Heat pump water heaters (HPWH) move heat from the surrounding air to water for domestic use. They are capable of generating all of the hot water needs of a residential home many times more efficiently than conventional electric water heaters.
In warmer climates, the heat pump may be found in a garage or outside but in Waterloo Region, the water heater is installed inside. Because it draws heat from the surrounding air, it will tend to cool the surrounding space: a benefit in the summer months, the impact of which is unlikely to be noticed in the winter months as the heat pump is rarely found in common living spaces. Because heat pumps heat water slower than conventional heaters, some HPWHs are hybrid: they contain a less efficient conventional electrical resistance heater that can heat water when demand is high. With hybrid systems, the homeowner can set the water heater to maximize efficiency or to maximize the rate of water heating.