Similar to heat pumps that are used in heating and cooling a house, this heat pump moves heat from the air into the water in the tank.
A standard electrical water heater has a heating element that is up to 100% efficient, meaning that 100% of the electrical power it uses makes as heat for the water.
For a standard electric resistance heater one unit of power = one unit of heat.
However, the heat pump is 235% efficient, meaning that the electrical power to run the heat pump transfers twice as much heat to the water.
For a heat pump water heater one unit of power = 2.35 units of water heating.
How does it do this? Simply put, it is more efficient to transfer heat from the air than to make heat so the heat pump technology is more efficient at heating the water.
According to the manufacturer some manufacturers, heat pump technology enables users to save up to 60% or ~$500 a year in energy consumption for a typical home.