Hot Water Heaters

General Recommendations
Tankless water heaters are recommended for their balance of affordability, durability, and low energy consumption. While first costs are higher for tankless water heaters, low operational costs and increased durability make them the most affordable water heater over their lifecycle. Tankless systems have the added benefit of being compact and wall-mountable. Therefore, they require considerably less space than a traditional tank unit. However, with some plumbing layouts, users may have to adjust to a longer time lag before hot water begins flowing. In addition, tankless models can be more susceptible to problems caused by hard water and lime buildup.

Solar hot water heaters are an economically viable option if they are replacing an electric water heater. They are the clear environmental winner across all types.

Water Heater Costs and Energy Consumption Comparison

Type EF Warranty Retail Cost Annual Energy Use (therms or kWh) Annual Energy Cost Energy Cost Over 20 Yrs Total Cost Over 20 Yrs (including unit replacement)
Conventional 40 gal tank (natural gas) 0.59 6 $295 254 $330 $6600 $7190
0.63 6 $322 238 $309 $4180 $6824
0.64* 6 $549 234 $305 $6100 $7198
0.65** 6 NA 230 $300 $6000 NA
0.59 9 $374 254 $330 $6600 $7161
0.59 12 $425 254 $330 $6600 $7025
0.60 12 $417 250 $325 $6500 $6917
0.62 12 $499 242 $314 $6280 $6779
0.80** 8 NA 187 $244 $4880 NA
Condensing 50 gal tank (natural gas) 0.90** 12 $2000 166 $217 $4340 $6340
Tankless on-demand (natural gas) 0.82** 10 $1000 183 $238 $4760 $5760
0.85** 12 NA 176 $229 $4580 NA
Conventional 40 gal tank (electric) 0.92 6 $226 4773 $508 $10,160 $10612
0.92 9 $322 4773 $508 $10,160 $10643
0.92 12 $379 4773 $508 $10,160 $10539
0.95 12 $388 4622 $492 $9840 $10228
Solar hot water1 1.20** 10 $6000-$80002 125 $2223 $4440 $11440
Solar hot water (with federal tax credit) 1.20** 10 $4200-$60002 125 $2223 $4440 $9540

* Power Vent Model

**ENERGY STAR Case

Prices for standard natural gas, electric, and tankless models are average retail prices collected from Menards, Hope Depot, and Lowes; Price for solar hot water heating system based on industry-wide estimates and costs of 16 local systems installed in 2007 (Green Institute, "Solar Pioneers")

Energy rates based on 2007 EIA average U.S. residential rates for electricity and gas: $1.30/therm, $0.106/kWh.

1. Solar hot water heating system is an active closed loop antifreeze system modeled with a 0.5 solar savings fraction (typically two 4x8 solar thermal panels) and 0.6EF natural gas backup, and OG-300 certified.

2. Retail costs includes installation (only for solar hot water)

3. Cost includes averaged annual maintenance cost of $60/year1

Operating Energy
Solar water heaters are the best energy performers. They can reduce energy requirements by 50% or more. At a minimum, they should produce 50 % to 70% of hot water needs. Tankless water heaters, due to elimination of storage energy losses, use less energy than conventional storage tank water heaters.

Cost
Conventional tank electric water heaters have the lowest first cost, but are also the most expensive to operate. Conventional tank natural gas heaters are more expensive than electric tank models, but significantly reduce operating cost. In fact, with average energy rates and normal hot water usage, the cost savings from a single year of operation can more than pay for the added first cost of a natural gas water heater. For all tank models, cost varies with efficiency and durability. Generally, the high-efficiency and long-warranty models are most expensive. Warranties for conventional tank heaters are in 6, 9, and 12 year terms.

For tankless systems, first costs are two to three times more than storage tank models and vary with flow rate and efficiency. Flow rate is the number of gallons per minute (gpm) a unit can heat. A flow rate of 3 gpm has the rough service equivalent of a 40-gallon tank. Tankless hot water heaters generally have a twenty-year warranty. A gas tankless system will pay back its price premium in 7 years, assuming normal hot water usage and average rates for energy.

Natural gas condensing tank water heaters are relatively new on the market. By extracting more energy from the hot exhaust gases, condensing units can achieve efficiencies and operating costs similar to tankless units. However, the first cost of these units can be twice that of tankless models. Nonetheless, the cost premium of a condensing, high-efficiency gas tank unit can be recouped over its lifetime, while also using less energy, causing less pollution, and depleting less resources.

Solar water heaters have the highest initial cost. In effect, installing a solar system is paying for the hot water up front because the water is heated with free solar energy.

Durability
At 20-30 years, tankless water heaters have the longest life expectancy of any water heater. This is twice the useful life of tank water heaters. A tankless system can also be serviced with replacement parts, helping to extend its useful life. However, tankless models can be more susceptible to damage from hard water and lime deposits. If used in a region with hard water, a home water softener is recommended.

Conventional tank water heaters have a life expectancy of approximately 10-15 years, depending on tank quality. Failure of tank systems typically results from corrosion and eventual tank rust-through, which cannot be repaired. Replacing the sacrificial anode rod periodically can extend the life of tank models by reducing the corrosion of the tank.

The useful life of solar water heating systems ranges from 15-30 years. Like the tankless systems, most components can be repaired, with the exception of a rusted storage tank. However, solar water heating systems require periodic maintenance to ensure that the circulating fluid and pump are in good condition. Failure of these components can result in overheating and severe damage to the rest of the system.

Water Heater Environmental and Installation Comparison

Type EF Warranty Annual Energy Use (therms or kWh) Annual CO2 Production (lbs) Practice IAQ
Conventional 40 gal tank (natural gas)0.59 6 254 2972
0.63 6 238 2785
0.64* 6 234 2738
0.65** 6 230 2691
0.59 9 254 2972
0.59 12 254 2972
0.60 12 250 2925
0.62 12 242 2831
0.80** 8 187 2188
Condensing 50 gal tank (natural gas) 0.90** 12 166 1942
Tankless on-demand (natural gas) 0.82** 10 183 2141
0.85** 12 176 2059
Conventional 40 gal tank (electric) 0.92 6 4773 8735
0.92 9 4773 8735
0.92 12 4773 8735
0.95 12 4622 8458
Solar hot water1 1.20** 10 125 1463
Solar hot water (with federal tax credit) 1.20** 10 125 1463

= standard practice
= special training required for installation*Power Vent Model
= typical IAQ
= better IAQ

*Power Vent Model

**ENERGY STAR Case

Energy rates based on 2007 EIA average U.S. residential rates for electricity and gas: $1.30/therm, $0.106/kWh.

1. Solar hot water heating system is an active closed loop antifreeze system modeled with a 0.5 solar savings fraction (typically two 4x8 solar thermal panels) and 0.6EF natural gas backup, and OG-300 certified.

Practice
Storage tank systems are standard practice. Tankless systems require some additional training. Solar water heating systems are still an emerging technology in the U.S., though they are considered standard throughout many parts of the world. As with all hot water heating systems, professional installation is recommended.