Heat pump water heaters also are technically tank-type but work differently. Instead of using gas, oil or electric resistance as a heat source, this appliance gets its heat from a small air-source heat pump located on the top of the tank.
Like other heat pumps, this one uses a refrigerant to extract heat from the surrounding air and move it to a heat exchanger where water heating takes place. If necessary, regular electric resistance heating elements in the tank can provide backup heating. A heat pump water heater is about twice as efficient as a standard electric water heater.
However, they will cool the space where installed, making these units good options for warm climates, but not as suitable for cold climates where basements and utility rooms need to be kept reasonably warm.