Here comes the hybrid water heater

The Hybrid Water Heater from General Electric adds a second type of heat source, a heat pump, to a traditional electric water heater, cutting the electricity used to provide a house with hot water by up to 60%. The heat pump, mounted on top of the all-electric appliance, takes in ambient air, extracts heat from it, and sends warmed refrigerant through coils that surround the outside of the water tank. The refrigerant gives up its heat to the water and tank before returning to the heat pump. If people in the house need more hot water, the appliance's controller switches on one of the two conventional 4,500-W heating elements immersed in the water tank and turns off the heat pump. The heat pump, in contrast, consumes only 550-W to operate but takes longer to heat the water. (The heat pump and heating elements are never used at the same time.)

The hybrid water heater also has software built in to provide demand-response on a smart grid, which lets power companies and other entities dial down the power the appliance uses in case of potential grid overloads. Smart-grid compatibility on the 215-lb heater comes via a connector for a smart-meter module. The module lets utilities and others control the appliance. But the consumer always has the last say about whether to lighten up on power use. The smart meter puts the heater in any of four modes. In mode one, the consumer is in total control. In mode two, only the heat pump heats the water. In mode three, the temperature setpoint is reduced. And mode four cuts back the setpoint even more. These modes let the utility shed electrical load in emergencies. But consumers can always disconnect the module to have total control of the $1,700 water heater. GE currently makes only an electric hybrid water heater, but it expects to field a natural-gas-powered hybrid version in the future.