Water Heating. Choose the Right System.

According to the U.S. Energy Department, residential water heating often accounts for up to 25 percent of home energy use. As more homeowners become aware of this fact, the marketplace is responding to their desire to cut energy costs by offering an array of innovative water-heating technologies, such as condensing and noncondensing tankless units, condensing storage tank systems, and cogeneration units that combine space heating and water heating—and that’s just the ones that run on propane or natural gas. Factor in systems that run on other energy types and the range of choices can become overwhelming. So, which is the right system for your project?

To help you discuss today’s water-heating options with customers in a knowledgeable, research-based way, here is an overview of key findings from a 2011 study, Comparing Residential Water Heaters for Energy Use, Economics, and Emissions (PDF), by Newport Partners, LLC.


Learn More About Water Heating






Energy Factor: What It Does and Doesn't Tell You

Energy Factor

Let’s start with Energy Factor (EF), the industry’s benchmark for measuring a water heater’s energy efficiency. Based on the amount of hot water produced per unit of fuel consumed over a typical day, the EF also takes into account a unit’s:

  1. Standby losses, or thermal losses from storage (tank) water heaters to the surrounding environment. Tankless units do not have standby losses, one of their advantages.
  2. Recovery efficiency, or how efficiently a unit can heat cold water.
  3. Cycling losses, or thermal losses that occur as water circulates through a water-heater tank.

Energy Factor is very useful for comparing the efficiency of water heaters with the same energy source and predicting which one will have lower annual energy costs. For example, a high-efficiency storage (condensing) propane water heater (EF = 0.80) will cost more to run than a propane tankless condensing water heater (EF = 0.94).

But using Energy Factor comparisons to predict annual energy costs across water heaters of different fuel types is not reliable. For example, based on EF alone, an electric storage water heater (EF = 0.90) seems a better option than a propane storage water heater (EF = 0.67). But if one also considers the price of the energy source, the propane water heater in the example below would cost roughly $72 a year less to operate than the electric water heater.

Because cost of energy is such an important part of true operating cost, the study used energy modeling analysis to calculate the costs of 10 water-heating systems across 10 U.S. locations. Newport Partners based each estimate on a daily hot-water demand of 60 gallons. They determined annual energy costs by measuring the efficiency of producing and storing hot water (for tank-type systems) and estimating the average cost of energy in each test location. The study found that, among conventional options, the propane condensing and noncondensing tankless systems ranked among the top performers. An alternative-energy combination of solar hot water with propane tankless back-up showed the lowest overall energy costs.

Of course, energy cost is not the only factor to consider when choosing a system. One must also account for up-front costs and service life, which we will discuss next.