Water Heater Buying Guide
A quick guide to strategic product selection
Water heating accounts for approximately 17% of residential energy consumption, making it the third largest energy consumer in homes.
Top 4 things to look for when buying a new water heater:
- Energy Factor (EF): a water heater’s efficiency is measured by its Energy Factor (EF). The higher a product's EF, the more efficient the product. An EF of 0.63 is a good rating for gas-fired units (0.67 being the current high); a 0.93 is a good rating for electric-fired units; and a rating of at least 0.80 is good for tankless units.See below for more details on Energy Factor.
- First-Hour Rating (FHR): measures how much hot water will be available during the busiest hour of the day (note: a large tank does not necessarily translate to a higher FHR). The FHR is important as it indicates the water heater’s ability to replenish hot water as it is drawn from the tank. Note that for tankless water heaters, flow rate or maximum gallons per minute (GPM) is used to measure hot water availability (see below for details).
- Storage and fuel type: traditional, tankless and solar water heaters are widely available (see below for details on each). You will need to consider the fuel type that either already exists or is available for access to your property.
- Capacity: when buying a water heater, whether it be storage or tankless, consider how much hot water you will need at a given time, typically depending on the number of people in your household and how often you run multiple hot water devices (dishwasher and shower at one). Think efficiency; bigger is not always better.
- Rebate and tax credit compatibility: the Federal Government is currently offering a tax credit for the purchase of efficient water heaters. Your utility may also offer rebates. Such opportunities make the purchase of an efficient product more financially feasible.
Types of water heaters
Standard (storage tank)
Standard water heaters store water in an insulated tank, hot-and-ready for use at any time of the day. Storage tank capacities range from 20-80 gallons. These units operate around the clock, even when there is no hot water demand. This inefficiency is known as standby heat loss and leads to unnecessary energy use - and costs.
The average gas or oil fueled storage tank water heater generates approximately 2 tons of CO2 annually, half that of your average automobile. The average electric water heater however, generates an astounding 8 tons of CO2 annually, nearly double that of your average automobile.
Tankless (on demand)
By heating water only when you need it, ENERGY STAR qualified tankless water heaters save the typical family more than $100 per year on gas bills compared to a standard storage model. These models also last 35% longer (typically 20 years).
Very popular in Europe, tankless water heaters work by circulating and heating water through a coil, or heat exchanger. When a hot water tap is turned on, 
cold water encircles the heat exchanger and leaves the heater at its set-point temperature, heating water on an on-demand basis. Combustion gases exit safely through a dedicated, sealed vent system.
There are no large storage tanks continuously maintaining excessive quantities of hot water involved in this innovative technology. Instead, tankless hot water systems have a space-saving design, provide an endless supply of hot water, and eliminate standby heat loss. The limitation, however, tends to be the limited number of fixtures that can simultaneously use hot water. However, if your unit is sized appropriately for your household, this limitation is not a factor.
Choosing the right size
While the capacity of gas storage water heaters is based on the number of gallons that will fit in the tank, the capacity of tankless models is based on the gallons of hot water produced per minute (GPM), also referred to as flow rate. The more likely you are to have the shower, dishwasher and clothes washer running at once, the larger the GPM you will need. We recommend you consult with a licensed plumber to estimate the hot water demands in your home, but here are some average GPM estimates to consider:
- Shower and bathtub: 2.5 gallons per minute
- Clothes washer: 3.3 gallons per minute
- Kitchen and bathroom faucet: 2.2 gallons per minute
- Dishwasher: 1.3 gallons per minute
The importance of temperature rise
Temperature rise in degrees Fahrenheit is used to help determine a tankless water heaters' GPM rating. Temperature rise is the difference between the temperature of the hot water exiting the heater and the cold water entering the heater. For example, if you want your shower water at 115 degrees Fahrenheit and the water coming from your pipes is 65 degrees Fahrenheit, the temperature rise equals 50 degrees Fahrenheit.
It is important to know before making your tankless water heater selection that product manufacturers and vendors use different temperature rise assumptions to calculate GPM for tankless water heaters. 35, 45 and 77 degrees Fahrenheit are common temperature rise assumptions used to help determine GPM. The lower the degrees Fahrenheit for the temperature rise, the higher the GPM rating. If you go by a temperature rise that is too low, you risk assuming the product has a GPM high enough to meet the needs of your household's hot water demand. Your safest bet is to assume a high temperature rise. ENERGY STAR and Eco-rate use 77 degrees Fahrenheit.
► Eco-rate features a variety of tankless water heaters. Click here to see them.
Solar thermal
While the initial purchase price of a solar thermal water heater may be high compared to standard models, they can be quite cost effective. As much as 70% of the sun's energy can be extracted using solar thermal technology, reducing hot water heating expenses by up to 90%.
Note that a solar thermal water heating system is different than a solar panel/photovoltaic (PV) system. Solar hot water heaters use the sun to heat either water or a heat-transfer fluid in collectors while photovoltaic solar cells directly convert sunlight into electricity.
Solar water heating systems require a conventional water heater as a backup water heating source to ensure hot water is available when solar energy is not. Click here to read more about the different types of solar water heaters.
An ENERGY STAR qualified solar water heating system can save the average household $190 annually when combined with a gas fueled storage tank water heater as backup ($250 annually when combined with an electric storage tank water heater as backup). Like tankless water heaters, they also last 35% longer than conventional storage water heaters.
Remember to look for a high Solar Fraction (SF) rating when purchasing a solar thermal water heating system. The Solar Fraction measures the portion of the total conventional hot water heating load (delivered energy and tank standby losses) provided by solar energy. The higher the SF, the more water the solar water heater is able to produce, thereby reducing the load on the back-up/conventional water heater).
What to look for in a new water heater
Compare water heaters using Eco-rate’s criteria. We’ve done the research for you and only feature water heaters that are ENERGY STAR qualified. Select the product with the highest “Average Eco-rating”. This is the product that scores best in terms of environmental impact, consumption, lifecycle cost and price. Please click here to discover our solar water heater rating system; here to view our tankless water heater rating system; and here to view our standard gas water heater rating system.
High Energy Factor (EF)
A water heater’s efficiency is measured by Energy Factor (Solar Factor for solar water heaters - see above). The energy factor (EF) indicates a water heater's overall energy efficiency based on the amount of hot water produced per unit of fuel consumed over a typical day. The higher the number, the more energy efficient the water heater.
An Energy Factor Rating includes the following:
- Recovery efficiency: how efficiently the heat from the energy source is transferred to the water.
- Standby losses: the percentage of heat loss per hour from the stored water compared to the heat content of the water (water heaters with storage tanks)
- Cycling losses: the loss of heat as the water circulates through a water heater tank, and/or inlet and outlet pipes.
Efficienct water heater models have better tank insulation, better heat traps, and more efficient burners. Such improvements have a modest impact on price but increase efficiency by about 7.5%. To increase efficiency further, manufacturers may add a power vent to accelerate the venting of combustion gases. This may increase the installed cost, but lifecycle cost savings and indoor health quality are also increased.
ENERGY STAR label
Most Americans have conventional water heaters that are barely more efficient than ones sold 20 years ago. Today's new ENERGY STAR qualified water heaters include smart design enhancements that offer significant improvements in efficiency and performance. If everyone in the U.S. purchasing a standard gas water heater this year chose a qualified gas storage model instead of a conventional product, we would prevent one billion pounds of carbon dioxide from entering the atmosphere, the equivalent of creating 132,000 acres of forest.
Find ENERGY STAR labeled water heaters by clicking here.
Insulation (for standard water heaters)
Because water is constantly heated in the tank, energy can be wasted even when a hot water tap isn't running (this is called standby heat loss and wastes energy and money). Only tankless water heaters avoid standby heat losses. However, you can find some storage water heater models with well-insulated tanks, which significantly reduce standby heat losses, lowering annual operating costs. Look for models with tanks that have a thermal resistance (R-Value) of R-12 to R-25.
First-Hour Rating (FHR)
FHR measures how much hot water will be available during the busiest hour of the day. A large tank does not necessarily translate to a higher FHR. This rating is important as it indicates the water heater’s ability to replenish hot water as it is drawn from the tank.
Emerging Technologies
- Heat Pump Water Heaters
Heat pump water heaters use half as much energy as your conventional electric storage tank water heater. They work by transferring energy from the surrounding air to water in a storage tank (like a refrigerator working in reverse) and are most effective in warm climates with long cooling seasons. The technology has been around for some time, but limited consumer and contractor awareness has lead to manufacturers discontinuing their lines. However, renewed momentum will be regained when ENERGY STAR releases their list of qualified Heat Pump Water Heaters later this year. If everyone buying an electric water heater this year chose an ENERGY STAR qualified heat pump model instead of a standard model, we would avoid 19.6 billion pounds of carbon dioxide emissions - the equivalent of taking 1.6 million cars off the road.
- Drain Water Heat Recovery
Drain water heat recovery systems reduce the demand placed on storage tank water heaters, reducing energy use by up to 30%. Click here to read more about drain water heat recovery.
Buy local
To reduce carbon emissions associated with product transportation and to support your local economy, we encourage you to buy your water heater from a local manufacturer.
► For Tankless Water Heaters, Eco-rate features where a product is made and how far it would have to travel from its manufacturer to your home. Note that most tankless water heaters are made in Japan.
Maximize the performance of your water heater
- Insulate your standard storage tank water heater and 6 feet of the hot and cold water pipes connected to the water heater.
- Use a timer. A timer will turn hot water heating OFF during times you don't need hot water (sleeping, on vacation, etc.). If properly insulated, your storage water heater will store enough hot water so that when you do need it again, enough hot water will be available. (A timer on a conventional electric water heater can reduce your hot water heating costs by 5-12%).
- Lower your water heater's thermostat to 120°F
- Reduce how water demand: install aerating, low-flow faucets and showerheads and ensure that leaky faucets are repaired promptly.
- If your hot water heater is more than 10-15 years old, you may want to consider upgrading to a new and more efficient water heater.
Properly dispose of your old water heater
Use Eco-rate’s product search tool to find a water heater and then select the “Recycle” tab from the product page. You will then be able to use the Earth 911 search widget to find a local reuse or recycling location for your water heater.
Questions? Feedback?
Visit our Forum to ask questions and share your thoughts about innovative, energy-efficient water heating products.