Water Heater energy use -- and how to save on it

Go Tankless!

Old-style tank water heaters are wasteful because of standby losses -- heat leaches from the tank to the surrounding air, and then the heater has to heat up the water again.  The modern replacement is an tankless unit, which heats the water instantly when you turn on the faucet.  This eliminates standby losses.  You can choose either gas or electric, just like with an old tank heater.  A typical tankless unit starts at around $400 for either flavor, though they cost a bit more to install.  They last up to twice as long as old tank models makes up for the higher installation cost.

Here are some typical costs for various water heaters, but remember that everyone's situation is different, so do not assume these numbers are valid for your particular situation. You especially should not quote this table with something like, "Mr. Electricity says XXX water heater costs $YY to run."s  (See how to misquote this website.)

Electric		Gas
Tank	Tankless	Tank	Tankless
$40.48/mo.	$36.96/mo.	$30.00/mo.	$21.08/mo.
$650 installed	$1000 - 2000 installed	$865 installed	$1500 - $2500 installed
lasts 10-13 years	lasts 20 years	lasts 10-13 years	lasts 20 years

Source: EPA's Residential Water Heaters Analysis (PDF, 350k, April 2008).
RMI's figures are similar, except they say a Gas Tank saves 36% (not 26%),
and they give a much lower installed cost for all models. (PDF, 2004)  See how to misquote.

Here's how the cost breaks down over 20 years:

	Gas Tank	Gas Tankless
Unit + Installation cost	$1,730	$2,000
Operating cost	$7,200	$5,059
Total cost over 20 years	$8,930	$7,059

 

As with most things in life, your results may vary, for many reasons:

• The numbers for tanks above are for 50-gallon tanks.  If you use a 30- or 40-gallon tank, it will cost you less to run it, so the savings with a tankless model will be less.
• The temperature where you keep your tank matters.  The colder the ambient air temperature, the more heat your tank will lose, and the more it will cost to run.
• The larger your household (i.e., the more hot water you use), the less standby losses you're going to have from your tank, because you'll be using a lot of the water before the heat can be lost to the air.  The less the standby losses, the less it costs to operate, and the less you'll save with a tankless model.
• If having an endless supply of hot water with a tankless model encourages you to take ridiculously long showers, then the tankless unit could wind up costing you more.
• The costs above use national average rates for gas and electric.  So if, for example, gas is really expensive in your area, electric could actually be cheaper.

The EPA has a calculator that can better approximate the cost for your situation, since it lets you enter both your daily use in gallons and your local energy cost.  And do make sure to use your actual local rates, since the default rates in the calculator are woefully outdated.  (Check your utility bill.)

There's a lot of misinformation floating around about tankless water heaters, so keep a few things in mind.  First, every method of heating a given amount of water uses the same amount of energy.  That's true whether you're using gas or electric, and whether you're using a big tank or a new tankless system.  This is basic physics. If you want to heat some water, it's going to require some specific amount of energy to do it, no more, no less.

So even though heating a given amount of water uses the same amount of energy no matter how you do it, here's why your costs can be different depending on your heating method.

• The cost of fuel differs.  If you use the same amount of gas energy and electric energy, the electric will cost more, simply because the price of electricity is generally higher.  (Your local rates could be different, of course.)
  
  
• You're heating the water more than once.  Both a tank and a tankless use about the same amount of energy to heat, say, 50 gallons of water initially.  But with a tank, some of the heat from the tank is lost to the outside air, so the tank has to heat up the water again.  The tankless system doesn't have to do that.  So a tank uses more energy because some of the energy that went to heat the water the first time is wasted.
  
  
• Standby losses differ.  While you'll use the same amount of gas or electric to heat the water initially, the gas tank will lose more heat than the electric tank because the gas tank requires a vent, from which heat can escape.  So more gas is required to keep the water hot.  However, gas tanks still generally cost less to operate than electric tanks,simply because the price of gas is cheaper, even though you're using more gas.
  
  
• You use more water than before.  When some people get a tankless system they love the fact that the hot water doesn't run out so they take ridiculously long showers.  At that point it's no longer a fair apples-to-oranges comparison, because of course it's going to take more energy if you wind up heating more water.  And in that case, the extra cost isn't the fault of the tankless system, it's the fault of the person who's decided to take much longer showers.

Other advantages of tankless water heaters

Tankless water heaters have other advantages over tank heaters:

• You can't run out of hot water by using all the hot water in the tank, because there is no tank.
• The unit should last about 20 years vs. about 10 for a tank heater.  That will help the tankless heater pay for itself. (In theory a tank will last longer if you drain it once a year or have a self-cleaning model, but there are doubts about whether self-cleaning models really work.)
• Leaks are rare with tankless systems, while all tanks will leak eventually.  The damage caused by a leaking tank could cost you a bundle.
• Tankless systems save space.  Your old huge tank heater is replaced by a small box which mounts on the wall.  Check out these before & after photos.

How to buy a tankless water heater

You'll choose a tankless model based on the flow rate (how much how water it can deliver per minute) and the temperature rise (how much it heats the water).  You don't look at those separately, because they're related.  For example, one unit might heat the water 54° at 1.5 gallons per minute (gpm), but only 27° at 3.0 gallons per minute.

So let's first look at typical gpm requirements.  Here's the typical flow rate for water use in your house:

• 2.0 - 4.0 gpm - Bathtub
• 1.5 - 3.0 gpm - Shower
• 1.0 - 3.0 gpm - Dishwasher
• 1.0 - 2.0 gpm - Sink
• 0.5 - 1.0 gpm - Toilet

So for most uses, a 2.5 gpm unit would be fine, as long as you don't want to run various things at the same time, and as long the temperature rise is also good.  If you want to use more than one thing at a time, you need more gpm, so you'll need a bigger model.  Conversely, if you have an efficient showerhead and run the water slowly when you shower, you might do fine with a 1.5 gpm model, which will cost less than a bigger model.

The temperature rise you need depends on the climate where you live.  If you live in the north where the incoming water is cold, you'll need a bigger rise to get your water up to shower temperature than you would in the south, where the incoming water is warmer.  You can get a thermometer from the grocery store to measure your cold water temperature. You'll need to get it up to about 104°F (40°C) for showers or dishwashing. And keep in mind that the temperature will drop a few degrees as the water travels from the heater to the faucet.

Here are some links to check check out electric models and gas models at Amazon.

I also found a Tankless Water Heater Guide that tells you pretty much everything you'd want to know about selecting and installing a tankless water heater. 

Gas vs. Electric (both tank & tankless)

I cover operating and installation costs above.  In this section let me give you some items in favor of choosing an electric model:

• Electric heaters are cheaper, because they're less complicated.
• They're easier to install -- no gas pipes required, no venting required.
• They're safer (no fuel to leak or explode, no pilot light to go out leaking gas into home, no combustion byproducts).

Electric tanks are actually more efficient than gas tanks, because gas tanks constantly lose heat through the venting flue (about 6°F per hour [source]).  Electric tanks typically lose 8-30% of the heat they generate while gas tanks lose a lot more, about 40-50%.  But even though electric is more efficient, it generally costs more to operate since electricity costs more than gas.  On the other hand, an electric model is cheaper to purchase and install.

 

Water use figures

Typical hot water temperatures

Tips for saving with an old-style tank heater

If you're not upgrading to a tankless system, here are some tips for conserving with your old-style tank heater.

1. Turn down the thermostat. When it's set on scalding hot you have to mix in cold water in your shower to lower the temperature, and why make your heater boil the water if you don't need it that hot? And remember that 130°F water is hot enough to scald you. Note though that many people prefer to set their tanks to 123°F or higher to prevent Legionnaires Disease. (Though I personally think the best way to avoid LD is to just get an instant tankless system, so you don't have festering water sitting around in a tank.).
   
   
2. Use a water heater timer on older heaters.  A timer turns off your heater automatically when you go to work, then back on right before you come home, off after you go to bed, and on again right before you get up.  They're available for both electric and gas models.  But they don't save as much money as you'd expect, though.  That's because a typical electric water heater only runs about three hours a day anyway, and modern energy-efficient water heaters run only 1.3 hours or so.  Standby losses (how much heat the tank loses by just sitting there) aren't that great, especially for modern heaters.  (In fact, if your heater was made after 1998, it's possibly not worth using a timer at all.)  And even with a timer you'll still have standby losses as soon as you leave for work and after the tank shuts off for the night.
   
   A timer for an old (pre-1998) electric heater costs around $40 and saves about 25kWh/mo. for a family of two using 40 gallons a day with the heater off four to six hours a day, but only 14kWh/mo. for a family of four using 80 gallons a day. (Florida Extension Service)   A gas water heater timer goes for about $110, and is user-installable.  (See our separate page on how to install a water heater timer.)
   
   
3. Wrap your heater in a special tank blanket.  Home improvement stores sell a special water heater blanket that you can put around your heater to help insulate it.  This reduces energy use by 10-15% -- for a family of two, that's about 21kWh/mo.  The savings are only slightly less for a family of four. (Florida Extension Service)
   
   
4. Fix leaky faucets.  Every 30 drops per minute from a hot water faucet costs you around 18kWh/mo. with an electric water heater, according to this article.
   
   
5. Insulate the room where the heater is.  If it's in a garage and it's cold outside, keep the garage door closed!
   
   
6. Take advantage of utility promotions. Some utility companies like Dakota Electric will install a special water heater which heats primarily at night for a lower kWh rate. (In Dakota Electric's case, only 3¢ per kWh.)
   
   
7. Install a drain recovery system.  A drain recovery system uses the heat from the water flowing down the drain to preheat water entering the heater.  A system like the one by GFX saves $180 to $340 a year when used with an electric water heater according to the manufacturer, and prices start at $334.  These are really only suitable for homes with basements or bathrooms on the second floor, because access to a vertical drainpipe is needed.
   
   
8. Turn it off when you're out of town.  For electric heaters without a switch, you can turn it off at the breaker box.  For gas heaters, follow the instructions printed on the heater.  (Usually you can just turn the thermostat, NOT the gas knob, to OFF -- unless you feel you're competent to re-light the heater when you return.)
   

Energy required to heat one gallon, and one tank

Energy required to heat a tank of water

• A Btu, or British thermal unit, is the amount of energy needed to raise one pound of water from 60°F to 61°F at sea level. (Wikipedia)
• A gallon of water weights 8.33 lbs.
• If the incoming water is 60°F and we want to raise it to 123°F, that's a 63°F rise.
• Heating a gallon of water thus requires 8.33 x 63 = 525 Btu's, at 100% efficiency.

Cost to heat water in a gas tank

• A typical gas tank water heater is only 59% efficient. So it takes 525 ÷ 59% = 890 Btu's to heat a gallon of water in a gas tank.
• One therm is 100,000 btu's. So one Btu is 0.00001 therms. (Pacific NW Natl. Lab.)
• 890 Btu's is 0.0089 therms.
• So we've got 0.0089 therms to heat a gallon of water, or 0.0089 x 40 = 0.356 therms to heat a 40-gallon tank.
• At $1.42/therm, it costs 0.356 x $1.42 = $0.51 to heat a 40-gallon tank.
• Another source comes up with a similar figure: 0.40 therms for the tank (based on 0.11 therms to heat 11 gallons of water. (Multi-housing Laundry Association)
• MHLA also says it takes 3.3 therms to keep 11 gallons hot for one month.

Cost to heat water in an electric tank

• A typical electric water heater is 90.4 to 95% efficient. Let's call that 92.7% on average.
• So it takes 525 ÷ 92.7% = 566 Btu's to heat a gallon of water in an electric tank.
• One kWh is 3413 Btu's, so one Btu is 0.000293 kWh.
• 566 Btu's x 0.000293 kWh/Btu = 0.166 kWh.
• So we've got 0.166 kWh to heat a gallon of water, or 0.166 x 40 = 6.63 kWh to heat a 40-gallon tank.
• At $0.15/kWh, it costs 6.63 x $0.11 = $0.99 to heat a 40-gallon tank.

Solar water heaters

While solar electric takes a while to recoup its installation cost, solar water heating works a lot better, and is easier to install and maintain. (More on solar water heating from the Dept of Energy, SolarRoofs.com, and the Centre for Enivronmental Initiatives.)

On a separate page I have questions I've received and answered about how saving on water heating costs.

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