Report details heat pump water heater market’s mixed year

A new report analyzed the 2025 heat pump water heater market, summing it up with a quote from Charles Dickens: “It was the best of times, it was the worst of times.”

What’s happening: The nonprofit New Buildings Institute prepared the report — the “2025 State of the Heat Pump Water Heater Market Report” — on behalf of the Advanced Water Heating Initiative (AWHI). 

• Five new residential manufacturers brought heat pump water heaters (HPWHs) to market in 2025, it notes, and the industry saw notable technological advancements.
• However, Biden-era federal tax credits that helped consumers afford HPWHs were eliminated, regulators weakened policies that promoted HPWHs, and the federal government froze funding for clean technology research, it adds. 

Go deeper: The report details innovations, including top venting, improved repairability, and predictive controls, with split HPWHs as a key development.

• “Eco2 Systems has been selling their SANCO2 split heat pump water heaters in the U.S. for over a decade, but in 2025, more manufacturers came to market with a variety of tank sizes to try to meet challenging replacement scenarios such as multifamily buildings and manufactured housing,” the report says. 
• Meanwhile, the first HPWH with flexible voltage came to market: The GE Geospring. “This water heater can be plugged into a standard 120-volt outlet and later can be converted to 240-volt power if a household decides that they want to use the included electric resistance elements for faster recovery during high usage times,” it adds. 
• “Many believe that this flexible voltage HPWH will make gas replacements, which have been a challenge, significantly easier.”

Yes, but: The loss of federal tax credits hit the market. For example, Clayton Homes, which had begun installing HPWHs as a standard option in new homes, stopped doing so when the credit was cut. 

The big picture: The federal government also made cuts to the Energy Star program, which made it difficult to track HPWH sales; however, AWHI estimated “12 [percent] HPWH average growth in 2024, which would translate to a sales number of approximately 214,000 nationally.”

• Google search trends and other data suggest that “HPWHs are becoming more familiar to the general public, but we still have a long way to go,” the report says. 

What we’re watching: Efficiency standards set in 2024 will effectively require electric tank water heaters over 35 gallons to be HPWHs starting in 2029, and “likely drive HPWH sales into the millions (up from 190,000 in 2023),” per the report — but the current administration has been rolling back such standards. 

• Some utilities across the country continue to offer rebates and incentives to encourage the adoption of heat pump water heaters — a tracker is available here.
• This year, AWHI will lead a field study on flexible voltage HPWHs.