Water Heater Information

Updated April 2009

Page: 7 of 8

In this report

Water Heater Links

Tax credits for installing efficient water heaters

The federal income tax credit for energy-efficient installations has been extended at least through 2010. Those who install the most energy-efficient gas-fueled storage water heaters, along with any Energy Star-rated tankless water heater, can claim a 30 percent tax credit through 2010 (with a $1,500 limit).

Those who install a solar hot water system can also claim a 30 percent tax credit through 2016, and the credit doesn't have a dollar limit. You can read about restrictions and eligibility on the Energy Star website.

Note that a tax credit is subtracted from the total income tax due, so it saves much more than a tax deduction, which is just subtracted from taxable income before the tax is calculated.

Many states and local areas have additional incentives and rebates for switching to a more energy-efficient water heater. You can check what's available for your location in the Database for State Incentives for Renewables and Efficiency.

New Energy Star rules for water heaters

In April 2008, the U.S. Department of Energy announced its new rules for Energy Star certification for water heaters, to be implemented in two phases. The first went into effect Jan. 1, 2009, the second will be implemented Sept. 1, 2010. The rules cover five types of residential water heaters, but don't cover electric storage-tank models. Covered are gas storage-tank water heaters, gas tankless water heaters, heat pump water heaters, solar water heaters and gas condensing water heater. Choosing an Energy Star water heater will make it much easier to ensure that a new water heater will really save money in operating costs. For a summary of the standards -- which also help in evaluating currently available water heaters, there's a page on the Energy Star website.

Water heater glossary

Energy factor (EF): The EF rating represents 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 -- the closer to 1 (100 percent) the better. The new Energy Star ratings that go into effect in 2009 will require a gas tank-style water heater to have an EF rating of 0.62 in order to earn Energy Star certification; in 2010 this increases to 0.67.

First-hour rating (FHR): This corresponds to 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.

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.

Peak-hour demand (PHD): Number of gallons of water your household uses during the busiest hour of an average day. The FHR should be within two gallons of your PHD in order to meet your hot-water needs.

Recovery: This is the amount of hot water the 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. The Energy Star thresholds require a solar fraction rating of 0.50.

Wikipedia has a good article on water heaters that covers all types.

Choosing a water heater

We found the best information on water heaters at the U.S. Department of Energy (DOE) website. Links from the main buyer's guide cover five different types: conventional gas and electric storage-tank, tankless coil and indirect, on-demand, heat pump and solar hot water heaters.

The DOE site also has an interactive tool that calculates the lifetime energy savings for specific water heaters, once you enter the information on your utility rate, amount of hot water you use daily, and the water heater's energy factor rating. You can print the calculated results for each water heater you're considering.

You can find the Energy Information Administration's price projections for the various fuels used for water heaters at its website. The site also publishes a state-by-state record of average prices for electricity, natural gas, propane and oil -- useful if you're considering moving to another section of the country.

HomeTips.com has a buyer's guide for hot water heaters:

The American Council for an Energy-Efficient Economy has a buyers' guide to water heaters, but its cost comparisons take neither the lifetime of the system into account, nor any additions to the value of the house.

Resources for storage tank water heaters

Owners recommend installing a water-leak alarm like the Zircon Water Detector (*est. $11) so that if your water heater's tank starts to leak, you'll find out before the house gets flooded.

This Old House provides a detailed buyer's guide to choosing a tank water heater.

For a good overview of pricing and features for tank-style water heaters, showing the typical features available at each price step, see EnergyExperts.org.

The Department of Energy says the quickest payback (in a year or so) comes from investing in insulation (*est. $20) for an existing water heater. This involves an insulating board under it, plus a blanket around it.

"Replacing a Water Heater" by Peter Hemp describes several do-it-yourself upgrades you can make when installing a basic gas or electric water heater to maximize its life expectancy. This article is available at the Fine Homebuilding website by subscription only, but you can sign up for a free two-week trial.

This Old House suggests replacing the anode bar every four years, to maximize the life of a tank-style water heater. A brief article on their website shows how to do it.

More on heat pump water heaters

Jim Dulley's bulletin No. 458 on heat pump water heaters (*est. $3) is very informative, not only describing how heat pump water heaters work, but describing specific models.

Toolbase.org provides a brief overview of heat pump water heaters.

GreenerBuilding.org also has a brief overview, with a owner-written reviews of one model.

AirGenerate.com, which manufactures the AirTap A7 add-on heat pump for storage-tank water heaters, has a state-by-state guide to state and utility-company rebates.

Articles on tankless water heaters

About.com's guide to home repair, Bob Formisano, has a well-illustrated article on tankless water heaters that helps distinguish the factors that affect how well these work. (Note: ConsumerSearch is owned by About.com, but the two don't share an editorial affiliation.)

FineHomebuilding.com has published several recent articles on tankless water heaters, available by online subscription. (A two-week trial subscription is free.) These include "Water Heaters: Tank or Tankless?" by Dave Yates and "Why Add a Tank to a Tankless Water Heater?" by Michael Chandler. Fine Homebuilding experts suggest combining solar and tankless water heaters as an ideal system, so their articles on solar water heaters are also relevant.

Toolbase.org has a well-organized, succinct article on tankless water heaters that looks very realistic.

The Journal of Light Construction, aimed at professional builders, has a brief free article with tips for calculating the payback period for tankless water heaters, comparing them with gas tank water heaters with an efficiency factor of 0.56.

Solar water heaters

FindSolar.com provides a useful online tool to estimate the payback period for a solar water heater in your specific area The calculations take into account your state, county, utility company and rates. (You can manually enter the correct rates if the online database is outdated.) You get an estimate not only of the cost of the system, but of any applicable rebates and tax credits, the annual dollar savings, payback period and increase in your property value.

We found the best guide to solar water heaters -- at least for mild climates -- at the website of the Florida Solar Energy Center.

The Solar Rating and Certification Corporation tests solar collectors for construction integrity, resistance to changes in water temperature, and durability (to reveal any leaks). Ratings are also based on actual energy output under a specified set of conditions. The information here is very detailed and technical. If you're serious about considering a solar hot water system, it's well worth some study.

Toolbase.org also has an article on solar water heaters, including tips on finding a contractor.

Popular Mechanics' June 2006 article, "The Energy Family Makes a Solar Hot Water Heater," describes how an off-the-grid family in Vermont built their own solar hot water heater and how they fare with it (very well, it turns out).

An article at Mother Earth News includes one homeowner's account of installing a solar hot water heater.

Manufacturers of storage water heaters:

American Water Heaters (made by A.O.Smith)

A.O. Smith

Bradford White

GE (made by Rheem/Ruud)

Marathon (made by Rheem/Ruud)

Maytag (made by A.O. Smith)

Kenmore (made by A.O. Smith)

Whirlpool (made by American / A.O. Smith)

Tankless water heaters:

Bosch