chilled water instead of refrigerant.

DT: So basically there are heat pumps that heat space and heat pumps water heaters for heating water, right? 

PD: Heat pump water heaters are a special type of air-to-water heat pump designed to heat potable water.  Whereas typical air-to-water heat pumps heat non-potable water for [space] heating, not for domestic uses like showering, and dishwashing, right? So the difference is a heat pump water heater heats water for domestic uses. Whereas an air-to-water heat pump heats water for space heating and cooling purposes. 

DT: And what's the kind of heat pump water heater where the heat pump sits on top of the tank?

 Delforge: That's an integrated heat pump water heater. It means that the compressor is integrated with the tank into a single unit

DT: okay. 

PD: Water heaters come in two main forms: integrated and split. Split systems are where the tank and the water heater are separate like with the SanCO2 unit that Harvest uses. 

DT: Okay. Okay, I think that's pretty clear. While we're on the subject of heat pump water heaters, where do radiant floor heat, radiators and fan coils fit in? Can we talk about those three things? 

PD: These are the three main ways of distributing heat from hot water-- hydronic heat -- is through fan coils, radiant floors, and radiators--which can be either hydronic baseboards or hydronic radiators. 

DT: Do you want to talk a little bit about a fan coil? 

PD: Yeah, a fan coil as the name says is a coil like a car radiator, you know, the radiator in front of the car's internal combustion engine that cools the engine down. You circulate hot water in it and the fan blows air across it and that air extracts heat from the water in the coil. So that's essentially a heat exchanger from water to air. It extracts the heat that's in the water and blows it into the ducts and the home. 

DT: Before we get specifically to the Harvest thermal system. What are the advantages of heat pump water heaters? Compared to electric resistance a lot of people have tankless or instant hot water heaters. What do you see is the big transformation around heat pump water heaters? 

PD: Well, the first one is efficiency. Heat pumps are 3 to 5 times more efficient than electrical resistance. 

The other thing is they draw much lower power from the grid. Because a heat pump water heater typically uses a low-power compressor to heat water, anywhere between 200 and 1,000 watts. Whereas an instantaneous water heater can be 12, 18, and even up to 36 kilowatts. That’s almost 200 times higher power than some heat pump water heaters. That's a huge difference for the grid and carbon pollution because those kilowatts are typically used in the mornings and evenings when there is little renewable energy available and the grid is dirtiest. 

People use the most hot water in the mornings and in the evenings when electricity is supplied primarily by gas power plants, not by renewable energy. So tankless electric water heaters have very high power draws of relatively dirty electricity compared to a heat pump water heater, which is a much gentler draw. The heat pump water heater also has storage which allows it to be operated in a way that maximizes the use of clean energy. So it's a slow steady draw of clean energy compared to a very high-power, peaky draw of dirtier energy of tankless electric water heaters. 

DT: Okay, so clearly efficiency and energy savings are huge with heat pumps. 

PD: And the time energy is used is also huge. Not just for energy savings, but for carbon emissions -- for how much emissions your water heating is responsible for. 

DT: Compared to gas there’s a huge emission benefit. Can you talk a little bit about that? 

PD: Well gas is a fossil fuel that produces CO2 when burnt and also has a high climate impact -- a high global warming potential – when it leaks unburned, 86 times the impact of CO2. So gas has climate impacts in two ways: both in terms of the emissions when it's burned but also the emissions as it escapes along the way from extraction to distribution to use in household appliances. 

DT: So let's take a look at the SanCO2 heat pump hot water heater that Harvest Thermal uses. Why did you choose that particular system? 

PD: We chose it because it's one of the most efficient heat pumps on the market today with efficiencies of up to 550%. And because it produces high-temperature water– 150°F –in one pass. It's pretty unique. Most heat pumps increase the temperature of the water by 10 or 20 degrees every time the water runs through the heat pump and eventually, the water gets to the target temperature. But it has to run through the heat pump several times. Whereas the SanCO2 takes cold water and brings it to hot in one single pass.

That’s key for efficient thermal energy storage. You have access to high-temperature water as soon as it's produced from the heat pump without having to heat a whole tank which takes a lot longer and also has much higher thermal losses. 

DT: That's super fascinating. Okay. I'm gonna go back to the comparison with air-to-air heat pumps. So we've established that we can store heat in hot water and then we distribute it through an air handler by blowing air over these warm coils. How does that compare with an air-to-air heat pump for space heating? What are the benefits of using a hot water heat pump and thermal battery for heating? 

PD: Yeah, air-to-air heat pumps are not designed for storage. We can't store refrigerant. I mean technically you can, through heat exchangers, but why run refrigerant to a heat exchanger inside the home to heat water when you can do it in the heat pump itself without running a refrigerant line? 

DT: You don't want R410 in your house. 

PD: Exactly. You don't want that because it has a high global warming potential and can leak. And it’s not the most efficient way to do thermal energy storage. 

DT: right 

PD: Air-to-water heat pumps are great for thermal energy storage, particularly the SANCO2 and other heat pumps that can produce high-temperature water in a single pass through the heat pump. This is why we selected it as the heat engine for our smart thermal battery. Its efficiency is up to 550% depending on temperature conditions and it is ideal for thermal energy storage using hot water. 

Heat pump water heaters are wonderful replacements for gas systems for all the reasons outlined above. But are they affordable? What kind of incentives are available? And are they the best investment for my money in the long-term? Stay tuned for Parts 2 & 3.

‘How much can I save?’ Incentives on HPWH Explained. 

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What are they? Why do some HPWHs get bigger rebates?

Homeowners can get a pretty good deal on a Heat Pump Water Heater (HPWH) right now when combined with incentives. In part 2 of our conversation with Pierre Delforge, we take a look at the offerings and why thermal storage is “hot” and what incentives are available. He explains why the energy cost savings make them a good economic investment for years to come. If you missed, our primer on heat pump water heaters, check our Part 1 here.

‍David Tuft: Let's talk about incentives for heat pump water heaters. You're pretty familiar with incentive packages being offered right now. Can you break it down for me? What can consumers expect from various kinds of tax credits and rebates when they're in the market for heat pump hot water heaters? 

Pierre Delforge: Yeah, so heat pump water heaters are eligible for a number of incentives that vary by region, but everywhere in the country you can get up to $2,000 of Federal tax credits and low-income customers will soon be able to get Federal rebates. And for thermal battery systems that meet the capacity requirements of the Inflation Reduction Act (IRA) like Harvest, you may be eligible for the 30 percent investment tax credit just like electrochemical batteries and solar. That's Federal. 

Then depending on your region and your utility, you may be eligible for other rebates. There are rebates in many states. In California, you can get $3,100 for a heat pump water heater and up to $5,300 for a Harvest system from a program called TECH HPWH.  California utilities also offer other rebates which under certain conditions can be “stacked” on top of each other, up to the project cost. This can pay for a significant part of the cost of installing the heat pump water heater.

‍DT: Okay. So Harvest can capture $5,300 in rebates from this TECH HPWH program. Part of that is because of the energy savings, is that correct? What exactly is the state of California trying to get out of it? 

PD: The Harvest system benefits from the base rebate of $3,100, as well as two kickers: One is for having a tank with a capacity greater than 55 gallons. This is because heat pump water heaters are more efficient when they have larger tanks because they don't need to use the electric resistance [heat] element as much. This efficiency benefit vastly outweighs the slightly higher thermal losses from the larger tanks. They cost a little more but the difference with the incentive would make it cost-neutral and therefore encourage people to right-size their water heater, rather than to go after the smallest therefore cheapest one. So the state of California is incentivizing people to buy heat pump water heaters with larger tanks, and because Harvest systems uses a larger tank they are eligible for that $700 kicker. 

And the other kicker that the Harvest Thermal system is uniquely eligible for is the low global warming potential [refrigerant], which means a lower climate impact than the standard water heater. We use CO₂ – the SANCO2 is the only heat pump water heater on the market currently to use CO₂ – and as such we capture this $1,500 kicker for low global climate impact refrigerants. 

DT: Okay, so the second kicker is purely about climate. It’s not about storage. 

PD: That's right. The key requirement for this incentive program in general is to have certain grid flexibility capabilities. Heat pump water heaters need to be able to shift load away from peak [time] when electricity is scarcer, more expensive, and higher emissions. California wants to electrify from gas to heat pump water heaters, but in a way that does not increase peak load of the electric grid. So for heat pump water heaters to be eligible for this incentive, they must meet a requirement that they can leverage their built-in storage capability in a way that minimizes operating on peak. 

DT: So to get this incentive from the state of California, you have to be able to manage and communicate with the grid.  

PD: Yes, the communication protocol with the grid is called EcoPort, also known by its technical name CTA-2045. Another requirement is called Joint Appendix 13 (JA13) of the California Building Energy Code, which defines how heat pump water heaters need to be able to optimize energy costs for people's time-of-use rate. 

Together, EcoPort and JA13 give you the ability to communicate with the grid and respond to time-of-use rates. Few utilities offer grid signals for water heaters. That's still very uncommon. It will become more common in the future. At the moment the goal is for heat pump water heaters incentivized by the TECH HPWH program to be ready to take advantage of grid signals when available. 

And in the meantime, they are able to optimize for time-of-use rates which has immediate value because most Californians are on some kind of time-of-use rate. So if they have a hybrid heat pump water heater that automatically optimizes energy use for time-of-use rates, it saves them money on their energy bills. 

So it's a double benefit. The first benefit is to be grid-friendly. The second benefit is to optimize for people's electric energy costs. 

Phew. That was a lot. We hope you enjoyed that deep dive into rebate programs for heat pump water heaters. You can save a whole lot by buying right now. But what about over the long term? How much does it cost to operate? Can we save our planet and lower save money over the long term? Find out in Part 3. 

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Gaze into the Crystal Ball 

What is the future of heat pump water heaters  And why should I buy one today?

In Part 3 of our conversation with Pierre Delforge, we look into the future of heat pump water hearts. How will their costs compare to gas? And what will grid flexibility mean to the homeowner with thermal storage in their tank? Pierre explains the economics of the electric grid why thermal storage gives consumers the biggest bang for their buck. If you missed it, you can read our primer on heat pump water heaters here, and our conversation about available incentives, here.

David Tuft: There are ambitious goals [for heat pump deployment] in California and 25 Governors have pledged to ramp up heat pumps. Where would you say the field is going? What will be different in 2028? Particularly with heat pump water heaters and air-to-water heat pumps? 

Pierre Delforge: Yeah. So looking at my crystal ball, we're going to see the economics of home electrification continue to improve over time. Gas rates [methane gas, a.k.a so-called “natural” gas] will continue to go up at a faster clip than electric rates. This is because as more people stop using gas or use less of it, there are fewer therms to pay for the fixed cost of the gas infrastructure [like pipe maintenance and safety investments]. So the fixed cost becomes a higher share of each therm [unit of energy]. So you're going to see a continuing increase in methane gas costs. 

Conversely, we should see a slowdown in the increase in electric rates because as people use more electricity, the fixed costs of the electric grid are spread over more kilowatt-hours, which reduces the share of fixed costs for each kilowatt-hour. It's basically a divergent trend in terms of rates that electricity rates are going to become relatively more affordable. I'm not saying they're going to go down, they may not but they're not going to increase as fast as gas rates. 

DT: As electric use increases there are more kilowatt-hours generated to pay the system costs, so the cost will go down even though that's the reverse of supply and demand. 

PD: Yeah, but this is not a supply and demand. Most of what we pay for -- 60% of what we pay for in California gas rates is fixed costs that need to be allocated to everybody. So if more people use a fixed asset, it costs less per unit of energy. It’s just a better utilization of the system.

DT: Right and plus all electricity will come from the sun and the wind and other sources where the fuel is free. 

PD: Exactly but it still takes fixed grid costs which are the biggest cost of the grid, right? 

DT: Yeah. So with more electric demand, the cost of running heat pumps are going to come down. 

PD: Yes, so if you think of buying a heat pump today or even in 2028, that heat pump is going to operate for 15 to 20 years – well until the 2040s. If you look at the trajectory of gas and electric costs over the next 20 years, gas is going to become increasingly expensive, and electricity is going to become increasingly affordable. It might not make a huge difference now, but you're not buying just for this year, you're buying for 15 to 20 years. So, think about where that cost trend is going and how much your water heater is going to cost you over its life. 

Energy cost trends are one thing, the second thing is efficiency. Efficiency is continuing to increase so heat pump water heaters will continue to be more efficient. By 2028, I expect that we're going to continue to see improvements and efficiency. And I also anticipate that the ability to be grid responsive and shift load to times of day when the grid is less constrained and when there's more renewable energy available, will become increasingly valued and you'll be able to have access to electric rates that will have really low cost off-peak and higher cost on peak. 

If you have appliances that are able to operate primarily or exclusively off-peak it will decrease their cost even more. The benefits of grid responsiveness or grid flexibility are going to become increasingly valuable and will help the economics of electrification. Solar has grown in the market very rapidly because its economics are very good, it saves you a lot of money on your energy bills. You have a payback. You can finance it. You can lease it. That's because it saves people money on their bills. I can see increasingly that heat pumps are going to be doing this more and more and the market share is going to increase exponentially as these economic benefits grow and enable those leasing and financing business models. 

DT: Okay. Well, this was fun to do. I appreciate you making the time.

That’s a wrap folks. We hope you enjoyed reading this series and learned a little more about why heat pump water heaters are the future of our home heating and hot water systems. Give us a thumbs up on your social media platform of choice or send us an email at decarb@harvest-thermal.com if you have any questions or comments. And as we like to say to our customers, happy Harvesting!