They sell the heat pump water heaters around here and they have the same sort of efficiency credit if you install one. Though in this part of the world, they're not really worth it - they work by pulling heat out of the room that the water heater is in and pushing them into the water - and if you put them in an electrically heated room, there's no gain. Also, many of them use the heat pump solely to maintain heat and reduce idle loss - you can accomplish a similar idle loss reduction with a heavy hot water heater blanket for far less money.
Natural gas is the best way to go, if you have it in your area.
Anyway, there's not much involved in changing an electric water heater, did it a couple years ago and did a few for other people. Here's the process:
- Kill electricity to the water heater at your breaker panel before you take your morning showers.
- Close the water entry valve, open a few hot water taps around the house. Hook up a garden hose to the drain port, run it to a nearby floor drain (hopefully you've got one) and open it up. Expect brown water/silt/other nastiness to come out of the thing.
- When the water coming out of the tank starts to slow down, close the outlet valve and disconnect the water outlet from the top of the tank. If your tank has the water input at the top, disconnect that too.
- When the water pretty much comes to a stop, disconnect the water inlet (if it's a bottom/side water entry) and electricity. Tip the tank towards the drain to get the last of the water out of it.
- Get a pile of old towels, tip the tank away from the drain and disconnect the drain hose. Drag it out of the house, make sure you don't tip it back towards the drain because iron and other mineral stains are a bitch to get out of stuff.
- Prep the plumbing for the new water heater. Take the opportunity to do a good job of the plumbing - my old water heater had copper/brass fittings screwed directly onto the inlet/outlet ports, and soldered into the copper house plumbing, and I had to cut everything apart to remove the heater. I put threaded couplings on the end of the house plumbing and used braided hoses to connect to the new heater. I'd suggest doing the same if you can, makes things much easier.
- Put the new heater in place. If you've got a floor drain next to the heater, I'd install a drain pan under the new heater and run a drain hose, as insurance if the new hot water heater fails. In my case, I didn't have an available drain nearby so I used a drain pan with the drain capped and I have an audible water alarm placed with the tank.
- Connect all plumbing to the heater.
- Open hot water taps around the house, open the outlet valve, then the inlet valve. It'll take a while to fill the heater, eventually your taps will start spitting water. When water flow out of your taps is back to normal, close 'em.
- Connect electricity to the heater, and turn the breaker back on.
- Wait several hours for the tank to heat up again. Done!