Expert Water Heater Buying Guide

Comparing water heaters

Buying a new water heater doesn't have to be a nightmare. Experts say the most important thing is to figure out what you want and need in a unit before you start shopping. For instance, if your priority is reducing your carbon footprint and cutting future utility bills, you have more energy-efficient choices than ever. Solar water heaters are still the ultimate in energy saving. These units offer the best tax rebates and incentives -- including a 30 percent federal tax credit on the installed cost with no upper limit.

Hybrid hot water heaters, another option, use heat-pump technology to boost energy efficiency. They are the only types of electric water heaters that earn Energy Star certification. The installed price can be offset by a 30 percent federal tax credit (capped at $1,500) as well as the state "cash for appliances" rebates under the federal stimulus recovery program. Other state and local rebates and incentives also may apply.

Keep in mind that gas water heaters cost even less to run than hybrid water heaters. The newest, most efficient models use condensing technology to boost thermal efficiency, a measure of the amount of fuel actually converted to hot water rather than wasted. Condensing technology can be used with tankless water heaters, but it can also make a gas storage-tank water heater (which costs much less to install in an existing home) as efficient as a tankless model.

Fuel preferences and energy savings aside, the editors at ConsumerReports.org also suggest looking for water heaters with a 12-year warranty since this protective trait often indicates higher quality parts inside the unit.

Water-heater installation prices can vary in different parts of the country, so experts suggest checking with a trusted local plumber prior to any purchase. Once you've narrowed your choice to a few models (you can view all the current options in our full report), check dimensions to make sure the water heater will fit in your space. Also make certain that your current plumbing and wiring will be compatible. If you have to install a bigger gas line, bigger water lines or new vents, installation costs can significantly climb. Here are some other things to consider when shopping for a water heater:

  • If you're replacing a tank water heater, the easiest substitute will be a similar tank water heater. Experts say changing fuel types can result in more expensive retrofit costs. Those costs may eventually be recouped by energy savings, but you'll need to do some math to calculate the payback period.
  • Energy Star water heaters are eligible for rebates, low-interest loans, tax credits and other incentives. The federal income tax credit is only one of many incentives available for energy-efficient water heaters. Before deciding that an efficient water heater is unaffordable, check the incentives available in case they offset the higher cost. Solar water heaters have the best tax credits and longest life expectancy.
  • First-hour recovery (FHR) is crucial for sizing a storage-tank water heater. Calculate the number of gallons your household uses at peak periods of use, then make sure the water heater can provide that.  Otherwise, you'll have to adjust your usage, perhaps running the dishwasher or clothes washer when no one needs to bathe.
  • Gas heats faster than electricity. This means that a gas water heater has a faster recovery time and FHR rating than an electric water heater of the same size.
  • Gas storage-tank water heaters can be smaller than electric because gas models usually have a faster first-hour recovery rating. So you might need a 50-gallon electric water heater while a 40-gallon gas water heater would do.
  • Gallons-per-minute (GPM) is crucial for sizing a tankless water heater. If the flow rate isn't high enough for your family's peak period of use, you'll be very disappointed in the system, so check specifications carefully.
  • Flow rate of hot water from a tankless system is greatly affected by the temperature of your groundwater. The warmer your groundwater, the better the flow rate. Homes in colder climates will need a larger system to get an adequate hot-water flow rate.
  • Installation of a tankless water heater generally works better for new construction. Retrofitting may involve installing new gas pipes, new plumbing and other changes.
  • Factor in the cost of installation. Storage-tank water heaters usually cost $200 to $400 to install, but switching fuel types can increase the cost. In a ConsumerReports.org survey, owners said they paid an average of $1,200 to have a tankless water heater installed due to additional plumbing and electrical modifications that were needed. Other sources estimate installation costs as high as $3,000. Add-on heat-pump water heaters and point-of-use water heaters that plug into a regular outlet can be do-it-yourself projects, as can some -- but not all -- solar water heaters.
  • Check for damage to the packaging. This may seem obvious, but Fine Homebuilding says water heaters are easily damaged in shipping, so it's unwise to accept a water heater whose packaging looks dented or broken.  Owners recommend checking a water heater for dents after delivery but before installation. (This may seem obvious, but some owners who had professional installation complain that the installer showed them the dent only after the installation was complete.)
  • Consider repair parts and service. Owners and contractors complain frequently about difficulty in obtaining parts, which can delay repairs. Check with your plumber to be sure you're getting a water heater that's easy and cost-effective to maintain and repair. A long warranty is no guarantee of prompt warranty fulfillment.
  • For a standard tank-type water heater, proper insulation reduces standby losses. If you are buying a gas-powered water heater, 2 inches of insulation is better than a single inch. Electric water heaters are more energy-efficient with 2.5 or 3 inches. The length of the warranty is often a clue to insulation thickness, but the manufacturer's specifications should also tell you.
  • Labor costs aren't usually covered for more than a year. Check warranty limitations carefully to avoid future disappointment. The warranties on some budget models may not cover labor costs at all. At any rate, reviews say to be cautious about depending on a warranty, since most warranties aren't transferable to a new owner. Good customer service and quick repair parts are more important. Even if you have a long warranty, reviews say regular maintenance is important, especially if you have hard water. 

Water heater glossary

  • Energy factor (EF): The percentage of energy that is turned into hot water by a particular model. The higher the number, the higher the efficiency and the less it will cost to operate the unit. This rating is determined by a Department of Energy test procedure.
  • First-hour rating (FHR): How many gallons of hot water a heater can produce during an hour of high usage. Keep in mind this is not the same as the number of gallons the tank holds, because the water heater keeps heating more water as water is drawn out.
  • Flammable vapor ignition resistant standard (FVIR): Water heaters must be designed so that they cannot ignite flammable vapors caused by flammable spills outside the unit. This minimizes the risk of the water heater's pilot light accidentally igniting any flammable vapors. All residential gas-fired units should meet this standard from the American National Standards Institute.  
  • Peak-hour demand (PHD): Number of gallons of water a household uses during their busiest hour of an average day. Note: Your FHR should be within two gallons of your PHD in order to optimally meet your home's hot-water needs.
  • Recovery: The amount of hot water a water heater is capable of providing in a given period of time. The recovery rate is the number of gallons that can be heated to that level in one hour. The higher the number, the better the rating.
  • Solar fraction (SF): Used as part of the evaluation of a solar hot water system -- which usually includes a backup water heater -- this measures the percentage of hot water that's actually produced by the solar part of the system. Energy Star thresholds require a solar fraction rating of 0.50.
  • Thermal efficiency: How much fuel is converted to usable heat. This is 0.98 for electric water heaters, but varies a lot among gas water heaters. This measure is different from the Energy Factor (EF) because the latter takes into account losses from the storage tank.

Watch the video

To learn more, watch this About.com video on how to troubleshoot a water heater that doesn't produce enough hot water.

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