Heat-pump water heaters just keep getting better

Heat-pump water heaters use electricity to move heat into a tank rather than generating it directly, which makes them about three times more efficient than gas or standard electric models. They can cut utility bills, lower emissions, and even help dry out damp basements the way a dehumidifier would. But high upfront cost has kept most households from choosing them: a 50-gallon heat-pump model can list for around $1,700, versus about $800 for a standard electric-resistance tank, and installation can add another $1,000 to $4,000 depending on your home's wiring and local labor costs. The federal tax credit that used to knock up to $2,000 off the price was eliminated last year, though some states, cities, and utilities still offer rebates ranging from $150 to as much as $4,000, so it's worth checking what's available where you live.

Manufacturers are working to close the cost and hassle gap. Rheem, A.O. Smith, and GE now sell versions that plug into a normal 120-volt outlet instead of the usual 240-volt one, which can spare smaller households an expensive electrical panel upgrade. For homes without much space for a tank, "split system" models put the heat-pump unit outdoors and the tank inside. And several companies, including startups Reservoir and Cala Systems, are building in smart controls that automatically run the unit when power is cheapest and learn a household's hot-water habits, cutting reliance on the less-efficient backup heating element. Reservoir also bundles installation with its own crews, which can simplify the process for homeowners who don't want to coordinate separate plumbers and electricians.