Selecting a New Water Heater

You have a lot to consider when selecting a new water heater for your home. You should choose a water heating system that will not only provide enough hot water but also that will do so energy efficiently, saving you money. This includes considering the different types of water heaters available and determining the right size and fuel source for your home.

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Types of Water Heaters

It’s a good idea to know the different types of water heaters available before you purchase one:

Conventional storage water heaters: Offer a ready reservoir (storage tank) of hot water
Demand (tankless or instantaneous) water heaters: Heat water directly without the use of a storage tank
Heat pump water heaters: Move heat from one place to another instead of generating heat directly for providing hot water
Tankless coil and indirect water heaters: Use a home’s space heating system to heat water

Selection Criteria

When selecting the best type and model of water heater for your home, consider the following:

Fuel type, availability and cost: The fuel type or energy source you use for water heating will not only affect the water heater’s annual operation costs but also its size and energy efficiency. See below for more on selecting fuel types.
Size: To provide your household with enough hot water and to maximize efficiency, you need a properly sized water heater. Visit the pages on different types of water heaters for more on sizing.
Energy efficiency: To maximize your energy and cost savings, you want to know how energy efficient a water heater is before you purchase it. Visit the pages on different types of water heaters for more on estimating energy efficiency.

Costs: Before you purchase a water heater, it’s also a good idea to estimate its annual operating costs and compare those costs with other less or more energy-efficient models. Visit the pages on different types of water heaters for more on estimating costs.

Also, be sure to do what you can to reduce your hot water use. You may also want to explore other strategies such as drain-water heat recovery to save money on your water heating bill.

Fuel Types, Availability, and Costs for Water Heating

When selecting a new water heater, it’s important to consider what fuel type or energy source you will use, including its availability and cost. The fuel used by a water heating system will not only affect annual operation costs but also the water heater’s size and energy efficiency.

Exploring Water Heater Options by Fuel Type

Fuel type and its availability in your area may narrow your water heater choices. The following is a list of water heater options by fuel or energy source:

Electricity: Widely available in the United States to fuel conventional storage, tankless or demand-type, and heat pump water heaters. It also can be used with combination water and space heating systems, which include tankless coil and indirect water heaters.
Fuel oil: Available in some areas of the United States to fuel conventional storage water heaters, and indirect combination water and space heating systems.
Geothermal energy: Available throughout the United States to those who will have or already have a geothermal heat pump system installed in their homes for space heating and cooling.
Natural gas: Available in many areas of the United States to fuel conventional storage and demand (tankless or instantaneous) water heaters, as well as combination water and space heating systems, which include tankless coil and indirect water heaters.
Propane: Available in many areas of the United States to fuel conventional storage and demand (tankless or instantaneous) water heaters, as well as indirect combination water and space heating systems.

Comparing Fuel Costs and Water Heater Types

If you have more than one fuel type available in your area, it’s a good idea to compare fuel costs, especially if you’re building a new home. Even if you’re replacing a water heater, you may find that you’ll save more money in the long run if you use a different fuel or energy source. Contact your utility for current fuel costs or rates.

The type of water heater you choose will also affect your water heating costs. One type of water heater may use a fuel type more efficiently than another type of water heater. For example, an electric heat pump water heater typically is more energy-efficient than an electric conventional storage water heater. Also, an electric heat pump water heater might have lower energy costs because of its higher efficiency than a gas-fired conventional storage water heater, even though local natural gas costs might be lower than the electricity rates.

Conventional Storage Water Heaters

Conventional storage water heaters remain the most popular type of water heating system for the home. Here you’ll find basic information about how storage water heaters work; what criteria to use when selecting the right model; and some installation, maintenance, and safety tips.

How They Work

A single-family storage water heater offers a ready reservoir — from 20 to 80 gallons — of hot water. It operates by releasing hot water from the top of the tank when you turn on the hot water tap. To replace that hot water, cold water enters the bottom of the tank, ensuring that the tank is always full.

Conventional storage water heater fuel sources include natural gas, propane, fuel oil, and electricity. Learn more about fuel types available when selecting a new water heater.

Since water is constantly heated in the tank, energy can be wasted even when a hot water tap isn’t running. This is called standby heat loss. Only tankless water heaters — such as demand-type water heaters and tankless coil water heaters — avoid standby heat losses. Some storage water heater models have a heavily insulated tank, which significantly reduces standby heat losses and lower annual operating costs. Look for models with tanks that have a thermal resistance (R-Value) of R-12 to R-25.

Gas and oil water heaters also have venting-related energy losses. Two types of water heaters — a fan-assisted gas water heater and an atmospheric sealed-combustion water heater — reduce these losses. Visit the Energy Basics site to learn more about how conventional storage water heaters work.

You might also want to consider some less conventional storage water heaters such as heat pump water heaters. These water heaters are usually more expensive but they typically have lower annual operating costs.

Selecting a Storage Water Heater

The lowest-priced storage water heater may be the most expensive to operate and maintain over its lifetime. While an oversized unit may be alluring, it carries a higher purchase price and increased energy costs due to higher standby energy losses.

Before buying a new storage water heater, consider the following:

Size and first hour rating
Fuel type and availability
Energy efficiency and costs

Installation and Maintenance

Proper installation and heater maintenance of your water heater can optimize its energy efficiency.

Proper installation depends on many factors. These factors include fuel type, climate, local building code requirements, and safety issues, especially concerning the combustion of gas- and oil-fired water heaters. Therefore, it’s best to have a qualified plumbing and heating contractor install your storage water heater. Be sure to do the following when selecting a contractor:

Request cost estimates in writing
Ask for references
Check the company with your local Better Business Bureau
See if the company will obtain a local permit if necessary and understands local building codes, etc

If you’re determined to install it yourself, first consult the water heater’s manufacturer. Manufacturers usually have the necessary installation and instruction manuals. Also, contact your city or town for information about obtaining a permit, if necessary, and about local water heater building codes.

Periodic water heater maintenance can significantly extend your water heater’s life and minimize loss of efficiency. Read your owner’s manual for specific maintenance recommendations.

Routine maintenance for storage water heaters, depending on what type/model you have, may include:

Flushing a quart of water from the storage tank every three months
Checking the temperature and pressure valve every six months
Inspecting the anode rod every three to four years