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Energy Efficient Water Heaters...
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Q: Dear Wiz:

I'm seeking information on water heaters. I would like to replace my natural gas water heater, since it is 13 years old and short cycling. I would like to compare energy costs for a replacement high efficiency natural gas "tank" water heater and a natural gas tankless (on demand) water heater. We are a low usage household and are willing to schedule our hot water uses. For example, the shower could wait until the dishwater is done. Does it take considerably more gas to heat the water "super fastĒ compared to having the water sitting in the tank waiting to be used? What is the lifespan of an on-demand unit compared to a standard tank model? What are the repair rates of the on-demand compared to a tank model? Is there a way to estimate how much could be saved on the natural gas bill?

A: Dear Reader:

Tankless hot water heaters are generally more efficient than residential tank types. You may also want to consider some of the commercial hot water heaters that have an even higher efficiency rating. Ratings for most gas (and electric) water heaters are available at the Gas Appliance Manufacturer's Association web site. At the bottom of the GAMA web page you will find a link to "Product Directories." On that link you will find other links to the following water heater directories:

Be very cautious of any efficiency claims from units not rated by GAMA.

Unfortunately, not all of these units list similar efficiencies. In most cases the efficiency will be the Energy Factor or EF, with the exception(s) being combination water and space heating units and commercial hot water heaters. The combination units use what is called an Effective Water Heating Efficiency or CAef, which is very similar to the Energy Factor or EF of other units. The commercial units use a Thermal Efficiency, which is not listed for commercial electric units as all electric units are given a thermal efficiency of 98 percent.

The commercial Thermal Efficiency cannot readily be compared to an Energy Factor, because the commercial Thermal Efficiency does not take into account standby losses, while the Energy Factor does. To complicate matters further for commercial comparison, gas and oil units show the standby losses in btu/hr, while electric units show the standby losses as a percentage of the heat stored in the unit. For those units using an Energy Factor or EF, the standby loss is included in the calculation of the EF. In all cases, the efficiency is better the higher the rating Energy Factor, Effective Water Heating Efficiency, or Thermal Efficiency.

The highest rating Iíve found for a tankless water heater was an EF of 0.85, which would mean that for the gas you purchase to heat your water, 85 percent of the heat in that gas is actually transferred to the water. On the other hand, I noticed a 50 gallon commercial hot water heater with a thermal efficiency of 0.95 (95 percent) and a 225 btu/hr standby loss. How do they compare?

Letís assume that the average family spends $40 per month on gas for heating hot water. Of that, let's say $10.00 is for the monthly service charge and taxes. So, $30 is actually spent on gas to heat the water. Let's also say the water heater that did the work had an Energy Factor of 0.60. Then of the $30 that we spent for gas, what we felt as hot water was $30 x 0.60, or $18.

Now to compare the tankless water heater with an Energy Factor of 0.85, divide what was actually used to heat the water, $18, by the Energy Factor to find out how much would be spent on gas: $18 / 0.85, or $21.17. Add back the service charges and taxes, $10, and the bill of $40 is now $31.17. The tankless water heater will save approximately $8.83 per month.

With the commercial hot water heater: $18 / 0.95 = $18.94. However, there are standby losses of 225 btu/hr x 24 hours per day x 30 days per month = 162,000 btu/month. If gas is $1.00 per therm (100,000 btu), add $1.62 to the $18.94, service charge and taxes of $10, and the bill would be $30.56 per month for gas to heat the water. An extra 61 cents a month would be saved using the commercial hot water heater over the tankless hot water heater.

If a commercial hot water heater with a 96 percent thermal efficiency had been selected and it had a 450 btu/hr standby loss, the monthly bill would have been $31.99. In this case, the commercial water heater would have cost 82 cents a month more than the tankless water heater.

Standby losses are an important factor to consider. While the Thermal Efficiency of the commercial water heater looks very good at 96 percent, the tankless water heater with an Energy Factor of 85 percent will actually save just a little more. On the other hand, if a reliable commercial unit with a low standby loss could be found, it would provide greater savings.

Questions on reliability are probably as important as the efficiency of the unit you choose. For this I would recommend the following:
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The Energy Wiz!
  • Check the unit you plan on buying
  • Ask your contractor for references
  • Speak to other customers who have actually used the unit, and
  • Check out your contractor with the Better Business Bureau.
How well a product is installed can have a big affect on how well it works. Also get more than one quote for your equipment since prices can vary greatly from one contractor to another.

The Energy Wiz Editor's Note:
The staff at the Energy Office respond to many inquiries on a variety of topics from Nebraskans. From time to time, the Quarterly will share some questions — and the answers — with readers. Contact Us Disclaimer Energy Office Home Security, Privacy & Accessibility Policy State of Nebraska Home Webmaster