Heat pump water heaters, unlike conventional water heaters that use either gas burners (and sometimes other fuels) or electric resistance heating coils to heat the water, the heat pump water heater takes heat from the surrounding air and transfers it to the water in the tank.
This is the same principle as refrigerators, freezers and room air conditioners but in reverse. Much less energy is required to "move" the heat than to actually heat the water unless the surrounding air temperature is very low.
Most heat pump water heaters have back up heating elements to heat the water during very low temperature periods.
Heat pump water heaters come either self-contained with a storage tank, or as an add on unit using a conventional water heater for storage.
Typical heat pump water heaters consume one half to one third as much electricity as a typical electric water heater.
Heat pump water heaters heat water more slowly than electric or gas water heaters, typically about 15 gallons per hour.
Heat pump water heaters are more expensive that conventional water heaters, generally $600 to $800 installed. The energy savings can be as much as 50% thus can have a relatively fast payback period.