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 taking effect in April 2015 that require 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. 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 55 gallons of water or less. 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 have been gearing up production for the new regulations.