Used to be that when a water heater needed replacing, most homeowners just bought a new tank to replace the old one. But now with federal regulations that took effect in April 2015 requiring tank water heaters to become more energy efficient, buying a new one just got a little more complicated and possibly more expensive. Although you will save money on your utility bill over time.
If you haven't replaced your water heater in a few years, you'll discover that you have more choices than before so it's worth doing your homework. In addition to conventional tank water heaters, tankless water heaters have improved since the days when the "cold water sandwich" left you shivering in the shower. And most tankless water heaters, which only heat the water you draw, already meet efficiency standards. Other choices include hybrid electric/heat-pump models, solar water heaters, and condensing gas water heaters. (Note: This report does not include Ratings.)
To comply with new Department of Energy efficiency standards, the water heaters used in most homes won't seem that different and will get a modest boost in efficiency, according to the American Council for an Energy-Efficient Economy (ACEEE). But larger units—those 55 gallons or more—will need to shift to new technologies to achieve the efficiency gains. Doing so can cut utility bills by 25 to 50 percent depending on the technology used.
That's good news for homeowners because water heating amounts to nearly 20 percent of a home's energy costs. The new standards apply to gas (50 percent of U.S. households), electric (41 percent), and oil residential tank water heaters.
The majority of homes have conventional water heaters that hold less than 55 gallons of water. If you're replacing a water heater of this capacity, the new more energy-efficient model may be an inch or two larger than the old one and can likely be placed in the same location unless it's in a very tight spot such as a closet. For such units, the new standards will increase efficiency by an average of 4 percent. According to the ACEEE, water heaters that comply with the new standards are already on the market, including models from A.O. Smith, Bradford White, and Rheem.
Water heaters that hold 55 gallons or more will see bigger efficiency gains. But to attain those gains, the larger water heaters will need to use technologies that are less familiar to consumers including electric heat pumps, which transfer heat from the surrounding air to water, and condensing gas heaters, which capture heat that usually goes up the flue.
For homes with electric heat, replacement options include hybrid heat pumps, for the biggest efficiency gains, or two conventional models with capacities of less than 55 gallons each, which won't be as energy efficient. Options for homes with gas heat include a large condensing gas tank water heater or, again, two smaller conventional models.
Also known as hybrid water heaters, heat pump water heaters transfer heat from the surrounding air to the water. The ACEEE says that condensing water heaters are designed to reclaim escaping heat by cooling exhaust gases below 140 degrees F, where water vapor in the exhaust condenses into water. When replacing a large water heater with either of these types, keep in mind that they may require more space. For more information on specific models, check manufacturers' websites. Most water heater makers geared up production well in advance of the new regulations.
Repair or replace?
Before you shell out hundreds for a storage-tank heater or thousands for a tankless or solar water heater, see whether your old one can be fixed. A corroded storage-tank model is history. But a leaky drain or pressure-relief valve or a burned-out heating element can often be fixed. Rule of thumb: Consider a repair if the labor cost (which warranties often exclude) averages less than $50 per year over the years left in the warranty. Otherwise, buy a new one, especially if the warranty has expired.
Most storage-tank water heaters look alike on the outside. But sawing open a cross-section of gas and electric storage-tank models in the Consumer Reports lab confirmed that paying a little more typically buys a better water heater. Those with longer warranties tended to have larger heating elements, thicker insulation, and thicker or longer corrosion-fighting metal anodes.
Longer warranties were also a good indication of better quality for tankless water heaters. But their added complexity can mean more potential problems. Some tankless heater manufacturers shorten the warranty for units used with hard water and in multi-family homes. And most recommend service by a qualified technician once a year.
Hybrid heaters meld an electric storage-tank heater with a heat pump that captures warmth from the air. Those we tested provided annual savings of about 60 percent over electric-only models. You'll also save by replacing a broken oil-fired heater with a hybrid. Solar heaters supplement an electric heater with heat from the sun's rays. The best in our past tests saved us about 80 percent over an electric storage-tank heater alone during the summer months at our Yonkers, N.Y. headquarters. But those savings plummeted to about 30 percent during cold weather. How much a solar system saves you can vary widely based on where you live, your home's sun exposure, and which system you choose.
Choosing the right capacity
Most water heaters are sold on the basis of how many gallons they hold. For example, two to four people might use 80 to 85 gallons per day—enough for about three showers, one laundry load, running the dishwasher once, and turning on the faucet nine times. But the first-hour rating (FHR) for storage-tank water heaters and the gallons-per-minute rating (GPM) on tankless water heaters are more important, because they tell you how much hot water the heater can deliver during a set period. A pro can calculate how much you'll need.
While almost half of homeowners replace their electric water heaters themselves, it may be wise to consult a professional or at least a manufacturer to fully understand the new regulations and what they mean to your particular installation. You may also need a local building permit. Proper installation and maintenance can optimize a water heater's energy efficiency so it may be best to have a qualified plumbing and heating contractor install your water heater. You can find an installer on phccweb.org, the website of the Plumbing-Heating-Cooling Contractors Association. For more information, check the websites of the ACEEE and the DOE as well as the manufacturer of any water heater you may be considering.