What the best water heater has

  • Efficient fuel. Natural gas is more affordable in most areas of the country than electricity, and because it's more efficient, gas water heaters cost less to run. Hybrid models use heat-pump technology for even greater efficiency.
  • Ample tank capacity. The best storage-tank water heaters have at least a 40-gallon capacity, while some boast up to 80 gallons. Tankless water heaters don't require storage tanks at all, however. Tankless water heaters eliminate the issues of heat loss and running out of hot water, according to GreenBuildingAdvisor.com.
  • Energy Factor rating. The Energy Factor (EF) rating is a calculation used to qualify appliances for Energy Star certification. The minimum required EF is 0.67; some models have EFs up to 2.5. Energy Star-rated appliances are more efficient; they'll use less energy to operate and often have a lower operating cost, as well.
  • First Hour rating (FHR). The First Hour rating is based on the hot water stored in the tank plus the amount of incoming cold water that can be heated in an hour. The higher the rating, the more hot water you can achieve during peak usage times in your home. Online calculators can help you determine what FHR you need.
  • Low NOx. Natural gas fuels produce nitrous oxide pollutants. Models with a low NOx rating emit less into the surrounding air.
  • High recovery rate. The recovery rate refers to how quickly the water heater can produce more hot water after the initial supply has diminished. A low recovery rate means you may be waiting awhile, or taking a cold shower once you use the initial supply.
  • Flow rate. This figure refers to the number of gallons of hot water per minute the water heater can produce. Clearly, higher flow rates are useful in many situations. Thermal efficiency. Displayed as a percentage, thermal efficiency is a calculation of the amount of hot water generated based on the energy input. The higher the thermal efficiency, the better.
  • Power vent. A power vent removes the exhaust gases from the heat production to a specified area. Direct-vent water heaters, those without power vents, simply release these gases into the ambient air.
  • Temperature controls. Water heaters with temperature-control options allow you to specify how hot you want your water.
  • Warranty. Choose a water heater with at least a six-year warranty. Some warranties cover only the tank and parts, and most brands that cover labor limit it to just one year. The best water heaters come with warranties of 10 or more years.

Know before you go

  • How much space do you have? Water heaters vary in height and diameter. If you're moving up in tank size, you'll need to make sure you have enough space for the larger capacity. Also, some water heaters require a certain amount of surrounding air (usually heat-pump or hybrid types), so you'll need to plan for appropriate cubic square footage requirements.
  • Do you have existing natural-gas service to your home? If you're purchasing a gas water heater, you'll need natural gas or liquid propane service to your home. If you don't already have it, consider the additional installation costs.
  • Do you have at least a 200-amp electrical service? Electric tankless water heaters typically require at least 200-amp electrical service. Upgrading your existing service can be an expensive undertaking, so consider these additional costs in advance.
  • Do you have an existing power vent setup? Water heaters require a specific vent size. If you already have a power vent setup, make sure it's adequate ventilation for what your new water heater requires.

Value expectations: The dollars and cents of it

There's more to consider when it comes to buying a water heater than upfront cost. Some models have specific requirements for natural-gas service or electrical service; home modifications before installation may be required. The ongoing cost of ownership in relation to fuel prices and energy savings should be carefully weighed and compared to setup cost.

What's to come

Solar water heaters are entering the market. However, most use solar energy as a supplement to other fuel sources as sunlight can be unpredictable. Newer technologies are making strides in both harvesting more sunlight and storing that energy for later use, ensuring a more constant fuel supply. Energy.gov discusses a few different technologies and collection systems currently used for solar water heaters.

There are two primary types of solar water heaters: passive and active. The latter uses a system of circulating pumps and controls. They cost more upfront and because they're more complex, take one to two days to install. However, Your News Now reports some solar water heaters can save home owners between 50 and 80 percent on hot water heating bills.

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