A heat pump is like a fridge in reverse. It sucks heat out of the air and pumps it into the water tank. While a really good gas water heater can be 95% efficient in turning gas energy into hot water, a heat pump can be an almost magical 400% efficient, because the energy is used in moving heat around, not generating it.
A heat pump water heater looks similar to the gas version. Both have a big storage tank, the gas one has a gas burner underneath, and the heat pump has a compressor on top. Heat pumps are often taller due to that compressor, so you should have your contractor check your space before installation.
A heat pump (left) looks pretty much like a regular gas heater (right)
Most heat pumps run on 220V power, like other major appliances, so you may need to run a new 220V line to your utility room or garage. If that's a problem, then there is at least one 120V model on the market in California now, and more to come.
Because they pull heat from the surrounding air, you’ll need about 750 cubic feet of air in the room where they are (~10 x 10 foot should do it, or a grille open to outside air, which many utility rooms have). Your old gas heater will probably have an outside air vent which you no longer use, so you can repurpose that if need be.
You will need a condensate drain, but most gas heaters already have that.
Like fridges, the compressor and fan emit a low hum, which many have compared to the volume of a modern fridge or dishwasher. Most people have no problem with this, but there are anecdotes of some units being loud enough to be a nuisance, especially those made by Rheem, about a year or so ago. The problem is apparently fixed, but you may wish to check with your contractor. One local resident was stuck with a bad unit and used acoustic fabric to silence the hum.
Heat pumps can be programmed and controlled by app, which allows for some nifty options. Since the big tank works a bit like a battery, to store heat energy, you can program most of the heating for times of day when electricity is cheapest or cleanest. There are also several programs that will give you incentives to temporarily suspend power during a grid emergency, and you can do all that automatically. A particularly neat idea is if you have solar panels and excess capacity, you can program to heat water when you are generating solar power.
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Back to the San Mateo County Guide to Climate-Friendly Water Heating.