Energy Efficiency: Residential Water Heaters

Studies indicate that the average U.S. household spends between $400 and $600 per year on water heating. On average, water heating is the second largest household energy expenditure after space heating and cooling. The vast majority of conventional water heaters sold in the U.S. market are only marginally more efficient than the ones sold 20 years ago, but improved designs do exist that can offer residential customers significant improvements in energy efficiency.

The ENERGY STAR program has qualified five types of residential water heaters (i.e. five different technologies) that can decrease water heating-related costs by as much as 50 percent.

Types of Residential Water Heaters

The five types of residential water heaters that qualify for the ENERGY STAR rating are described in the table below. They provide the average customer the opportunity to reduce their annual energy costs by $28 to $670 and significantly reduce CO2 emissions:

Type	Current Standard Alternative	Potential Reduction of CO2 Emissions	Potential Annual Savings per Household	Cost Recovery of Premium Price
High-Efficiency Gas Storage	Gas Water Heater	1 Billion LBS	$28 to $65	2.5 years
Gas Condensing	Gas Water Heater	30 percent	$110 to $250	3 to 5 years
Whole-Home Gas Tank-less	Gas Water Heater	50 percent	$115 to $260	3 years(extends life by 10 years)
Solar	Used in conjunction with Gas or Electric Water Heaters	50 percent	$190 to $250	10 years(extends life by 10 years)
Heat Pump	Electric Water Heater	19.6 Billion LBS	$290 to $670	3 years

Time to Replace Your Water Heater?

Water heaters generally last 7 to 15 years depending on their design and the nature of the local water conditions. Water heaters are generally replaced in response to a failure, which normally results in a quick and sometimes thoughtless decision. Proper consideration of all options rarely occurs under these circumstances and household budgets are either ill-prepared or inadequate to handle the amount of investment necessary to realize these benefits.

This situation means that even though the economic payback of a high efficiency investment over an extended period of time is usually clearly evident, oftentimes suboptimal and even least-efficient choices are made with little information. Studies have estimated that there are over 27 million households in the U.S. with water heaters over 10 years old; this population provides an opportunity to significantly reduce energy consumption nationwide.