A standard electric immersion heater converts electricity to heat one-for-one. A heat pump moves 3-4 times more heat than the electricity it uses. Here's what that means for your bill.
Written by the March Technology Technical Team · Last Updated: July 2026 · 5 min read
A standard electric immersion water heater generates heat directly from electricity — for every unit of electricity you pay for, you get roughly one unit of heat. A heat pump instead moves existing heat from the outdoor air into your water, using electricity only to run the compressor, which typically delivers 3-4 units of heat for every unit of electricity consumed.
This efficiency gap is why most households and businesses that switch see a meaningful drop in their hot water electricity costs. The trade-off is a higher upfront cost than a basic electric geyser, so the real question is payback period — for most households, that's around 2-4 years, after which the ongoing savings are essentially free. See our installation cost guide for current pricing.
Efficiency gain: 3-4x more efficient than direct electric heating
Upfront cost: Higher than a basic electric geyser
Typical payback: 2-4 years for average households
Best fit: Any household or business heating water daily
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Typically 3-4 times more efficient, since it moves existing heat from the air rather than generating it directly from electricity.
For most households and businesses with regular daily hot water use, yes — the running-cost savings typically repay the cost difference within 2-4 years.
Most residential installations pay back within 2-4 years through lower electricity bills, though this varies with household size and usage patterns.
In most cases yes, connecting into your existing hot water distribution pipework, though the outdoor unit does need a suitable, ventilated location.