Maximizing ROI with a Hot Water Heat Pump
The single best thing for many Kiwi households to do is to install a hot water heat pump.
Why?
A 300 litre hot water cylinder requires 15kWhrs of energy to heat it.
Assuming electricity is 25c per kWhr, the cost per day is $4 (to make things easy).
A heat pump will save 10 kWhrs a day (more in summer, less in winter), hence each cylinder of hot water will represent a saving of $2.50.
For a complete year, that's over $900.
Many families will use a cylinder of hot water each day.
Another way of looking at it.
The actual savings will depend on the number of people in a house, and obviously, how much hot water they use individually.
Our calculations show possible savings of between $200 to $250 per person per year.
Hence, a family of five could save over $1000 a year, similar to the figures above.
The average annual operating costs for water heating in a New Zealand home—representing the energy bills after installation—vary significantly across different technologies. Heat pump water heaters, particularly those combined with rooftop solar, offer the lowest ongoing energy bills, whereas fossil fuel options like gas and LPG are the most expensive to run.
According to Rewiring Aotearoa’s Water Heating Report, here is the detailed annual cost breakdown for water heating:
Heat pump with solar: $67/year
Heat pump (grid only): $183/year
Resistive electric with solar: $236/year
Resistive electric (with ripple control): $477/year
Gas: $529/year
LPG: $709/year
It means that if you are using LPG, shifting to a heat pump hot water without solar, you still can save around 75% on your hot water.
Another way...
If a hot water heat pump costs $4000 to install, the rate of return will be, say, 5% per person per year.
(5% of $4000 being $200).
Hence, 4 people will have a tax-free rate of return (also completely risk-free) of 20%.
Teenagers will simply result in more savings.
Larger users of hot water
Interesting things happen with motels, hotels and schools, etc. One recent project, after fitting a heat pump to a 750 litre cylinder, has produced savings of hundreds of dollars a month...easy money!
Further savings
Further savings can be made when a hot water heat pump is combined with solar PV. But note that a solar PV system will not provide the same rate of return as a heat pump.