When we think about where our energy dollars go, we notice the obvious choices we see every day around the house - lights, kitchen appliances, television, and air conditioning and heating. But we tend to overlook the expense of heating water for our daily needs, however 25% of each energy dollar goes to heat water.
Like most appliances, water heaters have improved greatly in recent years. Today's models are much more energy efficient. That's why you probably couldn't replace your existing water heater with the same exact model - and you probably wouldn't want to. Instead, you may be able to purchase a more efficient water heater that will save you money on energy each month. That's why you shouldn't just consider the initial purchase price - think about how much it costs to operate. You could save hundreds of dollars in the long run.
Look at it this way - some cars get 15 miles to a gallon, while other, more efficient vehicles can go 30 miles or more on a gallon of gas. In the same way, some water heaters use energy more efficiently. Buy one of those and you'll spend less money each month to get the same amount of hot water.
The average life expectancy of a water heater is 13 years. That's how long you'll be living with the decision you make now. If you choose a water heater that saves you money, the savings will continue for years.
If your new water heater saves an average of a dollar a month in energy costs, that amounts to a savings of $12 a year - or $156 over its expected lifespan.
Electric vs Gas
Your first decision should be whether to buy a gas or electric model. If you're replacing an existing water heater, check to see what type you have now. Is it gas, electric or even propane? Do you have a natural gas outlet available at the water heater, or only an electric outlet? Many homes are not equipped with natural gas. Obviously, it would not be a good idea to buy a gas water heater if you have an all-electric home.
Which is better - gas or electric?
In almost all of California, natural gas is the most economical way to go. It usually costs three times as much to heat the same amount of water with electricity as it does with gas.
If you have an electric water heater and a gas furnace or stove, you may save money in the long run if you extend the gas line to your water heater.
If you live in a rural area that has propane service instead of natural gas, propane is usually less expensive than electricity.
Solar Hot Water Systems
The sun's heat has been used for decades to heat water for homes and businesses. At the turn of the 20th century, solar heated water systems were common in Southern California. Some countries have made their use mandatory. For example, all homes in Israel have solar hot water systems.
More than one-half million solar hot water systems have been installed in the United States, mostly on single-family homes. The majority of these systems are used to heat swimming pools.
Typically, a homeowner relying on electricity to heat water could save up to $500 in the first year of operation by installing a solar water heating system. The savings over time increases due to increasing electricity rates. The average solar heating system pays for itself in four to seven years.
For more on solar hot water systems, check out the renewable energy section.
Comparing Fuel Costs
To estimate your water-heating bill, locate the price you pay for gas, electricity or propane on the charts below: (Based on general energy prices)
| Natural Gas | Propane | Electricity | |||
| Price per therm | Yearly Cost | Price per gallon | Yearly Cost | Price per kilowatt-hour | Yearly Cost |
| $0.50 | $136 | $0.95 | $283 | $0.08 | $390 |
| $0.60 | $163 | $1.05 | $313 | $0.10 | $488 |
| $0.70 | $190 | $1.15 | $343 | $0.12 | $585 |
Tankless or On-Demand Water Heaters
Tankless Water heaters are also called on-demand water heaters. These provide hot water right where you need it, when you need it, without a storage tank. Using electricity, gas, or propane as a heat source, tankless water heaters, in some cases, can cut your water-heating bill by 10 to 20 percent. The savings come by eliminating standby losses - energy wasted by warmed water sitting around unused in a tank.
Units large enough to supply hot water for an entire house can be located centrally. More commonly, tankless water heaters usually sit in a closet or under a sink where its hot water is used.
A tankless water heater can supplement a regular water heater in a distant location, or it can be used for all your hot water needs. But be aware that they aren't appropriate for all applications, and that sometimes they won't save that much energy or money.
Residential-sized gas-fired models that are now on the market supply only five gallons of water heated by 90 degrees per minute - a comfortable enough output for a house with one or two people. If you have a large family, however, and need to do laundry and wash dishes at the same time others shower, a tankless system probably won't meet your needs. Electrically heated models provide even less hot water than gas models - more like two gallons a minute, heated 70 degrees.
Advantages and Disadvantages
Here are some advantages to on-demand water heating:
- Tankless water heaters are compact in size and virtually eliminate standby losses - energy wasted when hot water cools down in long pipes or while it's sitting in the storage tank.
- By providing warm water immediately where it's used, tankless water heaters waste less water. People don't need to let the water run as they wait for warm water to reach a remote faucet. A tankless water heater can provide unlimited hot water as long as it is operating within its capacity.
- Equipment life may be longer than tank-type heaters because they are less subject to corrosion. Expected life of tankless water heaters is 20 years, compared to 10 to 15 years for tank-type water heaters.
- Tankless water heaters range in price from $200 for a small under-sink unit up to $1000 for a gas-fired unit that delivers 5 gallons per minute. Typically, the more hot water the unit produces, the higher the cost.
- In most cases, electric tankless water heaters will cost more to operate than gas tankless water heaters.
Here are some drawbacks to on-demand water heating:
- Tankless water heaters usually cannot supply enough hot water for simultaneous uses such as showers and laundry.
- Unless your demand system has a feature called modulating temperature control, it may not heat water to a constant temperature at different flow rates. That means that water temperatures can fluctuate uncomfortably - particularly if the water pressure varies wildly in your own water system.
- Electric units will draw more instantaneous power than tank-type water heaters. If electric rates include a demand charge, operation may be expensive.
- Electric tankless water heaters require a relatively high electric power draw because water must be heated quickly to the desired temperature. Make sure your wiring is up to the demand.
- Tankless gas water heaters require a direct vent or conventional flue. If a gas-powered unit has a pilot light, it can waste a lot of energy.
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Heat Pump Hot Water Systems
A relatively new technology is heat pump hot water systems. Heat pump water heaters use electricity to move heat from one place to another instead of generating heat directly. Therefore, they can be two to three times more energy efficient than conventional electric resistance water heaters. To move the heat, heat pumps work like a refrigerator in reverse.
U.S. Department of Energy (DOE) set standards for such systems that first took effect April 15, 1991, and the most recent update to that standard took effect January 20, 2004. They have been included in California's Appliance Efficiency Regulations since the early 1990s. They are also included in the April 1, 2008, Energy Star requirements for water heaters that will take effect until January 1, 2009.
The DOE says this about selecting a heat pump water heater: "Heat pump water heater systems typically have higher initial costs than conventional storage water heaters. However, they have lower operating costs, which can offset their higher purchase and installation prices."
For more information, please go to:www.eere.energy.gov/consumer/your_home/water_heating/index.cfm/mytopic=12840
Buying Smart
Now that you know whether you want a gas or electric water heater, to buy smart, determine the size you need.
To do this, estimate how much hot water your family uses during its busiest hour. We call this the "First Hour Rating."
Determine your "First Hour Rating" with this chart.
| Your house has: | |||
| How many bathrooms? | 1 to 1.5 | 2 to 2.5 | 3 to 3.5 |
| How many bedrooms? | 1 - 2 - 3 | 2 - 3 - 4 - 5 | 3 - 4 - 5 |
| You need a First Hour Rating of: | 43 - 60 - 60 | 60 - 70 - 72 - 90 | 72 - 82 - 90 |
Understanding the EnergyGuide
Once you've figured out your "First Hour Rating" - how much hot water your family typically needs and the size of the water heater you should buy - look for the "First Hour Rating" figure on the EnergyGuide.
The EnergyGuide will be a large yellow sticker that, by law, has to appear on water heaters and other appliances. In this case it compares the average yearly operating costs of different water heaters, using the same criteria for all models tested. It lets you see which one would probably cost you less to run.
On this sample, the "First Hour Rating" appears on the upper left-hand corner, underneath the water heater's energy source. The "First Hour Rating" is 66.
Choose a model with a "First Hour Rating" close to the capacity you need. Don't just rely on the physical size of the storage tank - gas water heaters work quicker than electric ones, so they produce more hot water in an hour. A gas water heater that holds 40-gallons may turn out as much hot water in an hour as a 65-gallon electric one!
If you decide to increase the size of your water heater, make sure you have room in your home for a bigger model. Water heaters are sometimes crammed into tight spaces - check the manufacturer's specifications on any model you buy to make sure it will fit.
Note the big number - $156 - in the center of the EnergyGuide. That's the estimated cost of energy needed to operate this water heater for one year. On the bar immediately below this yearly cost, the label even displays the range of yearly costs of comparable-sized water heaters, from the least expensive to most expensive. That's why an EnergyGuide label is such a valuable tool - it makes comparison shopping easy.
Understanding The Energy Factor Label
There is another label on new water heaters listing that unit's "Energy Factor." It's a number with a decimal point, usually listed on a separate tag beside the EnergyGuide.
The higher the "Energy Factor" number, the more efficient the water heater. Gas water heaters have energy factors between 0.5 to around 0.7. Electric models range from 0.75 to 0.95.
Those Energy Factor numbers show that electric models make better use of energy, primarily because gas water heaters lose some of their energy up the exhaust vent. However, new gas water heaters boast more efficient combustion than older ones, meaning that less heat escapes up the flue, and less gas is needed to heat the water. Gas efficiency has improved.
But since electrical energy usually costs three times more than gas, in most of California it's still cheaper to use natural gas, if you have a choice.
"Energy Factors" vary because different water heaters are made to be more energy efficient. Today's models are better insulated than the ones manufactured years ago. As a result, most cost about 18 percent less to run than older models. The savings are due to reduced heat loss, thanks to the added insulation.It's Your Money
Whichever type of water heater you buy - either gas or electric - look for a unit with a higher energy factor. It may cost more initially, but the energy (and your money) savings may more than make up for the higher sticker price. Consider the price difference and how long it would take to recover the money through energy savings.
For example, say a gas water heater with an energy factor of 0.57 sells for $129, while one with an energy factor of 0.61 sells for $145. To begin with, you'll spend $16 more for the model with the higher energy factor, but it will save you almost $11 a year in the natural gas. You have recovered your initial $16 investment within 18 months. Over the estimated life of the water heater, you should save an additional $125.
Here's a comparison of what various water heaters with different Energy Factors could cost to operate each year, using a consistent price for energy. Note the savings compared to the 0.53 model over the 13-year life expectancy of a water heater. Energy savings are based on the average use of a family of four.
| Energy Factor | Energy Cost Each Year | Savings Over Life of Appliance |
| 0.53 | $177 | $0 |
| 0.57 | $166 | $143 |
| 0.61 | $155 | $286 |
| 0.65 | $144 | $429 |
As you can see, spending more up-front for a more efficient water heater - one with a higher Energy Factor - can mean major savings over the life of the appliance!
Keep On Saving
- Do as much cleaning as possible with cold water to save the energy used to heat water.
- Check your faucets for leaks. They waste both water and energy!
- Conserve hot water by installing water-saving showerheads. A new showerhead can save as much as $10 a year in water and energy.
- Once your water is hot, insulate to help keep it that way. Wrapping exposed hot water pipes with insulation will minimize heat loss. So will installing an R-12 insulation blanket around your water heater, unless the manufacturer does not recommend it. Modern water heaters are generally very well insulated, and adding additional insulation will only save a small amount of energy. If you are having a difficult time trying to wrap the heater, and if the water heater isn't overly warm to the touch, err on the side of caution and leave it unwrapped. Instead of wrapping the heater, you could consider insulating your water pipes. This can do a lot to make sure that the heat in the tank reaches the faucet, especially if your home has metal pipes. Even insulating just the first three feet of pipes entering and leaving the tank can be worth it.
- Reduce your water heater's temperature to 120 degrees Fahrenheit. That will produce plenty of hot water and still save energy. For homes with a dishwasher, a setting of 140 degrees is required to clean properly, but most of the new dishwashers have a built-in water temperature booster.
- Many new water heaters have a "vacation" setting you can use to save energy if you're away for more than a few days. Turn the thermostat "down" or "off" when you're gone for more than three days.
