a dual fuel — gas fuel and electric heat pump — water heater is provided that captures waste heat from the exhaust flue of the gas fuel heating system and utilizes it in the evaporator of the electric heat pump . multiple mechanisms are disclosed for the transfer of heat from the exhaust flue gases to the evaporator . heat from the exhaust gas that would otherwise be lost is used to help heat refrigerant in the evaporator to improve the efficiency of the system . this heat can also be used to prevent or remove frozen condensate on the evaporator .