Heat pump water heaters (HPWH) work like house heat pumps, but transfer heat to water in a cylinder. The running cost depends on efficiency, measured by the coefficient of performance (COP). For example, a COP of 3 means it costs one-third of what an electric cylinder would. 

Check that the COP doesn’t drop too much in cold weather, as some HPWHs struggle below 7°C.
There are two types: 

• Integral models combine the heat pump and water tank in one unit, typically installed outdoors near the bathroom. 
• Split models have an outdoor heat pump that circulates water to a separate cylinder, which can be your existing one if it's not too old. 

Key benefits: one of the cheapest water heating options. 

Main drawbacks: high upfront cost, varying performance across models, and reduced lifespan of outdoor units in corrosive environments.