Air to water heat pumps technology uses the same mechanical principles as refrigerators and air conditioners to generate hot water. Unlike conventional electricity and fossil-fuel-fired water heaters.

The heat pump works by taking heat from the surrounding air and using it to heat low pressure liquid refrigerant in the heat pump's evaporator, vaporizing the liquid. The refrigerant then passes through the compressor, which raises the refrigerant pressure and thus the temperature as well. The heated refrigerant gas passes through the heat pump condenser, where it gives off its heat to the water and condenses back into the liquid state. The liquid refrigerant now passed through an expansion valve where the pressure is reduced and the cycle starts over.

Heat pumps mainly consist of a compressor, fan, evaporator and the heat exchanger. The compressor requires electricity to compress the refrigerant and vaporize it, and the fan requires a small amount of electricity to continually blow air across the evaporator coils when the unit is operating. The only electricity cost is the operation of the compressor and the fan in order to collect the free heat and pump it to the hot-water.