Rheem Heat Pump Water Heater

I didn't know these existed, traditional water heaters work like a toaster, they have an electric heating element - essentially a resistor that turns electricity into heat. But this unit works on the same principle as your refrigerator but in reverse. In your refrigerator, the system takes the heat inside the unit and dumps it out into the room and in the process cools your milk.

In this Hot water heater, it takes the heat in the room and dumps it into the water. It is twice as efficient as a standard hot water heater. They claim that will save about $286 per year on your electric bill. The problem as I see it is that the unit costs $1500 not including tax and installation. It is eligible for a 30% tax credit (so you'll save $500). I believe that makes it 3.6 years to payback its cost not counting installation costs.

Since these have very similar 'guts' to a refrigerator, I would expect it to last just as long. I think when our water heater dies, we'll replace it with one of these.