Heat Pump Water Heaters

In Australia, HPWHs make up around 3 per cent of water heaters in use. At the time of the 2012 product profile there were approximately 18 brands and about 80 separate models of HPWH on the market in Australia, and 9 brands and 25 models in New Zealand.

What is a Heat Pump Water Heater?

Heat pump water heaters absorb warmth from the air and transfer it to heat water. Hence they are also referred to as ‘air-source heat pumps’. They operate on electricity but are roughly three times more efficient than a conventional electric water heater. When used in the right environment they save energy, save money and reduce greenhouse gas emissions.

How does it work?

A heat pump works on the same principle as a refrigerator, but instead of pumping heat out of the fridge to keep it cool, they pump heat into the water. Electricity is used to pump a refrigerant through the system. The refrigerant transfers the heat absorbed through the air to the water in the tank.

Diagram 1. Workings of a heat pump


A diagram explaining how a water heater works.

Heat pumps work through the use of a refrigerant that evaporates at low temperatures.

There are several steps in the process:

  • A liquid refrigerant passes through an evaporator where it picks up heat from the air and becomes a gas.
  • The gas refrigerant is compressed in an electric compressor. Compressing the gas causes its temperature to increase so that it becomes hotter than the water in the tank.
  • The hot gas flows into a condenser, where it passes its heat to the water and turns back into a liquid.
  • The liquid refrigerant then flows into an expansion valve where its pressure is reduced, allowing it to cool and enter the evaporator to repeat the cycle.

A heat pump uses electricity to drive the compressor and the fan instead, unlike a traditional electric resistance water heater that uses electricity to directly heat the water. The heat pump is able to transfer a much greater amount of heat energy from the surrounding air to the water, which makes it highly efficient. The amount of heat that is able to be transferred from the air to water depends on the ambient temperature.

While the outside temperature is higher than the cold refrigerant, the heat pump will absorb heat and move it to the water. The warmer the outside air, the easier it is for the heat pump to provide hot water. As the outside temperature decreases, less heat can transferred, which is why heat pumps don’t work as well in places where temperatures are low.

In order for the evaporator to allow heat to be absorbed continuously, there needs to be a constant supply of fresh air. A fan is used to assist air flow and remove the cooled air.

Heat pumps are available in two configurations; integrated/compact systems, and split systems.

  • Integrated/compact systems: the compressor and the storage tank are a single unit.
  • Split systems: the tank and the compressor are separate, like a split system air conditioner.

Regulation for Heat Pump Water Heaters

There are no regulations that require the energy efficiency of HPWHs sold in Australia and New Zealand to be tested to a common standard, to carry labels indicating their energy efficiency or other key aspects of performance (e.g. noise), or to meet any minimum prescribed levels of energy efficiency or performance. These issues are now under investigation.

A product profile was produced in 2012 that described the market as well as explored options to introduce energy efficiency performance requirements. This was further explored with the release of a consultation Regulatory Impact Statement (RIS) in 2013. The consultation RIS provided further market and technical information about HPWHs in Australia and New Zealand. It explored a number of options including mandatory energy rating labelling and establishing minimum energy performance standards. The presentation given at stakeholder consultation meetings in Australia and New Zealand (August 2013) summarises some key issues in the consultation Regulatory Impact Statement.

At a glance...



Energy Rating Label


New Zealand

Heat Pump Water Heaters





What are we working on?

Following a review of the program, E3 is proposing to refocus its work in a number of appliance and product categories.  Final decisions on the E3 work program will be made by Ministers in 2016. 

At this stage, two technical projects relating to hot water systems energy performance will be completed as these will be of broader interest and value to the hot water appliance sector.

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Useful Resources

Visit the Australian Government's energy.gov.au website for useful information like: