About 1.06 quads of energy are consumed in the U.S. alone in the production of commercial hot water. The primary energy efficiency is about 90% for gas heaters and 32% for electric. In both cases, high-quality, highly exergetic energy is directly converted one-for-one into very low quality energy, yielding very low second law efficiencies.A gas-fired hot water absorption heat pump has been developed, incorporating generator-absorber heat exchange (GAX) to deliver hot water at temperatures above 60°C (140°F). With a gas COP of 1.54, one-third of the gas used for commercial water heating can be conserved. The heat pump also provides "free" cooling with evaporator temperatures as low as -10°C. The projected payback to the typical commercial customer is about two years.This paper summarizes the prototype heat pump design and testing, verifying component performance, heat pump capacity, temperature lift, water delivery temperature, and COP.Units: Dual