According to the U.S. Department of Energy, water heaters account for up to 25 percent of the utility bills in most homes, and they are second only to heating and cooling as a major cost. While the newest generation of energy-efficient water heaters can make a big dent in these bills, it can get complicated trying to sort through manufacturers' efficiency claims. Due to the overwhelming number of water heater models available, we found that many reviews (and surveys of builders and contractors) tend to rank brands rather than specific products.
Water heaters are categorized into a few different types based on the fuel they use and whether hot water is stored in a tank or generated on demand. Hybrid water heaters, for example, use energy-efficient heat-pump technology to heat the air surrounding the unit, which is in turn transferred to the water in a storage tank. Typically, this type of water heater also uses a backup electrical supply when the heat pump can't keep up with the hot water demand. Hybrid water heaters are more expensive than natural gas water heaters, typically costing between $400 and $1,500.
Natural gas water heaters use, as their name suggests, natural gas or liquid propane to generate heat. These are the most affordable water heaters available, with some models costing as little as $250 while others may be found up to $700. Standard electric water heaters, which have been around the longest, also use a storage tank. Because they sap so much energy, most consumers today are opting for more energy-efficient models, such as hybrid or natural gas-powered water heaters.
Tankless water heaters are much smaller and easier to install but not any less expensive. They range in price from $500 to well over $1,000. Tankless water heaters don't use 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 other smaller activities. Tankless water heaters may run on electricity or natural gas, depending on the model.
Due to the current trend toward more energy-efficient models, most of our review sources cover newer and more efficient types of water heaters. In fact, we found very few reviews overall recommending any standard electric water heaters. Consumers are accepting the larger initial purchase price of energy-efficient models, which is more affordable than ever, in favor of long-term energy savings.
We found dozens of professional review sources offering water heater buying guides, many discussing the various types in terms of cost and energy efficiency, such as BuilderOnline.org and GreenBuildingAdvisor.com. Some evaluate brands only, but a few do recommend specific water heater models. We also consulted thousands of owner-written reviews on water heater discussion forums like TerryLove.com and on retail sites like Amazon.com, HomeDepot.com and Lowes.com. We look at efficiency, Energy Star status, upfront and ongoing costs of ownership, and long-term durability to select the best water heaters in each category.