Although heat-pump water heaters have been around for 25 years, they’ve caught interest in the past few years as energy prices have spiked and as a number of manufacturers have introduced integrated appliances (as opposed to the retrofit units that made up the market previously). Heat-pump water heaters create hot water from warm indoor air and are fueled by either electricity or natural gas. The heat pump warms water in a storage tank by compressing and expanding refrigerant in a closed loop. As by-products, the heat-pump water heater generates cool, dry air and condensate. While heat-pump water heaters can be expensive, the cost can be minimized through federal tax credits and reduced energy consumption.
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