A dynamic model of a water heater system heated by a heat pump was developed. The water heater system was composed of heat pump and hot water reservoirs. Finite volume method (FVM) was applied to describe the heat exchangers. A new constraint on electronic expansion valve (EEV) or thermostatic expansion valve (TXV) that can control superheat after the evaporator was developed. Dynamic performances were evaluated for various sizes of the reservoir. In order to compare those performances, time scale was normalized by time constant representing the characteristics of reservoir size. Time constant was determined from quasi steady-state simulation of the system. From the simulation, the size of the water heater reservoir was found to have a large influence on the transient performance of the sys- tem. Therefore, the optimization of the reservoir size is needed in a design process.