Does anyone use a Hybrid Heat Pump water heater? They work on the same principle as a heat pump air conditioner. I've just learned about them and it seems like it would be a good option for Southern California/Arizona since we don't get that much cold weather (heat pumps don't work well below 40 degrees). They're expensive but they also cool the space in the summer. Supposedly, they'll cut your energy use for water heating by 60% and have an efficiency rating of 2.5 vs ~0.98 for a standard water heater.
My current water heater is an 80 gallon AO Smith from 1999 (runs on 220) (5200kwh per year). It's working fine now but in the event it fails, the hybrid might be a good option for me.
One question I have is the space requirements. My current water heater is in a closet but it's inside the house (in the middle of the floor plan). They recommend at least a 10x10 space. I was wondering if it would still work okay in the closet since it's indoors.