Time for a New Water Heater?

With an average annual cost of $400–$600 for a household to heat water, choosing the best replacement is important. When selecting a new water heater for your home, the two key factors are capacity and energy efficiency.

There are five types of water heaters in most areas.

Conventional storage water heaters offer a ready reservoir of hot water that, when sized correctly, is adequate for everyday use most of the time. These are typically lower in cost and have a life expectancy of 10–15 years. The major disadvantages of this type are potentially running out of hot water and standby heat loss. Sizing the tank correctly for your home and insulating the tank can help mitigate these issues.

Tankless or demand-type water heaters heat water directly without the use of a storage tank. This type of water heater is designed to provide an adequate supply of hot water without running out when adequately sized. This type of system is more expensive, but the life expectancy is 20-plus years. They’re more energy-efficient than storage-type heaters, and, depending on the amount of hot water your home uses, you could save $100 or more a year in energy bills. However, sometimes the energy savings don’t pay for the cost of purchase and installation. The limited flow rate of hot water means simultaneous, multiple uses of hot water can push a tankless system to its limit.

Heat pump water heaters move heat from one place to another instead of generating heat directly for providing hot water, resulting in high efficiencies and significant cost savings. Their purchase price is a higher as well, and the life expectancy is 10–15 years. They’re two to three times more energy-efficient than a storage tank heater, with an Energy Star-rated system saving almost $300 a year on electric bills. Performance is dependent on installation location, and heat pump systems exhaust cold air, increasing the load on home heating systems during cold months.

Solar water heaters use the sun’s heat to provide hot water, but they are the most expensive type of water heater and have a 20-year life expectancy. They’re 50% more efficient than gas or electric water heaters but may require a backup system for cloudy days or times of high demand.

Tankless coil and indirect water heaters use a home’s space heating system to heat water. Comparable in price to a tankless system, they have the shortest life expectancy at 10–11 years. They offer lower installation and maintenance costs but are typically an inefficient choice for homes in warmer climes.

When selecting a replacement water heater for your home, it’s important to not only look at the purchase cost but also the installation, operating and maintenance costs to determine if it’s worth investing in a more efficient system.

About 27 million households in the U.S. have a water heater that’s more than 10 years old, so it’s a good idea to do your research early to know which replacement will best fit your needs.