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Energy Use Coordinator Matt Lambert Reports on Water heaters in this special Ask Matt Feature. The choices homeowners have in water heaters can be Overwhelming.  Matt offers a few tips for choosing one that fits your budget both long and short term.

Dear Matt,

When I first owned my home we were forced to make a quick decision on a water heater when it started leaking. Now, almost 15 years later, we want to make a switch before we are forced to. We also want something more efficient. What should I look at when choosing something that won’t really change my electric bill.

When a water heater stops working or starts leaking it can be overwhelming when it comes to replacement. There are a surprising number of options. At FreeState I’m the water heater guy. Or, at least that’s what I’ve been told. But, I do take a lot of questions regarding these necessary units in homes. There are basically three ways to break down the decision of replacing your water heater. Energy source used, the type and size, and finally efficiency and cost. Let’s get to it!

Energy Source
The first question you should ask is, what kind of energy options do you have available? In FreeState’s rural service areas the majority of water heaters I have seen have been electric, and propane. Some members do have access to natural gas, but it is not as common. These three fuel sources are the most affordable to install. Homes are often ready to accommodate these three sources when you move in. Less common options are solar energy for water heating, and I’ve also seen members capture heat from their wood stoves to heat water.

There are pros and cons to any source you have access to. Ultimately, the decision may not be yours. It may be dependent on the previous owner, a builder’s preference, or maybe even installation costs. Whatever the case may be, the first item on the checklist is how do you power the water heater.

Type and Size
Your next question should be, how much hot water do you need? There are two primary types of water heaters readily available. Tanked and tankless.

Tanked water heaters are most common and what a majority of us have already in our homes. They come in many sizes with the most common sizes being 50 gallons or 40 gallons in apartments or mobile homes.

The specific size you need can be determined by how many people live in your home. The rule of thumb is three to five people put you in the 50-gallon tank range.

Tanked high-efficiency units sold incorporating air source heat pumps. These heat pump water heaters are some of the most energy-efficient units available.

Tankless water heaters don’t use energy to keep water warm in a tank. Instead, they use energy to create hot water instantaneously. Although yearly usage may be much cheaper with a tankless water heater, their initial cost often outweighs their long-term benefits as homes may need to retrofit to accommodate the large amount of instant energy needed to heat water on demand. Remember with either the tank or tankless units, research the manufacturer's recommendations on sizing, and always consult your installer.

Efficiency and Cost
The next item on the decision-making checklist is efficiency or operating costs, and the cost of initial installation. Granted, this may take the most time, but the information is readily available to consumers. When it comes to energy efficiency check for the ENERGY STAR seal and check the Energy Guide (yellow tag). The yellow label affixed to the unit is from the department of energy will give you a great idea of how much the heater will cost per year. Of course, these numbers are based upon estimated usage and energy cost and recommended maintenance. You may need to do a little more research when it comes to installation but consider getting multiple bids prior to making the decision.

The cost of the actual unit is also something to consider. Check for tax credits that may be available on heat pump water heaters. And, FreeState members (EAST DISTRICT) should check their eligibility for potential rebates on electric tanked water heaters. Right now, only the McLouth district members are eligible for rebates due to the contract with our power supplier.

The Verdict
When looking at efficiency and extended cost of ownership, you just can’t beat an electric heat pump tanked water heater. Although the up-front costs may run a little higher, the available tax credits and low yearly operating costs make up for it in the long run. Another consideration is a unit that is programmable in order to take advantage of maximum energy conservation and time of use rates.

However, each individual has to make their own determination and the information I’ve provided is simply to help guide your decision. Make sure to take into consideration your energy availability or preference, what type of unit fits your home and needs, the cost of installation, and what it will cost to run the unit. These are just a few of the factors that will determine what water heater you ultimately choose.   

Always follow the recommended maintenance like shutting the unit off and draining the water out of the tank a couple of times per year and keeping the thermostat unit from being turned up too high to help prolong the life of the unit and gain maximum energy efficiency.

water heater table
The table is an example of how members can determine the efficiency and cost of their water heater. This information can assist in making a final decision. The Rheem brand is being used because FreeState does sell the Rheem Marathon unit and does not sell the non-life warranty. Due to supply chain issues, we are not able to sell heat pump water heaters at this time. We do not sell non-electric units. The information below is based on current pricing and information and is subject to change. The information is meant as a guide and is only an estimate or example.