Q: On our last two bathroom remodels, clients wanted to upgrade to heat pump water heaters because the tax rebates on them are so good right now. But we have concerns about these units cooling the basement in winter. Are heat pump water heaters viable for cold climates and, if so, how is the installation typically handled to avoid adding to a home’s heating load?
A: Connor Dillon, quality manager at the Building Science Institute, a firm offering training and quality control to home energy raters, responds: Heat pump water heaters (HPWHs) take heat from the surrounding air and pull it over coils to heat the water inside the tank. A side effect of their operation is that they both cool and dehumidify the air around them. That’s wonderful for homeowners in warmer climate zones, especially hot, humid zones, where anything you can do to offset cooling bills and lower indoor humidity is great, but it causes concerns about installing the units in climate zones 5 and above. Some people have concerns about whether an HPWH will even work as intended in a cold climate. And some homeowners who are already dealing with cold floors over a basement during the winter worry about the unit making their basement (and floors) even colder.
The first concern is unfounded: An HPWH works even in cold climates. The “heat pump” mode will typically operate between 35°F and 120°F. Below 35°F, the hybrid nature of the water heater kicks in to heat the water using electric resistance rather than relying on the heat pump. Most manufacturers recommend setting the unit to the hybrid mode as a default setting; it will automatically switch from heat pump to electric heating depending on input to the sensors.
As to the issue of cooling the basement, we see this handled in a variety of ways, but not all of them work. The most common approach is to build a sealed, insulated utility closet to house the unit. While this might make sense in theory, there are two problems with it in practice: First, these water heaters need a minimum volume of air to operate correctly. Requirements vary by manufacturer and model, but in the case of one model, the smallest volume it can operate in is 450 cubic feet—a 10-foot-by-6-foot-by-7-foot-6-inch room. Most other manufacturers require almost twice that—700 cubic feet or more. The second problem is that sealing the closet locks the cooler air around the unit, dropping the temperature near it and triggering the electric resistance mode. This reduces the unit’s efficiency, defeating the purpose of installing a more efficient appliance.

It is possible to make this work by installing outlet and/or inlet ducting to the unit (this is model dependent). HPWH manufacturers often offer adapters, or “duct kits,” built specifically for this purpose. This adds an extra cost to buying the water heater, but the kit and requisite ductwork allows you to install the unit in a basement or crawlspace, or in a small, sealed closet with no minimum space requirements.
It is possible to put the HPWH in an insulated closet, using louvered doors with the size of the louver area based on the space requirements of the specific model. The louvered door will provide enough air for the unit to operate efficiently. In one example we saw, a full-louvered door lowered the space requirement from 450 cubic feet to 84 cubic feet—an 81% reduction. However this option will not prevent the unit from cooling the space outside the closet.