Q: Do heat pumps work with water heaters, are they efficient?

A: Heat-pump hot-water heaters are about 400% efficient or more than 4x as efficient as even the best natural gas furnace.  They are even more efficient than air-sourced heat pumps for heating your house. This is because they take the heat from the air in your basement which is probably at 50°F all year round. Air sourced heat pumps for heating your house take the heat from the ouside air and, in winter that could be at 10F. All heat pumps get less efficient as the temperature drops. Our basement cooled by about 8°F after we installed the heat-pump hot-water tank. But this included the effect of insulating the hot-water pipes and insulating the ductwork in the basement, so the effect of the heat-pump hot-water tank alone was less than 8°F. I am  guessing that it would be 2-3°F on its own. The way to avoid this cooling of the basement cooling the ground floor is to add insulation to the ceiling of the basement. I added 12” of fiberglass making it about R38.