Heat-pump hot water systems use a refrigeration cycle to extract heat from the surrounding air. They then use a heat exchanger to heat water in an insulated storage cylinder. These systems typically use around 60 to 75% less electricity than a conventional electric hot water system. This is because the electricity is used to operate the heat pump and doesn’t heat the water directly with an element.

These systems work in a similar way to reverse-cycle air conditioners when run on a heating cycle, but heat water instead of the air inside your home.

A heat-pump hot water system can be thought of as a type of solar water heater because the heat in the air ultimately comes from the sun. Unlike solar hot water systems, heat-pump systems don’t have an electric or gas boosting system. But they do use electricity to operate the evaporator fan and compressor when they’re heating water.

Heat-pump water heaters are normally a single integrated unit installed outside on the ground. In other cases, the unit is split between the heat-pump, located outside, and a storage tank which can be installed either outside or inside. This can be an advantage compared to a solar water heater, as collector panels do not need to be installed on the roof, making installation easier. It’s important that they are installed in a well-ventilated area, as they need access to a steady stream of ambient air when operating.