A water heater defines a vertical direction and includes a tank for holding water. The water heater further includes a shroud positioned over the tank along the vertical direction. The shroud defines a chamber over the tank, and includes a partition wall that divides the chamber into first and second chamber portions. The water heater includes an evaporator disposed within the first chamber portion, and a compressor disposed within the second chamber portion. The partition wall is positioned between the evaporator and compressor within the chamber of the shroud. Further, the shroud defines a vent extending through the shroud to the chamber of the shroud. In one embodiment, the vent is contiguous with the first chamber portion.