A heat pump works like an air conditioning unit in reverse. It extracts heat from the air surrounding it, enabling it to heat the refrigerant which is then compressed causing it to get even hotter. This is then run through a heat exchanger in which the water is heated. The refrigerant is then allowed to expand again, thus cooling it down and enabling it to again absorb heat from the surrounding air.

The modern domestic heat pump is a very efficient water heating device which uses a small amount of electricity to drive a compressor which forms the heart of the heat pump.