Best Types of Water Heaters

Top Types of Water Heaters

Choosing a water-heater fuel

When it comes to water-heater selection, experts say two considerations are key: a unit's fuel type and first-hour rate (FHR). Consider both, say experts, but focus most on a unit's FHR -- the number of gallons of hot water that can be produced in the first hour -- to avoid the disappointment of running out of hot water. The FHR, which is listed in each model's list of specifications, is based on the hot water stored in the tank plus the amount of incoming cold water that can be heated in an hour. This is important for peak periods of use -- such as getting everyone showered first thing in the morning.

When you turn on a faucet, cold water enters the water heater's tank as hot water flows into the pipe. If the rate of flow out of the tank exceeds the water heater's capacity to heat the cold water flowing in to replace it, the temperature of the tank will start to fall -- putting out first tepid, then cold water. (If this is the only problem that makes you consider replacing a water heater, consider installing a point-of-use water heater by a shower or sink that gets a lot of use; see the section on tankless water heaters.)

To find your specific FHR requirement, think about the time of day when your household uses the most water. Online calculators and charts can assist you in calculating this number; see our Useful Links page for some helpful formulas. Then narrow your water-heater selection to models with an FHR specification that meets your requirements. Two 50-gallon water heaters may have quite different FHR ratings. Note that water heaters often gain in energy efficiency at the expense of recovery rate, so don't skip this crucial specification.

A unit's EF or federal energy-factor number, which indicates how efficiently a water heater converts fuel into hot water, can also be a useful tool. The higher the EF rating the better, with numbers generally ranging from 0.5 to 2.4. (Note: solar water heaters use a rating called the solar fraction, with 0.5 being the requirement for Energy Star certification.) Need to compare two water heaters that use the same fuel? Start by narrowing your choice to the water heaters with an FHR that meets your needs, then look for the highest EF rating. Note that gas water heaters often use a thermal efficiency specification -- the percentage of fuel energy transferred to heating the water.

Consumers should also give some thought to their preferred fuel: solar, natural gas, propane, oil or electricity. It's important to acknowledge that most people replacing an existing water heater will be limited to the fuel type they're currently using, generally natural gas or electricity. The old rule of thumb was that it could be worth switching to a less costly fuel only if you plan to stay in your home for 10 years or longer. Now experts are starting to calculate cost savings in terms of return on investment -- with investing in an energy-efficient water heater offering better returns than most other choices.

Overall, experts say electric water heaters are less expensive and more efficient than gas water heaters, which lose some heat from the necessary venting. However, natural-gas rates are so much lower than electricity rates in many parts of the country that a gas water heater can still be the more cost-effective choice. Gas units also heat water faster than electric models, so you'll have more hot water available for times of peak usage. This also means consumers can get by with a smaller tank on a gas water heater. Still even under the umbrella of gas and electric there are many nuances. Water heaters can be categorized into several types, often used in combination:

• Solar water heaters are currently the most energy-efficient option. You can offset costs by taking advantage of a federal tax credit of up to 30 percent of the cost and installation expense (with no price cap) until 2016. This tax credit applies to existing homes as well as new construction. Cost effectiveness depends much more on local fuel costs -- and additional state and local incentives -- than on your area's climate, with a payback period as short as three or four years in some areas. Solar water heaters can also last indefinitely since they can always be repaired. Often they're used in combination with a storage-tank water heater and/or tankless water heater, to compensate for a string of cloudy days.

• Storage-tank water heaters heat water in a tank where it's stored until needed. The most popular consumer option, storage-tank water heaters are the least expensive units to buy and install. On average, experts say they last 10 years (13 for gas models) before a tank typically leaks and the unit must be replaced. Tank-style water heaters can also be combined with other types for extra storage or as backups (since a very small tank plus a pump can keep a tankless water heater from wasting water or shooting out slugs of cold water). Gas storage-tank water heaters cost more than electric models initially and require more labor to install, but in most parts of the country these appliances cost only about a third as much to operate. Currently, a few gas storage-tank models meet Energy Star standards.  

• Electric heat pump water heaters, also called hybrid water heaters, are the newest and most energy-efficient type of electric water heater. It's also important to note that this is the only type of electric water heater that qualifies for a federal tax credit of 30 percent of the installed cost (with a $1,500 cap), when added to an existing primary residence by the end of 2010. These units add a heat pump to a regular tank-style electric water heater (using the heat in ambient air -- as long as it's 45 degrees Fahrenheit or higher) to heat water. Consumers can buy a heat-pump add-on to use with the electric water heater they already have -- or buy a hybrid water heater that includes the heat pump. Experts say these appliances can be a good choice for all-electric homes.

• Gas condensing water heaters are the most efficient type of gas water heater, building a condenser into a gas storage-tank model or a gas tankless model. This type of water heater, compared with other gas water heaters, can cut the cost of heating water by 30 percent -- and the initial cost is partly offset by the 30 percent federal tax credit. This type of unit provides nonstop hot water at 3 to 5 gallons per minute, so consumers never run out of hot water.

• Tankless water heaters, often called on-demand water heaters, save energy by not heating water until it's needed. Since there's no storage tank, they also save space. Tankless water heaters last longer than tank-style water heaters (15 to 20 years), often carry longer warranties, and can be repaired easily.  Gas tankless water heaters that meet Energy Star standards qualify for a 30 percent tax credit (up to $1,500) for 2010. Tankless water heaters can replace a tank-style water heater, but installation is easier and more cost-effective for new construction -- though the tax credit doesn't apply then. One thing to note: Even gas-fueled tankless heaters require an electrical outlet for operation, which means consumers won't have access to hot water in the event of a power failure.

• Point-of-use water heaters, also called instantaneous heaters, are small water heaters, tankless or semi-tankless, that provide instant hot water to a specific sink or shower. They're often used in conjunction with a bigger water heater of any of the other types, or in an out-building where consumers just need hot water. Point-of-use water heaters are especially useful for faucets or shower heads located far away from the main water heater and can minimize water use for those who don't have a recirculating system that keeps hot water flowing through the pipes all the time. (Otherwise, a lot of cold water can flow through the line before the water reaches your preferred temperature.)

Lastly, quite a few water-heater manufacturers claim to meet National Appliance Energy Conservation Act (NAECA) standards, but they often don't clarify what this means. All current models have to meet these standards, so that statement doesn't differentiate one water heater from another. Instead, experts and users suggest contemplating your preferred fuel type and then comparing energy-factor (EF) specification for the water heaters that have the size and FHR you need.