Upgrading to a heat pump water heater can lower energy bills for some homeowners, particularly when the unit replaces a standard electric tank or runs during cheaper off-peak hours. But one Michigan homeowner found the opposite in their specific case after researching a natural gas water heater, saying a heat pump model seemed likely to add about $25 a year in operating costs instead of reducing them, illustrating the importance of adjusting to your circumstances.

Here's what to know

In a post on Reddit's r/HeatPumps, the homeowner described several reasons the switch had lost its appeal. They worried about losing hot water during outages, disliked the reviews for models their contractor recommended, faced a higher upfront price, and found that Michigan incentives in their situation applied only to electric-to-electric replacements.

The unit's location also factored into the calculation. The homeowner said their desk in a new work-from-home setup is "about 10 feet away" from the water heater, so the expected noise and winter cooling effect felt more consequential.

"Am I wrong?" they asked of their list of concerns. 

Replies to the post mostly stressed that the answer depends on local circumstances. One commenter told the homeowner, "Agree that you should not work or be near your HPWH — you'll hear it (it'll sound like a fridge) and feel the cool air."

Cheap gas prices in the state came up repeatedly. As one commenter put it, "With cheap natural gas in Michigan (I think it's cheap?) you probably won't save money with the water heater." Overall, the discussion pointed to utility rates, climate, and installation location as major payback factors.

More background

Homeowners in similar climates then added their own examples. One commenter at the same latitude as Chicago said, "TOU rates — 6 cents at night. We save money over gas. I schedule it to 140 at night and coast during the day. Works great."

A commenter in metro Detroit shared a more detailed data point, saying a 50-gallon, 120-volt Rheem installed at the end of 2024 has been using about 43 kilowatt-hours per month, or around $6.81, for a two-person household. That same person said the main drawbacks were slower winter recovery and cooling of the surrounding room by about 1 to 3 degrees.

Other responses focused on tradeoffs besides monthly energy use. One commenter said choosing gas left them spending heavily on a basement dehumidifier and worrying about venting.

What can be done?

The practical advice focused on checking the specifics before deciding. Commenters said a time-of-use electricity plan can change the economics substantially if overnight power is much cheaper, and they recommended hearing a unit in person before buying if it would be placed near a desk or bedroom.

The homeowner said the gas model they wanted could still operate during an outage because it uses a thermopile, although commenters noted that many newer gas water heaters still need electricity for a damper or blower. They also said tank size, winter inlet water temperature, and whether the heater is installed in a basement or garage can all influence the result.

For households that still want to explore the category, Cala offers customizable smart heat pump water heaters that can help homeowners lower energy bills by heating water only when needed. That kind of scheduling could be especially relevant for homes on time-of-use plans, where commenters said overnight heating made the economics look better. For shoppers trying to make the numbers work in a cold climate, Cala is one example of a model built around that approach.

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