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How to Buy a Hot Water Heater

Updated Mar 23, 2016
By Gary Sprague and

There are two main types of water heaters: units that have an insulated storage tank to hold hot water until it is needed and “tankless” units, which only heat the water as it is needed.

Tankless models tend to be more energy efficient but have lower throughput—that is, produce less hot water in a given amount of time--than models with storage tanks. Both types of water heaters come in versions powered by electricity, natural gas, or liquid propane. In general, electric models cost the most to operate and are the least energy efficient.

Solar water heaters are starting to gain traction in the marketplace. They come in both passive and active configurations and can use several different types of collectors. Currently, solar water heaters are more expensive than other options but are typically cheaper to operate. Solar water heaters depend on line of sight access to sunlight, so carefully evaluate the proposed installation site with a professional before committing to solar.


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Hot Water Heater

Water heaters are made by a wide variety of heating and cooling (HVAC) companies, including:

How Water Heaters Work

Hot water heaters convert energy into heat. This heat is transferred to water, which makes the water hot. A cold water supply pipe connects to the heater and a system of hot water pipes going out from the heater supplies water to various taps or appliances. A thermostat controls the temperature of the water.

Most water heaters use natural gas as fuel to heat the water, while others use propane, electricity or even fuel oil. Natural gas-powered heaters are less expensive than electric water heaters. Conventional water heaters store hot water in a cylindrical tank. If the tank is not insulated properly, heat escapes via the sides of the tank, resulting in energy waste.

Types Of Water Heaters

Storage-tank water heaters use electricity, natural gas, propane, or oil. Water is heated in the tank to the specified temperature. The heater turns on and off to maintain the heat. When hot water is used, the heater switches on to heat the incoming cold water to make up for what you have used. Since the water is being heated continuously, it can waste energy, even if you are not using it -- this is called standby loss.

Tankless instant water heaters, or demand water heaters, heat water instantly and do not store hot water. Cold water goes into the unit through a pipe and a gas burner or an electric element heats the water when required. You can get continuous hot water through this type of water heater. Since there are no standby losses, energy is not wasted. If your hot water needs are not much larger than normal, the low flow rate won't matter to you.

Heat pump water heaters transfer heat from one place to another instead of generating heat directly. They use electricity to do this. Heat pump water heaters can be integral units with built-in water storage tanks or add-ons that can be retrofitted to an existing water heater tank. Initial cost is high and heat pump water heaters must be installed in specific locations.

Tankless coil and indirect water heaters use your home space heating system to heat water. Water heats inside the boiler and then flows through a heat exchanger every time you turn the tap on. Indirect water heaters require a separate storage tank because heated water flows to an insulated storage tank.

Solar water heaters, when properly designed, installed, and maintained, can take care of your hot water needs. They have a storage tank and a collector and use the sun's energy for heating water. Passive solar heaters don.t use pumps and controls and are said to be more reliable, easy to maintain, and less expensive than active systems. Active solar heaters use pumps and controls to pass the heat transfer fluids from the collectors to the storage tanks, which have an inlet and outlet.

Heat recovery units (HRU) use air conditioners' hot refrigerant to make hot water. The compressor's hot refrigerant and the cooler water from the bottom of the water heater enter the HRU. Heat from the air conditioner heats the water.

While choosing a new water heater, you need to consider the capacity, efficiency and cost, as well as the actual usage pattern. Water heaters can use 15-20% of the total energy you use, so it's important to choose the type of heater that is most appropriate for your needs.

Water Heater Efficiency

If you are buying a new water heater after April 16, 2015, you will notice a couple of big changes. These changes are a result of updates to the National Appliance Energy Conservation Act (NEACA), and they call for higher efficiency standards on all residential water heaters.

How will these higher efficiency changes affect you as a homeowner? In the long run, it will save you money. Water heating accounts for up to 20 percent of an average home’s energy usage. The new standards will increase efficiency by an average of 4 percent, resulting in approximately $10 billion in energy bill savings as well as preventing the release of up to 164 million metric tons of carbon dioxide for products shipped from 2014-2044, according to the U.S. Department of Energy.

That’s the good news. The bad news is that the price of a new water heater under 55 gallons will increase between 15 and 40 percent. This can result in an increase of $100 or more for a water heater. So while you may actually save money in the long run due to the higher efficiency standards, in the short term the cost increase is quite steep.

Another noticeable change will be in the size of new water heaters. Because of the increased insulation necessary to meet the efficiency standards, new units will increase by approximately 2 inches in height and diameter. While this will not impact installation in many homes, it may cause problems in apartments and mobile homes, where space can be limited.

The biggest changes will be with water heaters over 55 gallons. Electric water heaters of this size are now required to be hybrid units, also known as heat pump units. These units transfer heat from the surrounding air to heat the water. And gas water heaters over 55 gallons will now be required to use gas condensing technology.

What do these changes to the larger units mean for you? There will be a higher increase in the cost of these water heaters than the smaller ones, up to 100 percent in some cases. And because of the technology changes, the increase in size of these units will be even greater. The good news is that the efficiency savings will be even greater with these units than those under 55 gallons, saving you more money in the long run.

How much Capacity do you Need?

Capacity is an important factor in choosing a hot water heater. To determine how much capacity you need, estimate your home’s water usage during the heaviest hour of a typical day. Typically showers and faucets have a published flow rate that is measured in gallons (or liters) per minute. If you can't find the flow rate, you can measure it yourself:

  1. Get a stop watch and a bucket
  2. Place the bucket under the faucet, and turn it on full blast for 10 seconds
  3. Measure how much water is in the bucket, and convert it to gallons (1 cup = .0625 gallons)
  4. Since you only collected water for 10 seconds, you will need to multiply the number of gallons of water you collected by 6 to determine the gallons per minute.

For example, let's imagine that in 10 seconds, you collected 2.5 cups of water. You would convert that to gallons (2.5 x .0625 = .15625 gallons) for a total of .15625 gallons every 10 seconds. Next, multiply that by 6 to determine the number of gallons per minute (.15625 x 6 = .9375 gallons per minute).

You will need to ask yourself how many faucets and showers you expect to be able to run simultaneously. For most families you might want to be able to use the hot water at the kitchen sink while someone is taking a shower. To determine your estimated total usage, add the flow rate of the shower and the kitchen sink faucet. This will give you a maximum flow rate in gallons per minute.

Multiply the flow rate (in gallons per minute) times 60, to determine the number of gallons per hour you need at the peak hour of the day. This is sometimes known as the "peak hour demand".

Water heaters have a rating called the first-hour rating (FHR) or first-hour delivery that indicates the number of gallons per hour of hot water your water heater can provide. This number should be very close to your peak hour demand.

Tankless heaters generally produce 3.5 gallons per minute. Heavy users will likely find this insufficient.

Before selecting a hot water heater, it is also important to measure tank sizes and the available space in your home. It does no good to purchase a high capacity heater if it doesn't fit into your space. And while it is possible to extend plumbing lines to a different location, that can greatly increase the installation costs.

Another factor to consider is the material used to construct the storage tank in units that use them. Stainless steel tanks are expensive but do not rust. Steel tanks coated in ceramic or porcelain are also resistant to corrosion, unless they are scratched or dented. Tank corrosion may require you to replace the entire unit, while problems such as leaky valves or worn out electrical elements can be fixed with replacement parts.

Water Heater Warranties

Many water heaters come with long warranties (anything from 6 to 12 years) but the majority of these warranties cover only defective parts. For example, GE water heaters come with a full replacement warranty for the first year and a defective parts warranty for an additional 5, 8, or 11 years. Many other brands structure their warranties in a similar manner.

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