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High Efficiency Water Heaters

Published Dec 9, 2016
By Gary Sprague

According to the US Department of Energy, water heaters account for about 17% of the average home's utility bill -- a higher percentage than refrigerators, washing machines, dryers and other appliances. High efficiency water heaters use between 10 and 50 percent less energy than standard efficiency units. This makes upgrading to a more efficient water heater an attractive target for homeowners looking to reduce their utility bills and their impact on the environment.

How Efficiency is measured

Let's imagine that you burned 1 gallon of natural gas to heat the water for your morning shower. You would want your ideal water heater to address the following concerns:

  • You would like the heat to be applied directly to the water, with no heat radiating off in other directions. (This is known as the recovery efficiency).
  • You would like to heat the water just before you use it (so that it doesn't cool off and have to be re-heated). (This is known as a standby loss).
  • You would like to heat the water as close to the shower head as possible (to minimize the heat that the water loses as it circulates through the water heater, and out of the outlet pipes). (These are known as standby losses).

While water heater engineers have to consider each of these efficiencies and losses separately, you don't. You just need to pay attention to a water heater's Energy Factor (EF). EF is the standard measure of water heater efficiency, and it takes into account the amount of hot water produced per unit of fuel consumed per day. The higher the number, the more energy efficient the water heater.

At the time of publication, the highest efficiency Energy Star water heaters have an EF of 3.5.

Are you considering a solar water heater? If so, you should know that the efficiency of a solar water heater is measure by the Solar Energy Factor instead of EF.

Types of high efficiency water heaters

Conventional storage, or tank-style, water heaters work by keeping water hot and ready for use in an insulated storage tank. One disadvantage to tank-style water heaters is standby losses, where heat is lost through the tank, reducing efficiency. However, newer high efficiency units are insulated very well, minimizing these losses. These water heaters can be fueled by electricity, oil, and gas.

Tankless water heaters don’t use a storage tank, instead providing hot water on demand by utilizing a large coil which heats water as it passes through. This provides nonstop hot water while eliminating standby losses. High efficiency tankless water heaters are gas units.

Heat pump water heaters use electricity to transfer heat from the surrounding air to water in a storage tank. Because they do not generate heat directly, they can be two to three times more efficient than conventional electric tank-style water heaters.

Solar water heaters use the sun’s energy to heat water. Solar water heater systems use a conventional backup water heater for times, such as during the winter, when solar energy is not available. The initial purchase and installation of a solar water heater is high in comparison to other types of water heater, but they can reduce energy use by up to 90 percent.

With high efficiency water heaters, climate matters. Tank-style and tankless models will function the same in any climate, but because they draw heat from the surrounding air, heat pump water heaters work best in mild to hot climates. And solar systems, of course, are most efficient in mild to hot climates with a lot of sunlight.

Energy Star requirements

Energy Star criteria for electric tank-style high efficiency water heaters is an EF of at least 2.00 for models with a capacity of 55 gallons or less, and 2.20 for models over 55 gallons.

Gas tank-style water heaters require an EF of 0.67 or higher for models with a capacity of 55 gallons or less, and 0.77 for models over 55 gallons.

Tankless water heaters require an EF of 0.90 or higher and a 2.5 GPM. Solar water heaters must have an SEF (Solar Energy Factor) of at least 1.8 for electric backup and 1.2 for gas backup.

What to look for when buying a high efficiency water heater

High efficiency water heaters come in many shapes and sizes, so it’s a good idea to plan ahead before purchasing one. For example, today's tank-style water heaters contain more insulation than earlier models, which may make them a little taller and wider than your old unit. It’s a good idea to check if a new unit can fit into the space your older unit occupies.

Check the capacity and first hour rating (FHR). FHR is the number of gallons of hot water a water heater can supply per hour. Because this number depends on the source of heat (burner or element) and the size of the burner or element, a larger tank does not necessarily indicate a higher FHR.

Search for rebates and tax credits. Many utility companies offer rebates on high efficiency gas and electric water heaters. And all non-solar Energy Star-labeled high efficiency water heaters are eligible for a federal tax credit of 10 percent of cost up to $500 or a specific amount from $50-$300. This tax credit expires on December 31, 2016. Solar systems are eligible for a tax credit of 30 percent of total cost, with no upper limit. This 30 percent credit is available through December 31, 2019. It then decreases to 26 percent for tax year 2020 and drops to 22 percent for tax year 2021, expiring on December 31, 2021.

Should you buy a high efficiency water heater?

There are many benefits to having a high efficiency water heater, including reductions in energy usage and utility bills, reduction of greenhouse emissions, and rebates and tax credits. However, high efficiency water heaters tend to cost more than conventional units. The actual difference will depend on factors such as the type and size of water heater, the brand, and the particulars of your installation.

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