Many homeowners consider only the size of the tank when choosing a new water heater, but ignoring the energy factor and other efficiency measures can cost a lot in the long run.
Hot water usage
Even if you have four teenagers, you may not need a large capacity water heater. Instead of concentrating on size, start by estimating how much hot water your family uses during the busiest hour — morning showers, for example. The chart below shows approximate consumption for some typical activities:
When you’re armed with this information, look for a water heater with a first-hour rating that meets your family’s needs. A high-efficiency 40-gallon model might provide more hot water in one hour than an inefficient 50-gallon unit. The first-hour rating is shown on the top left corner of the Energy Guide.
If your family uses hot water all day long — dishwashing, laundry, etc. — look for a water heater with a fast recovery rate. This will ensure that you never run out of hot water. A larger capacity water heater will likely have a slower recovery rate, so again, a smaller unit might be a better choice.
The next decision in purchasing a new water heater is usually fuel source. A natural gas unit will cost less to operate than an electric unit; the price difference (usually around $50) can be paid back in energy savings in just a few months.
Or, depending on your location, you might consider investing in a solar water heating system. The solar panels, usually installed on a rooftop, require an unshaded south-facing location.
Energy efficiency ratings
A water heater’s efficiency is measured by its energy factor. This number, shown on the yellow and black EnergyGuide label, shows the unit’s overall operating efficiency, taking into account the burner and heat exchanger efficiencies, as well as heat losses from the water tank, pipes, etc.
Two other measurements are important in assessing how well a water heater works:
The largest number on the Energy Guide will show the water heater’s estimated annual operating cost. You’ll also see how the unit compares to other models of the same size.
You can also look for ENERGY STAR certification. This identifies appliances as being the most energy-efficient products in their classes. They usually exceed minimum federal energy use standards by a substantial amount.
Although the purchase price will be higher for a higher-efficiency unit, your energy savings will likely pay for the difference in a few months; a high-efficiency model can pay back the entire purchase price in just a few years. Your dealer can help you determine what your payback period will be on a particular model.
Take advantage of money-saving incentives
Before you make the final decision on your new water heater, be sure to investigate rebates and other incentives from your utility companies.
Most electric and gas providers offer cash-back rebates or low-interest financing for customers who invest in new energy-efficient water heating equipment. In many cases, the incentive amount can cover the added cost of upgrading to a high-efficiency model.
Residential gas customers of Alliant Energy in Iowa and Wisconsin can earn cash back on ENERGY STAR-certified water heaters. Incentives range from $25 to $300, depending on the efficiency rating of the model you choose.
If you're not an Alliant Energy customer, try the ENERGY STAR Rebate Finder.