How To Heat Your Water Without Heating The Planet

(Photo: iStock)

Canadians use a lot of hot water. Between bathing, showering, washing dishes and doing laundry, we each use an average of 75 litres of hot water every day. And it takes a lot of energy to heat that water. Water heaters account for nearly 20 percent of the energy used in the average Canadian home. In fact, water heating is second only to space heating when it comes to energy use, according to Dianna Miller, chief of the Energy Star program—a certification for energy efficient products and buildings run by Natural Resources Canada (NRCan). 

Heating all that water may get you and your things clean, but it can leave the planet with dirty emissions. Here’s everything you need to know about how to get hot water without heating the planet.

How do water heaters contribute to climate change?

Many Canadians burn fossil fuels to heat their water. In 2021, 48.6 percent of the water heaters used in Canada were fueled by natural gas. And every time a gas-fired water heater runs, it produces greenhouse gas (GHG) emissions. In Canada, water heating comprises 20 percent of residential GHG emissions.

An electric water heater is the most low-carbon way to heat your water—if you live in a province that uses clean electricity. (More than 80 percent of Canada’s electricity grid is low-carbon.) 

“In a hydro province, for example, like a province where electricity is generated most by hydroelectric dams,” says Miller, “an electric water heater isn't considered to be contributing to GHG emissions.”

The only problem is, conventional electric water heaters use a lot of electricity, making them more expensive to operate than gas hot water heaters. So until recently, we’ve had to choose between heating water with cheap and dirty fossil fuels or clean and expensive electricity.

That’s where heat pump water heaters come in.

What are heat pump water heaters?

Unlike standard hot water heaters, which use electric elements to heat water directly, heat pump water heaters don’t actually heat water—they capture heat from the surrounding air and transfer it to a water tank. Think of it like a refrigerator in reverse.

Because less energy is needed to move heat than to create it, heat pump water heaters are up to four times more efficient than conventional electric water heaters and use up to 70 percent less energy. And because they use less electricity, they put less strain on the grid and cost less to run. If you’re the average household that uses 75 litres of hot water a year, and your electricity rate is $0.12 per kWh, you could save more than $500 on your energy bill annually.

Heat pump water heaters are also referred to as “hybrid electric water heaters” because they can work using heat pump technology, electricity, or a combination of the two. They cost from about $1,500 for a 50-gallon model to $3500 for an 80-gallon model. Installation usually ranges from $500 to $1,500 depending on your space and how complex the installation is. (Gas water heaters cost anywhere from $650 to $1,800 plus installation.) If that gives you sticker shock, remember that such an efficient system will pay for itself in as little as three years. 

Are there other low-carbon hot water heaters?

If you are decarbonizing your home, you may be curious about other low or zero-carbon ways to heat your water. While heat pump water heaters are the most efficient—and the only type covered by most loan and grant programs—there are some other great options.

Tankless water heaters

As the name suggests, these don’t store hot water in a tank. Instead, water flows through a heat exchanger, where it’s heated instantly by either a natural gas burner or an electric element. Also called in-demand water heaters, these deliver a constant supply of hot water as you need it. They come in different sizes and flow rates, measured in gallons per minute (GPM). The GPM dictates how much hot water they can deliver at once. If you don’t get a big enough unit, you may run into issues if someone wants to take a shower while the dishwasher is running.

Because there is no storage tank, these systems have a longer lifespan than traditional models, as there’s less rust or corrosion. They’re also more efficient, as they don’t waste energy keeping a tank of water hot. And they have a smaller physical footprint than traditional water tanks.

If you want to shrink your environmental footprint, ignore the gas-powered variety. 

Electric models are low-carbon (if powered by clean electricity), and they don’t need to be vented. Because of this, they can go where gas units cannot go. And they are less expensive to buy. However, they have to be hardwired to the electrical panel, and larger units might require your home to get an electrical upgrade. 

The cost for an electric tankless water heater is usually between $500 and $1,000 depending on the GPM and efficiency of the unit.

Solar water heaters

Solar water heaters use the sun’s energy to heat water. There are two system types: passive and active. Passive systems use only the sun and gravity to heat water. These are the simplest and least expensive, but they are only reliable in warm climates. In Canada you need an active system: one that uses electricity to pass water through a heat exchanger and into your home. 

An active solar water heater is made up of solar collectors, a heat exchanger and a hot water tank. The collectors, mounted to a roof or south-facing wall, absorb the sun’s radiation through a heat transfer fluid. The radiation is converted to thermal energy by pumping the fluid through the heat exchanger, which then transfers the heat to the water heater.

Solar water heaters are low carbon and incredibly efficient, using 60 percent less energy than a standard system. Here in Canada, they can provide up to 60 percent of your hot water. So they’re typically used in tandem with another system. Even if they’re not the sole source of heat, they can help you save energy by preheating water before it enters the storage tank—so less energy is needed to heat the water to the temperature you need. According to Builders Ontario, a solar hot water system costs between $4,000 and $6,000, including installation.

Funding for heat pump water heaters

Before you purchase a heat pump water heater or start any work, find out if you are eligible for rebates or loans in your jurisdiction. Here are some programs that are currently available.

Canada Greener Homes Loan (Canada-wide)

Currently available through NRCan, the Canada Greener Homes Loan Program provides interest-free financing of up to $40,000 for eligible retrofits. (The loan program is different from the Canada Greener Homes Grant Program, which has been discontinued.) Once approved, a portion of the loan can be delivered upfront to help pay for any deposits required by your contractor. The balance of the loan will be delivered after the retrofits are completed and verified through a post-retrofit evaluation. Make sure you submit your application before starting any work; otherwise, your project will be ineligible.

British Columbia

Home Renovation Rebate Program 

BC Hydro offers rebates of up to $1000 for heat pump water heaters through its Home Renovation Rebate Program. Your home must be 12 months or older, primarily heated by electricity, and connected to a current residential utility account with BC Hydro. The heat pump water heater must be new, in good working order, and installed by a licensed contractor with a GST number and a valid B.C. business license. The model also has to be listed on the Residential HPWH Qualified Products List. 

CleanBC Better Homes Energy Savings Program

Formerly called the Income Qualified Program, the CleanBC Better Homes Energy Savings Program provides rebates of up to $44,900 for energy-saving home upgrades. Heat pump water heaters qualify for up to $3500 in rebates. Your heat pump water heater must be installed by a program registered contractor who is approved to install home upgrades.

Fortis BC Home Renovation Rebate Program 

If you have a FortisBC account or a municipal electricity account with Grand Forks, Penticton, Summerland or Nelson Hydro, you may be eligible for a rebate of up to $1000 for a new heat pump water heater. Your current water heater must be a standard electric storage tank model. 

Alberta

Clean Energy Improvement Program

Available in some municipalities in Alberta, the Clean Energy Improvement Program offers low-interest financing for a range of clean energy upgrades, including water heating. Since the project is tied to the home, the loan is paid back over time on your property tax bill. If you sell your property, the new owner will assume the repayment.

Saskatchewan

As of July 2024, there are no rebates or incentives for heat pumps in Saskatchewan. The Residential Equipment Replacement Rebate Program offered by SaskEnergy is only for water heaters that use natural gas.

Manitoba 

Home Energy Efficiency Loan

Administered by Manitoba Hydro, the Manitoba Home Energy Efficiency Loan program offers $7500 in loans (6.20% (O.A.C.), which is repaid with your energy bill. While the program doesn’t specify coverage for heat pump water heaters, it does cover residential solar water heating systems. The system must use solar hot water collectors that meet CSA Standard F379 or equivalent.

Ontario

Enbridge Home Efficiency Rebate

Available for residents of Ontario, the Home Efficiency Rebate program provides up to $3000 in rebates for heat pump water heaters. Before renovating or installing any upgrades, you must complete a home energy assessment with an Enbridge-approved home energy advisor. You will also be reimbursed $600 towards the energy audit.

Home Renovation Savings Program

Announced in January, the Home Renovation Savings Program offers rebates for energy-efficient upgrades like insulation, heat pumps, smart thermostats, solar panels and more. The program provides up to $500 for heat pump water heaters.

Quebec

Chauffez vert 

Run by the Quebec government, the Chauffez vert program provides rebates of $200 - $250 for switching from an oil or propane water heater with a system run by renewable energy.

New Brunswick

Total Home Energy Savings Program 

Run by NB Power, the Total Home Energy Savings Program offers up to $550 in rebates for heat pump water heaters. Units must be Energy Star certified and meet the program criteria to be eligible.

Nova Scotia

Efficiency Nova Scotia 

Efficiency Nova Scotia offers rebates of up to $400 for heat pump water heaters included on their list of qualifying models. Additional rebates are available for energy upgrades for low and moderate income Nova Scotians. Here’s the guide to see the full eligibility requirements.

Prince Edward Island

EfficiencyPEI Energy Efficient Equipment Rebates

EfficiencyPEI offers rebates for the installation of various efficiency upgrades. Depending on your income level, you may be eligible for a rebate between $1500 and $2750 for a solar thermal hot water heater, and between $1000 and $1800 for a heat pump water heater. An energy audit is not required. 

Residential Home Heating Loan Program

If you need help paying for the upfront costs of purchasing and installing a solar or heat pump water heater, the Residential Home Heating Loan Program offers loans of up to $30,00. This program covers100 percent of eligible invoiced costs for the purchase and installation of eligible energy efficient equipment upgrades by Network of Excellence contractors.

Newfoundland and Labrador

Newfoundland Power Financing 

Although there are impressive incentives for transitioning from oil to electric heat, there are no rebates available for heat pump water heaters at this time. Newfoundland Power does offer financing of up to $1425 for electric water heaters over a 12 to 36 month period.

Yukon

Government of Yukon Rebates

The Government of Yukon offers rebates for solar hot water heaters for 20 per cent of eligible material costs up to $1,200.

Nunavut

Nunavut Housing Corporation Home Renovation Program

The Home Renovation Program, run by the Nunavut Housing Corporation, offers funding for home renovations that include improvements in energy efficiency. You can apply for a loan of up to $100,000 that is forgivable over 10 years, or a grant of 50 per cent of eligible costs, for up to $20,000. See the program guide for details.

How do I find the right heat pump water heater?

Since heat pump water heaters are relatively new to Canada, they’re not as widely advertised or promoted as conventional systems. The HVAC industry is still warming to this technology, so you won’t always get the answers you need by calling the nearest company. It’s best to do your research ahead of time.

Ask an energy advisor for recommendations

A certified energy advisor will visit your home and run various tests to determine how airtight your home is, pinpoint air leakages, and recommend ways to make your home more energy efficient. 

Energy advisors are great resources. They undergo standardized training and are familiar with the latest clean technology. By inspecting your home and consulting with you, they know what your current equipment is and have a good sense of your household’s energy and water needs. They will likely be able to recommend certain systems, and they can also point you to a good supplier or installer in your area.

Look for the Energy Star label

“My first stop, when I'm buying anything, is to go to the Energy Star Canada web portal,” says Miller, “because they connect you to all of the certified products in your area, and you know that they'll get certified with an Energy Star certification.”
Energy Star is trademarked by the United States Environmental Protection Agency, and in Canada the program is administered and promoted by NRCAN. Any product with Energy Star certification has undergone rigorous testing by an independent third party to ensure it meets strict efficiency standards. And certified products meet other relevant standards or legislation, too. You can use the Energy Star product finder tool to search for and compare heat pump water heaters.

Look for government-recommended products

If you’re interested in a particular model, check the searchable product list for the Canada Greener Homes Initiative. Although the Greener Homes Grant is now closed, the list of recommended heat pump water heaters (that would have been eligible for a rebate) continues to be updated quarterly, and only includes models that meet strict criteria. You can search for specific products or download the complete list. If you’re getting quotes from contractors, ask for them to include the Energy Star “unique ID number,” brand, model name and model number so you can check the list.

Check the Uniform Energy Factor

“When comparing heat pump water heater models, compare Uniform Energy Factors (UEF),” says Patricia Kirchner, product implementation manager at water heater manufacturer A.O. Smith Enterprises Ltd. “The UEF is an indicator of the energy efficiency of a water heater, the higher the UEF, the more efficient the water heater, the better.”

If you’re narrowing your search to Energy Star models, or models covered by the Canada Greener Homes Grant, you’re already on the right track; these are within the range of 2.3 to 4.

Get the right size

No matter what type of water heater you buy, you’ll want it to provide enough hot water for your household’s needs. Take into account the number of people in your home, and how often you shower, wash dishes and do laundry. Use your current water heater as a benchmark—is it up to snuff?

“Take special note of your growing family,” says Shelly Vallée-Ewing, co-founder of Women in HVACR Canada. “ If your kids are going to be teenagers in the next few years, you should plan for their water usage.”

Give it space

“Heat pump models are taller than standard electric units, and they need room to ‘breathe,’ says Kirchner. “So the height and size of the room in which the heater is installed needs to be considered.”

Make sure you or your contractor measures the space, and check the specifications for your model—different units have different spacing requirements. 

Because heat pump water heaters pull heat from the air around them, they perform better in a heated space. They also give off cool air, so they should be installed away from your main living space. (Ours is tucked away in the furnace room, beside the laundry room.) Better yet, have it vent outdoors so the cold air and humidity don’t affect you. 

Check your outlets

According to ENERGY STAR, most heat pump water heaters require a dedicated 240-volt outlet, the same used by conventional electric water heaters. If you are replacing a gas water heater and don’t have a 240-volt outlet, you will either need to upgrade your panel or find a model that can utilize a 120-volt outlet.

Plan ahead

Don’t wait until your hot water heater dies before you get a new one. The last thing you need is to be mid-shower when your hot water heater conks out. If that happens, you’ll probably be in such a hurry to replace it that you’ll default to the nearest installer—who may or may not be familiar with heat pump water heaters. So if you want to decarbonize your home, start planning in advance.

Research the different models available, know which one you’re interested in, and find out who installs them in your area. Know when your current model will reach its end of life and budget for its replacement. It’s a worthwhile investment and one that will help you go a long way towards shrinking your carbon footprint.

“If all Canadian homes used heat pump water heating, we could reduce our greenhouse gas emissions by more than three megatonnes,” says Miller, “The equivalent to taking about one million cars off the road every year.”

Read more ways to get your home off natural gas for heating and cooking.

Originally published in 2022; updated in 2023 and 2025.

More ways to fight the climate crisis

• Talk to your friends, neighbours, relatives and colleagues about climate change
• Write your politicians
• Support a green charity
• Electrify your home heating
• Stop flying
• Decarbonize your hot water heating
• Canada's big banks fund fossil fuels. Switch to a credit union
• Cut back on meat and dairy
• Get rid of natural gas in your home
• Ditch your gas stove for an induction stove
• Garden with native plants
• Cut back on food waste
• Buy secondhand