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Your choice of water heater replacement will likely impact your household budget, for better or worse. In the average home, making hot water alone represents about 12 percent of the total energy consumption. Only heating and air conditioning take up a bigger portion. Any efficiency gains you can make when you select a water heater replacement will therefore show up as lower monthly operating costs as well as better hot water performance.

water heater inspection

Because the service life of storage tank water heaters averages only a decade, and even less where hard water is a problem, you’ll probably get the chance to decide on a water heater replacement at some point during your home ownership. Here are just some of the factors that will influence your selection as well as the choices available.

Evaluating Efficiency

Water heater efficiency is formally estimated according to a unit’s efficiency factor (EF) rating. The EF of a new unit is prominently displayed on the Department of Energy’s yellow Energy Guide sticker, as well in manufacturer’s specifications. The higher the EF, the more efficient the heater. Some older existing hot water heaters may have EF ratings as low as 0.53.

Three factors that influence a heater’s EF rating include:

  • Recovery rate – A measure of how efficiently and quickly the heat from the burner is transferred into the water in the tank
  • Standby loss – The percentage of heat loss per hour that occurs as hot water in the storage tank waits to be utilized
  • Cycling loss – Heat loss that results as water circulates through the inlet pipe, the tank and the outlet pipe

Minimum efficiency requirements for new hot water heaters are set by the U.S National Appliance Energy Conservation Act. As of April, 16, 2015, the minimum standards increase. For typical gas-fired residential water heaters, the new EF minimum is 0.67. Oil-fired water heaters must have an EF of 0.68 and electric models should have and EF of 0.96.

Fuel Types

Gas-fired storage tank water heaters are the most commonly installed in the United States. Where natural gas is readily available, they’re usually the most inexpensive water heater replacement option as well. Calculated on a per-BTU basis, heat energy produced by natural gas is currently the most affordable option available, and the large market and mass production of gas-fired heaters produce an economical upfront purchase price.

Oil-fired water heaters actually provide a higher EF rating because the oil burner flame is hotter than a gas flame. This also results in an improved recovery rate as an oil flame re-heats the tank faster. On a per-BTU basis, oil is competitive with natural gas, depending on the locality and the particular time frame. However, installation of an oil-fired heater can be complex. A qualified HVAC contractor can advise you on the options.

Electric heaters provide the highest EF rating, as well as the highest operating costs. Because gas and oil are less expensive than electricity per BTU, in many areas of the country, operating an electric water heater is three times more costly. On the plus side, the simplicity of electric heaters gives them a low upfront purchase price. Because no gas or oil lines are required, installation is also uncomplicated and less expensive than a gas- or oil-fired unit.

The High Efficiency Option

High-efficiency gas-fired water heaters offer EF factors above 0.90. Condensing technology is behind these efficiency improvements. In a standard heater, substantial heat waste occurs in the form of hot combustion gases exhausted up the vent. In addition to a standard heat exchanger at the bottom of the tank, a high-efficiency unit incorporates a secondary heat exchanger coil submerged inside the tank. Instead of immediate venting, hot exhaust gases are circulated through the coil and release extra energy as they condense, adding additional heat to the water and improving efficiency.

The superior performance and energy conservation of a high-efficiency water heater comes with a few caveats. The first is a substantially higher upfront purchase price than other options. While lower fuel consumption begins compensating for the high sticker price from day one of operation, the time to achieve full payback may be lengthy. Also, installation of a high-efficiency heater is complicated. Because the unit can’t use the existing vents of a standard gas or oil-fired heater, special intake air vents and exhaust vents must be added, in addition to a drain system to remove condensation.

Learn more about Griffith Energy Services, Inc.’s water heater replacement options, or contact us today at 888-474-3391 to schedule an appointment!

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