Heating water accounts for up to 30 percent of the average home’s energy budget. So if you have an energy-hog of a water heater that you inherited with your 30-year-old home, you might want to consider replacing it. Like most people, you’ll want to wait until you have a problem with your water heater before thinking of replacing it but making a rushed decision on what system to buy is going to leave you short-changed. Since there are so many efficient options on the market now, it’s worth your time to consider each one carefully and see which would best suit your home. To help you out, I’ve compiled some pertinent information on Gas Storage, Electric Storage, Electric Heat-Pump, Solar and Tankless Water Heaters, how they work, and what they mean to your pocket-book upfront and in the long term. You’ll also find the federal, state and utility incentives that go along with each option. All APS (Arizona Public Service) customers, take special note of the $0 out-of-pocket cost for installing a solar water heater and the operating savings you will achieve over the long term.
I. High-Efficiency Gas Storage Water Heater:
How does it work?
Ranging in size from 20 to 80 gallons (or larger) and fueled by natural gas, gas storage water heaters transfer heat from a burner to water in an insulated tank. Because heat is lost through the flue and through the walls of the storage tank, energy is consumed even when no hot water is being used.
New energy-efficient gas-fired storage water heaters are a good, cost-effective replacement option for your current water heater if you have a gas line in your house. They have higher levels of insulation around the tank and one-way valves where pipes connect to the tank, substantially reducing standby heat loss. Keep an eye out for the price to come down for newer super-efficient
“condensing” and “near-condensing” gas water heaters, which save much more energy compared to traditional models but are currently niche products.
Estimated
up front cost (including installation):
$1025
No tax credits or rebates available
Efficiency: 65%
Yearly operating cost: $323
High-Efficiency Electric Storage Water Heater:
How does it 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. Electric water heaters have one or two electric elements, each with its own thermostat.
With two electric elements, a standby element at the bottom of the tank maintains the minimum thermostat setting while the upper demand element provides hot water recovery when demand heightens.
Estimated up front cost (including installation):
$820
No tax
credits or rebates available
Efficiency: 95%
Yearly
operating cost: $439
Electric Heat Pump Water Heater:
How does it work?
Heat pump water heaters use electricity to move heat from one place to another instead of generating heat directly. Therefore, they can be two to three times more energy efficient than conventional electric resistance water heaters. To move the heat, heat pumps work like a refrigerator in reverse. While a refrigerator pulls heat from inside a box and dumps it into the surrounding room, a
stand-alone air-source heat pump water heater pulls heat from the surrounding air and dumps it—at a higher temperature—into a tank to heat water.
Estimated up front cost (including installation): $1660
Federal Tax Credit: up to $450
Out-of-pocket cost: $1210
Efficiency: 200-250%
Yearly operating cost: $190
Yearly operating savings compared to an electric storage water heater: $249
Payback period: 4.9 years
Note:
- Operates by taking heat from the room and heating water with it (good for the summer in the Valley – it
provides free airconditioning and dehumidifying) - Uses 1/3 to ½ as much electricity as a conventional storage electric water heater.
Solar Hot Water Heater:
How does it work?
Solar water heating systems include storage tanks and solar collectors. There are two types of solar water heating systems: active, which have circulating pumps and controls, and passive, which don’t. Most solar water heaters require a well-insulated storage tank. Solar storage tanks have an additional outlet and inlet connected to and from the collector. In two-tank systems, the solar water heater preheats water before it enters the conventional water heater. In one-tank systems, the back-up heater is combined with the solar storage in one tank.
Estimated up front cost (including installation): $5000
APS (Arizona Public Service) Utility Incentive: 50% of the total system cost
Federal Tax Credit: 30% of the system cost up to $1500
AZ State Tax Credit: 25% of the system cost up to $1000
Out-of-pocket cost: $0
Efficiency:
120%
Yearly operating cost: $175
Yearly operating savings compared to an electric storage water heater: $439
Payback period: 0 years
Note:
- A Solar Water Heater can save 50–75% of your water heating energy over the long term
Tankless or On-Demand Water Heater:
How does it work?
Demand water heaters heat water directly without the use of a storage tank. Therefore, they avoid the standby heat losses associated with storage water heaters. When a hot water tap is turned on, cold water travels through a pipe into the unit.
Either a gas burner or an electric element heats the water. As a result, demand water heaters deliver a constant supply of hot water. You don’t need to wait for a storage tank to fill up with enough hot water. However, a demand water heater’s output limits the flow rate.
Things to consider with a tankless water heater:
- If water uses are widely spaced at opposite ends of your house, a tankless system does not work
well. - Tankless water heaters perform much better when coupled with low-flow faucets and showerheads.
- You might have to re-wire your house to be able to support a single tankless water heater that will
service your whole house. - Tankless water heaters are most efficient if they are gas-fired not electric.
Estimated up front cost (including installation): $2200
Federal Tax Credit: up to $1500
AZ State Tax Credit: $200 for Energy Star tankless water heaters
Out-of-pocket cost: $500
Efficiency: 80%
Yearly operating cost: $262
Yearly operating savings compared to a gas storage water heater: $61
Payback period: 8.2 years
Tags: aps renewable energy rebate, arizona state tax credit, electric heat pump water heater, electric storage water heater, federal tax credits, gas storage water heater, solar water heater, tankless water heater, water heater
