Did you know 30 per cent of your energy bill likely goes to heating your hot water? Most people still have a conventional electric water heater, but sales of hybrid water heaters are growing.

"When they come to understand about the efficiency, how it costs a little more up front but will save them a lot of money over time, then they get more interested in it, so we're selling more of these models," Sears sales representative Jan Todorski said.

Hybrid water heaters work like conventional electric ones, but they also have a pump that draws in heat from the air to help heat the water. Hybrid water heaters tend to be taller because the pump is usually mounted on top. As a result, you'll need at least a seven-foot ceiling and about a 1,000 cubic feet of space.

Hybrid water heaters cost about $1,000 more than a conventional electric water heater. Consumer Reports tested three to see how long it would take to really start saving money.

To evaluate, engineers set the temperature to 18 degrees in a specially built enclosure. The test results are based on how much hot water a family of four might use in a day, which is about 300 litres.

It turns out the hybrid water heaters Consumer Reports tested can save you more than $250 a year compared to a conventional electric water heater.

"That means they could pay for their purchase price and installation costs in as little as five years. That's a lot faster than either solar or tankless heaters," the magazine's Bob Markovich said.

If you're looking to buy a hybrid heater, Consumer Reports recommends one from Rheem.

It's about $2,000 installed and it is very efficient. But if you have a natural gas water tank, you wouldn't switch.

"You'd look for a higher efficiency natural gas, maybe a condensing unit, maybe on the wall. But if you are looking for the best and most efficient electric hot water tank -- this is twice as efficient as the conventional hot water tank today," Rob Newmarch of Hy-Line Sales said

A 50 gallon tank is standard, but they are coming out with some smaller and larger ones this year.

The heat pump on top makes some noise because it has a fan, but it is a relatively quiet 49 decibels which is about the same as an ultra-quiet dishwasher.

You might have wrapped your old hot water tank in an insulating blanket to prevent heat loss.

The hybrid doesn't need it because it's better insulated to begin with.

With a report CTV British Columbia's Chris Olsen