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GE Will Drop Heat-Pump Water Heaters

After a 2012 launch, sales prove disappointing despite efficiencies much higher than conventional electric-resistance water heaters

Posted on Sep 14 2016 by Scott Gibson

Improved energy efficiency, utility incentives, and a federal tax credit aren't going to be enough to save GE's GeoSpring heat-pump water heaterAn appliance that uses an air-source heat pump to heat domestic hot water. Most heat-pump water heaters include an insulated tank equipped with an electric resistance element to provide backup heat whenever hot water demand exceeds the capacity of the heat pump. Since heat-pump water heaters extract heat from the air, they lower the temperature and humidity of the room in which they are installed. .

According to published reports, GE Appliances will stop manufacturing the water heaters at the end of the year because of low sales, just four years after the energy-efficient appliances were introduced.

Editor's note: Since this story was originally published, there has been an important development, reported here: Bradford White Buys GeoSpring Rights and Equipment.

WDRB.com reported that the suspension of operations will affect about 300 hourly workers at the Louisville, Kentucky, Appliance Park. Kim Freeman, a spokeswoman, said the workers would go to other jobs in the factory.

The hybrid appliances use the same technology as air-source heat pumps. A closed loop of refrigerant that is compressed into a liquid and returned to a gaseous state captures heat in the air and transfers the heat to water stored in an insulated tank. Heat-pump water heaters operate at an annual coefficient of performance (COPEnergy-efficiency measurement of heating, cooling, and refrigeration appliances. COP is the ratio of useful energy output (heating or cooling) to the amount of energy put in, e.g., a heat pump with a COP of 10 puts out 10 times more energy than it uses. A higher COP indicates a more efficient device . COP is equal to the energy efficiency ratio (EER) divided by 3.415. ) twice that of a conventional electric-resistance water heater, according to a report from the National Renewable Energy Laboratory.

But the water heaters cost two or three times as much as a conventional electric-resistance water heater, Freeman said. GeoSpring water heaters are made in two sizes, 50-gallon and 80-gallon. Lowe's lists the 50-gallon model for $999 and the 80-gallon unit at $1,599, while a Whirlpool 50-gallon electric-resistance water heater sells for $399.

Hundreds of dollars in annual savings

At the GeoSpring website, the manufacturer said the units could save as much as $330 in water heating costs annually for a family of four and up to $490 annually for a family of five to six people.

Despite those savings, as well as a variety of incentives offered by state efficiency programs and the federal government, heat-pump water heaters apparently aren't selling in very high numbers. Freeman wouldn't say how many GeoSpring heaters the company produced, but she said heat-pump water heaters account for about 2% of the market and add up to about 60,000 units per year.

"We lose millions of dollars on GeoSpring every year," Freeman told WDRB.

Heat-pump water heaters are made by a number of companies, including Rheem, Stiebel Eltron, A.O. Smith and Reliance. AirGenerate, which manufactured the AirTap heat-pump water heaters, reportedly went out of business.


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Image Credits:

  1. Oak Ridge National Laboratory / CC BY-NC-ND 2.0 / Flickr

1.
Sep 14, 2016 8:03 AM ET

Short term vs. long term
by Steve Knapp CZ 3A Georgia

Human nature is to prefer an immediate benefit (such as lower cost) to a mid- or long-term benefit (such as lower total cost of ownership). The easiest way around this issue is government mandates or efficiency standards. Of course, GE seems to have some quality issues with the GeoSpring. Most consumers are going to research this type of high-cost item, and bad reviews are probably not helping sales.


2.
Sep 14, 2016 8:20 AM ET

The quality issues is probably responsible for the low sales #s.
by D Dorsett

In the information age bad news travels at internet speed, and online reviews never die. The abyssmal track record of the first generation GeoSpring dogged this product line, making it a tough sell for the new-improved versions at any EF efficiency.


3.
Sep 14, 2016 8:43 AM ET

Best heat pump water heaters?
by Adam W

Who is making the best heat pump water heaters these days?


4.
Sep 14, 2016 8:48 AM ET

Response to Adam W
by Martin Holladay

Adam,
I haven't done any side-by-side testing, and I don't really have any performance or maintenance data to share -- but I've heard good reports on the Stiebel Eltron units.


5.
Sep 14, 2016 9:04 AM ET

Quality
by stephen sheehy

I looked into a geospring and for the most part, quality improved a lot when GE moved manufacturing to the US.
I opted for a regular electric resistance heater because the HPWH was too noisy to put in our small, single level house.
Once you look at credits and rebates, the geospring is no more expensive.


6.
Sep 14, 2016 10:22 AM ET

Edited Sep 14, 2016 11:02 AM ET.

Marathon as an alternative
by Steve Knapp CZ 3A Georgia

I considered a Stiebel HPWH but by the end of my build process did not have a lot of faith that my builder or his plumbing sub had enough knowledge or interest to do a proper installation. I decided to install a 105 gallon Rheem Marathon electric instead. It was way more capacity than my two-person household needed, but I wanted a tank that was large enough for future occupants. The Energy Guide lists annual consumption at 4773 kWh (@ 12 cents per kWh). So far it has been a great appliance.

I double-checked the model number and found it is actually the 85 gallon unit. The standby hot water of 91 gallons threw me off since I expected it to be lower than the tanks total capacity.


7.
Sep 14, 2016 10:28 AM ET

Response to Steve Knapp
by Martin Holladay

Steve,
So if your family uses as much hot water as the EnergyGuide label assumes -- you may use less -- your operating cost will be $573 per year.

If a HPWH were twice as efficient, a HPWH would save you $286 per year. That level of savings is more realistic than numbers cited by GE (annual savings of $330 to $490).


8.
Sep 14, 2016 10:45 AM ET

Edited Sep 14, 2016 10:48 AM ET.

These things are duds
by Nate G

I don't expect these products to ever take off, for a number of reasons:
- Higher upfront purchase cost in most cases, even with rebates (most people don't live in Northeastern states that offer huge government and/or utility subsidies).
- Loud
- Physically larger; may not fit in the same place as the one it's replacing
- New, untested technology full of complicated electronics and refrigeration components; lower reliability and longevity than far simpler electric resistance tanks
- Lack of clear contractor serviceability; the plumber doesn't know HVAC or refrigeration and the HVAC guy doesn't know plumbing or water heaters
- Not user-serviceable at all
- Manufacturer may go out of business or pull the product, leaving you with no support
- Few savings when the home is already fairly hot-water-efficient; high efficiency may never pay for itself

I went through a very negative experience with one of these units myself. After lots of research and consumption of hype here, I bought an ATI AirTap heat pump water heater, only for the company to go out of business a few months later, apparently due to their flagship product's unreliability. I hadn't installed it yet and wound up selling it at a steep loss to someone to use as just a big water tank.

Its replacement is a Rheem Marathon unit which has been outstanding so far and was definitely the right decision. My household uses so little hot water (≈ 60 kWh/mo costing $7) that the energy and money savings of using the heat pump unit instead would have been trivially small and never paid for themselves when taking into account the greater cost and lower longevity of the equipment. People who are already highly committed to energy efficiency are probably the worst customers for these units since they will produce so little savings that going with a Rheem Marathon and making up the difference with a small amount of additional PV capacity probably makes far more more financial and practical sense.


9.
Sep 14, 2016 10:50 AM ET

Not Surprising
by Stephen E

Not surprising considering the audience for this appliance is limited to warmer climates, has higher initial cost and higher repair cost. Now if GE came up with a water heater that worked in zone 6 outside of the house at this same price then it might have had some teeth. As is this product was niche at best.

With the decade plus of depression in the US and the world continuing and about ot get worse the major companies have been cutting back on jobs and sticking to the higher ROI products. Doesn't look to be a change in outlook so this is going to be more of the norm going forward. Downsizing of houses and life style isn't limited to just people. It effects all parts of the economy.


10.
Sep 14, 2016 10:59 AM ET

Edited Sep 14, 2016 11:09 AM ET.

Response to Martin
by Steve Knapp CZ 3A Georgia

I just happened to receive my power bill today, and it shows a usage of 1543 kwh between 8/10 and 9/8 (with daytime temperatures in the 90s and the thermostat between 76 and 77). So my real-world usage is about 1/3 of the Energy Guide average, which is likely based on a family of four. (1500 kwh is pretty consistent consumption during the summer.)

To Nate's point, I don't have a way to measure how much of the 1500 kwHs is due to the Marathon, but it is probably not much. I will likely leave the mortal plane long before recouping the Marathon's higher upfront cost (compared to a more run of the mill water heater costing half to a third as much).


11.
Sep 14, 2016 11:10 AM ET

Edited Sep 14, 2016 11:12 AM ET.

A word about the Energy Star estimated consumption tag
by Nate G

Let me echo Steve's sentiments. For efficiency-minded families, the Energy Star usage figures for these units are patently absurd. My Marathon suggests a yearly usage of 4622 kWh, or 385 kWh a month, which is 50% higher than my entire household's total monthly electricity bill--including the water heater! Actual usage suggests closer to 50-80 kWh per month with two adults and two children, providing hot water for showers (1.25 GPM heads), baths, and a dishwasher (energy star). No hot water for washing.

(I am able to measure this because the Marathon replaced a gas unit, so nearly all of the increased electrical consumption can be traced to the new water heater)

This Energy Star "average family" must take 6 showers a day with 5 GPM heads, have an ancient non-Energy Star dishwasher going constantly, and wash clothes with hot water every day. 4622 kWh is a ridiculous figure that bears no resemblance to reality especially for this site's audience. The savings for a 200% efficiency HPWH at low usage levels is probably going to be $5 a month or less--squarely in the realm of the payback time exceeding the equipment lifespan.


12.
Sep 14, 2016 12:02 PM ET

Edited Sep 14, 2016 12:10 PM ET.

How many kWh for electric-resistance hot water?
by Martin Holladay

Steve,
You noted, "The Energy Guide [for the Marathon electric-resistance water heater] lists annual consumption at 4773 kWh. " I wrote, "you may use less."

According to monitoring data gathered by Marc Rosenbaum for a group of 8 households in Massachusetts using electric-resistance water heaters, the average annual electricity consumption per family for hot water was 3,051 kWh.

If these families pay 12 cents per kWh for electricity (I'm not sure what rate they pay), the annual cost for hot water is $366. A family that switched to a heat-pump water heater would save about $183 per year.


13.
Sep 14, 2016 1:31 PM ET

I agree
by Steve Knapp CZ 3A Georgia

There is a strong argument for Investing in efficiency--especially for households with multiple people, old fixtures, and an abundance of bad habits.


14.
Sep 14, 2016 1:38 PM ET

Very few in Massachusetts are paying 12 cents/kwh
by Dana Dorsett

MA residents in the large utlities (Eversource, National Grid) service areas will see annual average pricing between 18-24cents/kwh. Rates get adjusted every 6 months, and winter rates of recent years have been higher than summer rates. Some of the highest rates in MA are in Marc Rosenbaum's island neighborhood, averaging in the low 20s.

Most are paying about 10-12 cents just in energy costs alone, before delivery and other charges. Only the lucky few in some of the cheaper municipal lighting company service areas are paying in the 12 cent/kwh range, all-in, including delivery & other charges. As of June 2016 the statewide average was 18.5 cents, down from 19.5 cents in June 2015:

https://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_6_a

Even so, spending the extra for the heat pump water heater has a lower return on investment (unsubsidized) than adding sufficiently more solar panel to cover the energy use difference, if rooftop solar is already being installed. The unsubsisided levelized cost of the solar power at this year's ~$3/watt installed price is about 19 cents, assuming a 5% discount rate a very conservative 13% capacity factor, and a 25 year lifecycle. The unsubsidized cost of the power is about the same as grid retail, but the lifecycle of the PV is (at least) twice as long as what you would expect out of a heat pump water heater. With federal & MA & SREC subsidies applied it tilts even more strongly in favor of PV.

If the house needs to run a basement dehumidifer 5-6 months out of the year to keep summertime humidity at bay, the heat pump water heater option begins to look attractive, but the analysis gets more complicated.


15.
Sep 14, 2016 8:48 PM ET

Mechanical room required
by Anthony Mach

Up here in Quebec, many homes don't have a mechanical room. It's common to have homes heated with electric baseboards and then have an electric hot water tank. The tanks are typically located in closets or squished under stairs. These homes would not be suitable for hpwh, especially when people completely finish their basements. Condos and apartments also have electric hot water tanks in closets. A positive aspect of an hpwh is that they can dehumidify basements and provide cooling, although that seems like a band aid solution for another problem! (could install a mini-split which would heat the house as well).
Electric tanks are also cheap, a 184 L tank is currently on sale for $319.99 (CAD). Also, some insurance companies require replacement of the hwt every 10 years, to prevent blow out water damage.


16.
Sep 15, 2016 12:49 AM ET

Deep Discounts For Remaining Inventory?
by Peter L

Does this mean by years end, GE will be offering deep discounts on this discontinued unit?

People just don't care about energy efficiency here in the USA. That's my take on it. Everyone is into the house lipstick. It's not what's inside the walls but what's the wall painted with. Those concerned with true house energy efficiency is a very small minority, especially here in the USA where electricity is still cheap.


17.
Sep 15, 2016 8:06 AM ET

HPWH Worked For Us
by Sean W

We looked at the GE units when shopping water heaters last year, but as some have already suggested, the negative user experiences we heard/read about were a factor. So we ended up with the Steibel Eltron 80-gal HPWH, which has the highest efficiency ratings in its class. This was on a new construction though, and we did purposefully design for a mechanical room in the center of the basement to accommodate a HPWH. We also have a dedicated circuit in that room for future installation of a freezer, which should be a great long term dance partner for the HPWH.

For a family of 4 it seems to be working out well so far, but we have no way to calculate the energy savings separately. The noise and height issues are non-factors for us and the dehumidification is a nice bonus in our Zone 4 basement. Bonus time is when you come back inside, hot and sweaty from working outside, and the unit is blowing nice cold air at face level. But I can certainly understand how these are difficult retrofits into existing homes.


18.
Sep 15, 2016 5:40 PM ET

Solar PV a better Investment?
by Andrew Bond

I'm wondering if solar PV to make up the 50% savings would be a better investment, than a complex mechanical system? In cold climates the numbers for heat pumps and mini splits just don't seem to add up, especially if access to support and repairs is considered.


19.
Sep 16, 2016 5:18 AM ET

Response to Andrew Bond
by Martin Holladay

Andrew,
Your question was the subject of a Q&A Spotlight article on GBA: Can Solar Electricity Trump a Ductless Minisplit?


20.
Sep 17, 2016 12:15 AM ET

Edited Sep 17, 2016 12:25 AM ET.

Sad to see it go...
by Peter L

The Geo Spring unit costs $162 per year (based on DOE study). A similar Rheem electric unit will cost $555 per year to run. That's almost $400 per year more in electricity costs. The GE unit will pay for itself within 2 years.

US consumers are sad and pathetic when it comes to green energy efficiency. Electricity is still cheap (12 cents per kWh) so just like with gas guzzling SUVs, they buy them and don't care. Only when the costs of gasoline goes up or the cost of electricity goes up, will people take notice.

Sad to see this unit go. I will buy one before they disappear. Otherwise we are stuck with going with the more expensive German unit. The 50-gallon GE unit is on sale at Lowe's for $1,000 while the Steibel unit is around $600 more.


21.
Sep 18, 2016 2:44 PM ET

$555 a year? Gimmie a break…
by Nate G

As I mentioned above, the typical usage figures for water heaters represent an insane hot water demand. If you have a Rheem Marathon tank and spend $555 a year operating it, the low hanging fruit is not replacing it with a heat pump unit but rather getting low-flow shower heads and washing your laundry with cold water. Moderating usage offers a better payback than the fanciest, most efficient equipment.

Simple payback isn't everything, either. These machines are mechanically complex and their reliability track record isn't stellar so far except at the top end of the market. The GE unit has a standard glass tank with an anode rod, which may not last very long in many climates, especially those with hard water. I fully expect my Rheem Marathon to last 2 years or more (probably more). It needs no anode rod and has a curved bottom, which reduces sedimentation and actually clears the sediment if you ever remember to drain some water for maintenance.

I don't encourage you to get a discounted soon-to-be-discontinued heat pump unit. I did that myself and and only found out later about the mechanical problems that caused it to be discontinued (the company went out of business, in fact). Once it breaks, you will have no support options from the manufacturer or local contractors. It's a lousy situation to be in.


22.
Sep 22, 2016 10:05 AM ET

but compare cost and maintenance to tankless gas
by Leigha Dickens

Wow I had no idea GE was losing so much money on those things. Makes me wonder how the other manufacturers are doing on them as well.

We have used the GeoSpring models in several homes now with decent success.* They are similar or even better in up front cost than tankless gas/propane water heaters while offering greater energy savings and so far seeming to have lower maintenance costs, so I don't get why the up front cost is such an barrier when in my experience everybody wants a tankless gas because they think it's efficient and nice and seem willing to pay for it before knowing about heat pump water heaters as another option. But here in climate zone 4 heat pump water heater is a good fit for a high performance home: when you're building out somewhere with no natural gas service like many of our clients do, when you can heat your house with a good heat pump and can talk them into induction cooking so that they have no other reason to run a gas line or bury a propane tank, and especially if you're doing grid-tied solar, they're a natural choice.

*Noise is the only immediate issue, but for some clients that is *not* a small thing. Subjectively to me they've seemed even louder than refrigerators, certainly location in the floorplan matters. Definitely not a good idea to put it on the first floor in a central closet with louvered doors for a noise-sensitive client. Perhaps some of the other manufacturers make quieter models.


23.
Mar 2, 2017 12:44 PM ET

Update - Bradford White purchases GE's HPWH production assets
by John Semmelhack

http://www.achrnews.com/articles/134479-bradford-white-acquires-producti...


24.
Mar 2, 2017 12:50 PM ET

Response to John Semmelhack
by Martin Holladay

John,
Thanks for the link. Evidently you missed the fact that GBA reported this news on February 21.

Here is the link to the GBA news story: Bradford White Buys GeoSpring Rights and Equipment.

-- Martin Holladay


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