Hybrid water heaters use a heat pump to pull heat from the air to heat the water. The heat pump functions like an anti-refrigerator, and cools the area surrounding the tank. When a lot of people need hot water at once the hot water heater switches to electric heat to fulfill everyone's hot water. This combination of heating technologies allows for more energy efficiency, saving you money in the long run. Kenmore hybrid water heaters are compatible with the Kenmore Smart Water Heater Module. This module allows you to connect your smartphone to your heat, giving you more direct control over your hot water.