Maintenance and Efficiency Upgrades


The vast majority of homes in the United States have stand-alone water heaters. These are independent hot-water storage tanks with their own heat source, with the sole function of providing domestic hot water. A home that is heated by a boiler is likely to have a tankless coil or an indirect-fired storage tank. Standard gas water heaters are cheap and inefficient. They are typically expected to last only 5 to 15 years, so most people do not invest much money in them. Replacing a water heater tends to be an emergency event, full of stress because the old water heater has suddenly failed. Proper maintenance can extend the life of a water heater, and some efficiency improvements can be made to existing tanks with minimal investment; but if you have a standard water heater made before 2010, it may make more sense to upgrade to a very high-efficiency unit and not try to make the old one last longer. If your present water heater appears to be near the end of its useful life, now is the time to do research on the right type of replacement unit. Then you will be well prepared, whether you decide to wait until the old one goes or to replace the tank at your convenience.

Two types of tanks: Gas and electric

Stand-alone water heaters come in two basic types: gas and electric. Gas water heaters, fired with piped natural or LP gas, are the most common. Gas water heaters are usually smaller than electric water heaters, because their burners produce more heat than an electric heating element. A capacity of 40 to 50 gal. is typical for most houses. Electric water heaters in single-family homes often hold 50 to 80 gal. Electric water heaters don’t require a fuel supply in the house, so they are a common choice for homes where piped natural gas is unavailable.

Setting the temperature

The temperature of many hot-water heaters can be lowered without any noticeable reduction in the hot-water supply. Lowering the temperature of stored hot water saves energy by reducing conductive heat loss through the tank surfaces, called standby loss. Standby losses depend on the location of the tank (how cold it is outside the tank), how well the tank is insulated, and where the tank is located (in a cold climate, most losses in the winter just contribute to heating the house). The better insulated the tank and the greater your hot-water use, the less savings a temperature setback will provide.

Reducing the temperature setting by 10°F may save 2 percent to 5 percent of your water heating costs. The investment is $0, and it’s easy to readjust if you turn it down too much. In addition to energy savings, a lower tank temperature reduces scaling and corrosion and increases the life of the tank. The thermostat knob on a gas water heater is usually located at the front of the gas valve. Look carefully at the markings; on many gas water heaters, counterclockwise rotation increases the temperature setting. Electric tanks have two thermostats—one for each element—located behind metal covers near the bottom and the top of the tank. Because there is exposed wiring inside, shut off the circuit breaker before unscrewing the covers. Set both elements to about the same temperature, or set the top element just slightly cooler so the bottom element activates first.

Hot water stored below 120°F may increase the risk of Legionella pneumophili bacteria, which can cause pneumonia. But Legionella infections in single-family homes are quite rare compared to the risk of scalding, which increases rapidly at tank temperatures over 120°F. The U.S. Consumer Product Safety Commission recommends all home water heaters be set at 120°F, and even at that temperature third degree burns can occur with exposures of five minutes or more. Antiscald mixing valves can help keep children and elders, who are at higher risk for burns, safe.

Insulating hot-water pipes

Hot-water pipes lose energy in two ways: through conductive losses in pipe walls while hot water is running and through thermosiphon effects. Pipe insulation is readily available at most home centers and hardware stores and is easy to install. The biggest benefit from pipe insulation occurs within the first 10 ft. of the tank. Be sure to use the right diameter of insulation; most homes have a mixture of 1⁄2-in. and 3⁄4-in. pipes, so it’s a good idea to measure how much of each you will need.

Typically, gas water heaters don’t have degree markings, but the recommended target temperature of 120°F is usually between “Warm” and “Medium.” It may take some trial and error to find a setting that’s just right. Photo Credit: John Curtis

Photo Credit: John Curtis

The most common pipe insulation is made from polyethylene and is widely available at hardware stores and home centers. Photo Credit: Randy O’Rourke

Replacing Hot-Water Systems


When it is time to buy a new hot-water heater, it makes sense to install the most efficient replacement system possible. But choosing a water heater can be confusing; there are many different styles of high-efficiency units with competing claims of superiority. Which type will work best for you depends on the type of hot water and heating systems already in your house. If you have a furnace, then you will need some type of independent, stand-alone water heater. If you have a hot-water boiler, it usually makes sense to use it for water heating, especially if the boiler is a newer, efficient model. Stand-alone, standard LP-gas, or oil-fired water heaters are the most expensive to operate; if you have one of these, or if you heat your house with electric resistance or a heat pump, you might benefit from either a super-high-efficiency condensing water heater, a heat pump water heater (HPWH; or a solar water-heating system).
Water-heater efficiency
There are three basic types of replacement water heaters that work on their own (without a boiler): storage tanks, on-demand units (sometimes called tankless water heaters), and heat pump water heaters. Any of these types except the heat pump are available in either gas or electric models. Most have high-efficiency versions, and all have pros and cons. Every new water heater has an efficiency rating (called a uniform energy factor, or UEF) listed with AHRI. Today’s water heaters have UEFs that range from about 0.55 to 0.97 (except for heat pumps, which can have UEF ratings between 3 and 4); try to get a water heater with the highest UEF rating for the type of application you need.

Tank-type water heaters

Most standard gas water heaters have UEF ratings in the high 50s—that means over 40 percent of the energy is wasted. Until recently, the highest efficiency tank-type units you could buy were in the low 60s; most had efficient burners, electronic pilots, and high insulation levels. There is a new generation of high-efficiency tank-type water heaters emerging that have higher uniform energy factors. For example, the Kenmore® Elite uses a special air intake and other features to achieve an UEF of 0.7. Both the Kenmore and the Rheem® Fury (0.67 UEF) use electronic vent dampers. Although not the highest efficiency available, these products provide a sizable performance boost at a modest price increase over a standard gas water heater.

The most efficient units on the market are condensing gas water heaters; they typically have UEF ratings of 0.90 or higher. The best ones have stainless-steel tanks and high firing rates—typically around 90,000 to 120,000 Btu per hour, two to three times that of a typical tank. Because of their high cost—roughly $1,500 to $2,500—condensing water heaters may be more appropriate for supplying whole-house heating as well as hot water. Their high heat output makes them well suited for supplying a hydro-air system. A hydro-air handler used in conjunction with a condensing gas water heater is probably one of the most efficient replacements for an old, inefficient gas furnace and a standard electric or gas water-heating tank, especially if you have piped natural gas and live in a cold or mixed climate. Standard electric tank-type water heaters appear to be more efficient than gas units, with UEFs ranging from about 0.86 to 0.95.

The uniform energy factor, or UEF rating, is based on a standardized test that takes into account burner efficiency, pilot usage, and standby losses for “typical” hot-water usage. UEF ratings for gas, oil, and electric water heaters can be found at under “residential water heaters.” The directory also shows first-hour ratings and the burner efficiency, which is called “recovery efficiency.”

All new water heaters are required to have an Energy Guide label, which compares the energy use of this model to that of similar models. Buyers beware: “Energy Saver” is a common name found on water heaters, but it can be almost meaningless. Few water heaters have their UEF rating listed on the tank, but you can look it up in the AHRI directory online. Photo Credit: John Curtis

Tankless water heaters

At the other end of the spectrum is the tankless or on-demand water heater. The premise of a tankless water heater is to save energy by eliminating the storage tank and its associated standby losses, using a large gas burner to heat water only when you need it. (Don’t confuse this with a tankless water-heating coil that’s run from a boiler; these waste far more energy by keeping the boiler hot all year.) On-demand water heaters have higher UEF ratings than conventional water heaters. Gas on-demand water heaters fall into two groups: those with standard gas burners and UEF ratings in the low 80s, and those with condensing burners and UEFs in the 90s. Savings will be lower than the UEF ratings (and marketing literature) indicate, about $80 to $100 per year (assuming national average of $1.20/therm). The modest savings make it hard to recoup your investment in a reasonable time: Tankless water heaters cost between $800 and $1,500. Installation cost is also likely to be high; larger gas lines are typically needed, and in many cases new electrical service. Other advantages of tankless water heaters are their small size and their ability to provide hot water continuously, but there are some drawbacks as well. The burner starts when a hot-water tap is opened, by sensing the drop in pressure, so some cold water always flows into the heat exchanger at first. If you use hot water intermittently, or take a shower right after another family member, you may end up with surprise “slug” of cold water each time. The total flow of hot water in gallons per minute (GPM) is also limited by the burner capacity, so sizing these units is less forgiving than water heaters with some storage. Some tankless units have small storage tanks built in to reduce these troubles, or an external tank can be added. Finally, on-demand water heaters are sensitive to minerals—if you have hard water, the annual service that’s needed will cut into the savings. I don’t generally recommend on-demand units for most existing-tank replacements, but these heaters can make sense in a major renovation. Electric tankless heaters are also available, but they are not typically suitable for whole-house service.

Indirect-fired tank (with boiler)

If you heat your house with a hot-water boiler, an indirect-fired water heater can generate hot water more efficiently than a tankless coil or most stand-alone units. The storage tank contains a thermostat that requests heat from the boiler, just like a separate heating zone. To get the best efficiency from an indirect storage tank, the boiler has to have the right controls: It needs to be set up for “cold start” and should also include a purge cycle. Generally, the control should also include a 30-minute hot-water priority. This ensures that you always have hot water, even on a cold morning when the boiler is needed for space heating. Many indirect-fired tanks have a built-in heat exchanger. Boiler water is pumped through the heat exchanger, heating water in the tank without mixing boiler water with the potable water supply. Alternatively, almost any type of insulated storage tank can be combined with an external heat exchanger to produce hot water from a boiler. An external heat exchanger requires two circulating pumps, adding a small electrical load. But when the unit is properly sized, the heat transfer is very efficient. All piping between the boiler and the storage tank must be thoroughly insulated to minimize heat loss, including any external heat exchanger (don’t insulate pump bodies). Indirect tanks have AHRI efficiency ratings, but they don’t have UEF ratings like other water heaters. This is because any boiler can provide the heat source with a wide range of efficiencies. Indirect tanks are rated for “standby loss” in a range from 0.4 to over 1.0; try to aim for 0.8 or less. Smaller tanks tend to have higher losses per hour, but they are cheaper and take up less space. Look for the lowest standby loss available with a first-hour rating that suits your needs.

Heat pump water heaters

Heat pump water heaters (or HPWHs) have come a long way. Now considered a mature technology, today’s HPWHs offer better efficiency and reliability at a price range of about $1,300 to $2,000. HPWHs have UEFs in the range of 2.0 to 3.5, which means that between half and three-quarters of the heat comes from the environment around the heater, rather than from the electric meter. There are a number of factors that affect the real installed efficiency. First, controls in most units allow for resistance heat to turn on when demand is high or surrounding air temperatures are low; this can really cut into the overall efficiency, depending on how the control is set and how you use hot water. The most efficient units have smaller electric backup heaters (less than 2,500 watts) and run the heat pump even while the resistance heat is on. Larger tanks also tend to run more efficiently than small tanks. Also, the heat comes from the air around the tank. If you live in a cold climate, that heat is not entirely free: If the tank is in a conditioned space, you’ve already paid to heat it up. If it’s in an unconditioned basement or crawlspace, the air may get too cold and efficiency can suffer. HPWHs need space, especially in cold climates; if the space available to install the water heater is in a closet or other restricted area, a HPWH is not a good choice. Some units allow for a duct to divert the chilled air output outdoors in cold weather. Also, the standard UEF ratings for HPWHs are based on relatively warm climates; the Northwest Energy Efficiency Alliance has a listing of units that achieve higher efficiencies in cold climates, which can be found at The bottom line is this: If you are looking to replace an existing electric or LP-gas water heater, consider getting a HPWH. Average savings should be around $300 per year, so payback on the $1,000 to $1,500 increased cost is fairly reasonable, especially if there are incentives available to bring the cost down. Savings may be higher where electric rates are higher than average, even in colder climates. Savings will tend to be largest when hot-water use is high.

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