UC Berkeley’s Terner Center for Housing Innovation, SmithGroup, and Factory_OS examined the potential of integrating a distributed 120-volt, shared-circuit heat pump domestic water heating system in multifamily modular construction. Water heating constitutes a large proportion of building energy use in multifamily apartment buildings in the U.S., and a distributed system with individual heat pump water heaters in each unit aligns well with volumetric modular housing construction practices. The study included two main components: 1) the energy performance of a distributed electric heat pump water heater system relative to centralized, building-level water heating systems using either natural gas or electric heat pumps, and 2) the life-cycle cost comparison of multifamily water heating via a centralized heat pump installed onsite, distributed heat pumps installed in modular units at the factory, or distributed heat pumps with wastewater heat recovery capability installed in modular units at the factory. Distributed heat pump water heating systems are shown to offer the greatest energy efficiency, but at higher life-cycle costs than centralized heat pump systems.