Heat pump water heaters, like heat pump furnaces, use heat transferred from a cooler area to a warmer one to heat the water. Most heat pump water heaters are hybrid systems that also contain resistance coils for high hot water demands.
Heat pumps use the same principles that work for refrigeration and air conditioning. A person standing by an air conditioner that is in operation is able to feel the heat it is pumping from the home. Heat pump furnaces transfer that heat to a heating coil, and the air handler circulates it through the house. In the water heater, the exchange coils heat the water.
While heat pump water heaters are efficient, they have a longer recovery time than standard electric water heaters. Manufacturers include the same type of resistance elements in these units as they do in the standard ones. When the demand for hot water is high, as happens when several residents take showers in a row, the less efficient resistance elements reduce the tank's recovery time.
Heat pump water heaters automatically switch between modes, depending on demand. Most units also allow users to override the automatic setting with either an economy setting that uses only the heat pump or a high-demand setting that bypasses it to use the resistance heating elements.