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Choosing a Water Heater

Types of Water Heaters

Storage/electric-resistance water heaters

The most commonly used model, the storage/electric-resistance water heater, works by heating water and storing it in an insulated tank. It’s inexpensive and easy to install, and it converts power at 100 percent efficiency.

Heat pump water heaters

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, these units work like a refrigerator in reverse. While a refrigerator removes heat from inside the box and expels it into the surrounding room, a heat pump water heater uses the heat in the surrounding air and expels it — at a higher temperature — into a tank to heat water.

Heat pump water heaters require installation in locations that stay in the 40º-90ºF range year-round and provide at least 1,000 cubic feet of air space around the water heater. Non-air-conditioned basements are great locations for these types of units. They also act as dehumidifiers while in operation, so they help keep basements drier and less musty smelling.

Tankless water heaters

Tankless water heaters are also known as demand water heaters or instantaneous water heaters. The tankless water heater doesn’t have a storage tank, essentially eliminating storage tank heat losses. Hot water storage tank heat losses are analogous to the heat lost from a hot cup of coffee getting colder, as it sits losing heat. Tankless water heaters can be gas or electric. They are classified as either a “whole house” or “point of use” water heater. Whole house tankless water heaters actually replace the existing conventional storage water heater while the point of use water heater is remotely installed in close proximity to the actual hot water use, such as under a kitchen sink. They are more expensive to purchase and install than a conventional storage water heater, but may cost less to operate since they don’t maintain a tank full of hot water when not in use.

Solar water heaters

A solar water heater typically includes collectors mounted on the roof or in a clear area of the yard, a separate storage tank near the conventional heater in the home, connecting pipe, and a controller. Throughout the year, the solar system preheats the water before it reaches the conventional water heater. During the summer, it may provide all the heat that’s required.


A desuperheater is an attachment to your air conditioner or heat pump that allows waste heat from that device to help heat your water. In hot climates, a desuperheater can provide most of a home’s hot water needs during the summer.

Tips on buying a new water heater

  • Although many consumers buy water heaters based only on the size of the storage tank, the first-hour rating (FHR), provided on the Energy Guide label, is actually more important. The FHR is a measure of how much hot water the heater will deliver during a busy hour. A larger tank doesn't necessarily mean a higher FHR. When you buy a water heater, estimate your household's peak-hour demand and look for a unit with an FHR in that range.
  • If you live in a moderate climate with relatively low heating needs, consider a more efficient heat-pump water heater (HPWH). Although an HPWH may have a high initial cost, it can save up to 50 percent of your water heating bill.
  • For energy efficiency as well as safety, when buying gas- or oil-fired water heaters, look for units with sealed combustion or power venting to avoid back-drafting of combustion gases into the home.
  • Everything else being equal, select a water heater with the highest energy factor (EF), the measure of a water heater's efficiency. EF is based on recovery efficiency, standby losses, and cycling losses. The higher the EF, the more efficient the water heater. Electric-resistance water heaters have an EF ranging from 0.86 to 0.95; gas water heaters from 0.50 to 0.60, with a few high-efficiency models at around 0.80; oil water heaters from 0.70 to 0.85; and heat-pump water heaters from 1.50 to 2.00.
  • Whenever possible, try to install your water heater in a conditioned area. Also try to minimize the length of the pipes that must be run to your bathroom and kitchen.
  • Warranties on water heaters vary, so be sure to compare the warranties and make sure you are getting the best water heater for your money.