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Compare Hybrid Water Heaters with Storage Tank and Tankless Water Heaters.

A hybrid water heater combines tank type and tankless technology in one unit. A hybrid unit offers the best of both worlds: continuous hot water capabilities through high efficiency and the ability for homeowners to use multiple hot water-utilizing appliances simultaneously. Hybrid units offer optimum performance as they combine the positive attributes of both tank type and tankless water heaters.
Benefits: Continuous hot water; Ability to utilize multiple hot water usage appliances simultaneously; Highest energy efficient water heater on the market.
Limitations: Similar footprint as a tank type; Product cost is higher than most tank units.

Pros:
Electric hybrid heat pump units have the lowest operating cost compared to any of the electric hot water heaters on the market, especially when they are used in warm climate. On top of that, they also qualify for rebates and tax incentives.
Cons:
The heater needs almost 1,000 cu ft of air surrounding it; hence you cannot install it in a closet.
Just like a heat pump air conditioner, hybrid electric heat pump water heater will need cleaning of air filter regularly, so as to maintain the efficiency of the unit.
The heat pump is taller (and wider in some cases) than your existing electric heater. Make sure the unit will fit.
Some heaters are “side-piped” to eliminate the possibility of heat pump damage caused by leaking pipes. On those models, you'll have to reconfigure the water pipes.
Can you install it yourself?
If you can reconfigure the water pipes and connect the wiring, you can install this yourself. But pay close attention: These units are gigantic and heavy (about 200 lbs. empty). Get some help!
Is this unit right for you?
If you live in a warmer climate and heat water with electricity, an electric hybrid heat pump will save you the most money over a conventional heater. In colder climates, it'll still save money during the summer when you're not paying to heat the surrounding air. The higher your electric rates and the warmer the year-round climate, the faster the payback. In many cases, the payback can be as little as four years.


Hybrid Tankless Tank
Fuel natural gas natural gas natural gas
Material cast iron copper cast iron
Efficiency average 86% average 80% average 60%
Nitrous Oxide emissions (PPM) 5–30 30–40 60–90
Carbon Monoxide emissions (PPM) 40–45 190–200 200–250
Exhaust temp. (°F) 128–155 390–410 480–500