Split-System Heat-Pump Water Heaters

A newer type of water heater is starting to show up on the market: split-system heat-pump water heaters. Regular heat-pump water heaters pull heat from the air to warm water in a tank, using far less electricity than a standard electric water heater, but they're bulky, noisy, and cool down the room they're in. Split systems fix that by putting the compressor and fan outside, similar to a ductless minisplit heating system, while keeping just the storage tank indoors. That means less noise inside, no cold spot in your utility room, and an indoor unit that fits in tighter spaces.

Three models are now available. A.O. Smith's Voltex X ($6,500, 80 gallons) moves water rather than refrigerant between the outdoor and indoor units, so a plumber can install it without special refrigerant certification; it can heat water up to 160°F and works in temperatures down to -25°F. The Eco-Logical OMNI ($4,500, 80 gallons) is the cheapest option but uses refrigerant lines, which a plumber can connect if a short precharged line works, though longer custom runs need a licensed HVAC technician. The SANCO₂ ($7,000, 83 gallons), from Sanden, was the first of these systems sold in North America and has a loyal following among efficiency-minded homeowners.

These systems cost more to install than a standard heat-pump water heater because they need outdoor unit placement, wall penetrations, and sometimes freeze protection or distance limits between the two parts. Tax credits and utility rebates can help offset that cost, and it's worth checking what's available in your state.