A heat pump system includes a compressor, a heat rejecting heat exchanger, an expansion device, and a heat accepting heat exchanger. A storage tank stores the water that cools the refrigerant in the heat rejecting heat exchanger. A mechanical interface plate positioned between a hot water reservoir and a cold water reservoir in the storage tank reduces heat transfer between the hot water and the cold water. During a water heating mode, cold water from the cold reservoir flows into the heat sink to cool the refrigerant in the heat rejecting heat exchanger. As the water exchanges heat with the refrigerant, the water is heated in the heat sink, exits the heat sink, and flows into the hot reservoir of the storage tank. During a water discharge mode, the hot water in the hot reservoir is removed from the storage tank and flows into a hot water discharge. Cold water from a water source flows into the cold reservoir of the storage tank to refill the storage tank.