New regulations, new options cut energy costs, raise water heater prices
Thanks to a bevy of new water heater technologies that have emerged in recent years homeowners looking to buy a new water heater have more choices than ever before. Traditional storage tank gas and electric water heaters are still available -- and popular -- but those have now been joined by tankless water heaters; heat pump water heaters (also called hybrid water heaters); condensing gas water heaters; and more. Oil-fired water heaters are also still available, but experts say their higher up-front costs make them a bad deal for new installations. Fuel costs might also be higher, depending on local utility costs.
One thing that could affect your hot water heater choice are new National Appliance Energy Conservation Act (NAECA) energy-efficiency regulations that went into effect in April 2015. The rules raise the minimum energy efficiency -- expressed as its Energy Factor (EF) -- for all types of water heaters made after that date. Manufacturers are allowed to continue to sell water heaters already produced until stocks are exhausted. That means that for a short time after this report is published you might find some older, non-compliant water heaters available for sale.
For most homes and families, a water heater of 55 gallons or less will be the right choice. For those, the new NACEA standards only require a small boost in efficiency -- about 4 percent says Marianne DiMascio of the American Council for an Energy-Efficient Economy (ACEEE). DiMascio adds that new standards won't require any changes in technology, and will be largely handled via small improvements in insulation and the like.
However, there are still some factors that shoppers should be aware of. One is that new NACEA-compliant water heaters are slightly larger than previous models. The ACEEE says that a survey of manufacture websites showed that the new conventional water heaters (55 gallons and below) are typically an inch or two wider or taller than previous models to accommodate their higher level of insulation. That won't be an issue for most, but can be a problem for some looking to replace an existing water heater that's installed in a tight space, such as a closet. Experts also say that compliant water heaters will be a little costlier than earlier models, by around 20 percent.
If you are looking for a new water heater that's larger than 55 gallons, the impact of the NACEA is much more significant. The 2015 standard raises the minimum EF for those so much that traditional storage tank gas and electric models will no longer be an option. Instead, you can consider installing two smaller water heaters or opting for a heater that uses a higher efficiency technology.
Types of water heaters
Storage tank heaters are the traditional water heaters that most are familiar with. They include a large storage tank that keeps water hot via a burner or heating element, fueled by gas or electricity, respectively. Regardless of the fuel source, traditional storage tank heaters are the least efficient type of water heater.
Hybrid electric and condensing gas water heaters are storage tank heaters as well, but they use new technologies that can cut fuel costs considerably -- especially in the case of hybrid electric models. The downside is that these new types of water heaters carry a hefty price premium over traditional storage-tank water heaters. However, their long-term payoff is also substantial. The ACEEE reports that a hybrid/heat-pump electric water heater can cut utility costs by more than 50 percent compared to a conventional storage tank water heater, while a condensing gas water heater can cut energy costs by about 25 percent. That can make these new technology alternatives a good choice even if you are in the market for a smaller size hot water heater. We cover these technologies and available models in more depth in our discussions of the best electric water heaters and best gas water heaters, elsewhere in this report.
Tankless water heaters are another option. These don't rely on a storage tank to supply heated water; instead, hot water is generated on demand. Some are designed to provide enough water for an entire home, while others are portable for outdoor showers and similar uses. Tankless water heaters can run on electricity or natural gas, depending on the model. Tankless water heaters are also covered by the latest efficiency standards but most were already efficient enough to not be significantly affected.
While tankless water heaters are much smaller than other types of water heaters, they are pricey and can be complicated to install. Inconsistent water temperature is another oft-cited complaint. However, in a free article, ConsumerReports.org notes that a new generation of tankless water heaters promises to overcome many of these issues. Daniel DiClerico say that the site plans to test these claims in the future, though that review was not online at the time of this update.
Finding the best water heaters
As always, we look to expert feedback and user reviews to find the models that rate the best. In the case of water heaters, credible experts are often silent regarding specific models, but have plenty to say about which brands consistently deliver satisfaction. User reviews fill in the gaps regarding models, often reflecting months or years of use. In naming the best choices among gas, electric and tankless water heaters, we consider performance, energy efficiency and value.