Over a million Japanese homes have a cutting-edge appliance that I'll bet you (along with 95% of America) have never even heard of. No -- it's not a singing toilet seat with a remote control, butt warmer, and built-in bidet. Why... here's one of those gleeking now:

So I bet that most of you have heard about -- and some out there even used -- that particular Japanese contraption. Instead, the contraption I speak of is a heat pump that you add on to your water heater. It saves about $350 a year on the electric bill! The Japanese models are quite sleek, and resemble the condenser unit of a split air conditioner, as seen on the left in this picture:

That larger thing to the right is the hot water tank itself. They make 'em rectangular over there, not cylindrical.
The Japanese models are fairly advanced, and the refrigerant of choice is actually not freon but instead CO2! You know the slight cooling effect you feel when you first crack open a 2 liter and the "air" rushes out of it? Well, that effect is put to work in a Japanese HPWH. Here's a diagram:

They have a fun name for these CO2-based heat pump water heaters: "Eco Cute". And you know the Japanese -- when they're excited about something they draw up cartoons with corny mascots -- in this case "Tankman" and "Pumpu"!

Even though there are more than a million of these installed in Japan, strangely here in the States these awesome CO2-based models are not available. Instead over here there are only a handful of very small shops making heat pump water heaters (commonly abbreviated HPWH) using standard refrigerator compressors, so they use R-22 or R-134a. Most of those shops seem to be struggling to make enough sales to keep afloat. I think if only people knew more about the technology then the market would explode, since the payback happens in only about 3 years. After that it's saving you money. At any rate, being the environmental nut that I am I wanted in on this trend.
After Googling around awhile for HPWH I found a guy in Florida that was selling some American-made units for just $550 each, and sent him a fat cashier's check. A couple weeks ago the thing arrived, and last weekend I got around to trying it out. Here's a look under the hood:

Water gets pumped in from the tank with that brown pump on the right, circulates through the black oval-shaped heat exchanger in the middle, and goes back to the tank. The heat exchanger is kept hot from the R-22 being pumped into it by the compressor. Heat is dumped out through the curved evaporator with all its fins, seen in the bottom of this pic.
Most HPWH models are designed to be connected to an existing electric water heater, and this was no exception. Here's the important electrical connections to deal with:

At first before connecting everything to the water heater I just wanted to turn it on and see it work. So I put the unit in a bucket of cold water and connected just the 220V electrical connections. Nothing happened. I was pretty discouraged, and got out the multitester and schematic diagram. Then I found out that in order to run this HPWH unit at all, it must, must, must be connected to a resistive load on the other side. Turns out all I needed to do was just put the hot water heater in the circuit, which allows the 5-minute timer to get energized and actually do its thing. 5 minutes later a little relay tripped, which in turn juiced the coil for the main contactor, and everything jumped to life. It was very welcome to feel tons of cold air pumping out the top of it. Within a few minutes that bucket of water was pretty hot.
So now it's been installed for a week. I need to make a better mount for it in my garage, and vent the cold outlet air to the outside for the winter months. Seems to be doing the trick anyway.