Don't get scalded by water-heating bills

Tankless water heaters are big money savers in the long run

Each year, water heaters are replaced in 8 percent of American households. In 2006, almost all of them — 97 percent — were standard, free-standing, electric- or gas-powered, tank models. Yet there are many more options for homeowners, and many ways to save both energy and money.

Determining the best option for a house depends on many factors, including where the house is located and how much water you use. Tankless models are the fastest-growing segment of the market.

Nationwide Water Heater Facts and Figures

• Water heating is the second-largest user of energy in American homes, after space heating/cooling.

• One out of every 13 water heaters is replaced each year.

• The Pacific states have the highest percentage of water heating by gas at 70 percent. New England has the lowest, at 52 percent.

• 53 percent of homes use natural-gas water heaters; 40 percent use electricity. The remaining uses primarily are fuel oil, propane, wood and solar.

• Energy Star-qualified water heaters consume 7 to 55 percent less energy than standard-efficiency models.

Source: U.S. Dept. of Energy. Water Heater Market Profile 2009; www.drintl.com/HtmlEmail/Water_Heater_Market_Profile_Sept2009.pdf

"The burner is so much more efficient than a standard, tank-type water heater," says Mike Davis, president of SOS Plumbing in Talent. "If you're (in a house with) one or two people, you may not see a big benefit, but the bigger the household, the better the benefit with tankless."

The average cost of a new, tankless system may run about $2,600 installed, whereas a new, full-tank model might cost $1,000. But if you're converting from an energy-wasting, full-tank, electric heater to natural gas, you can figure in a $300 federal tax credit, a $340 state tax credit and an additional $200 from Avista. This can bring the payback period down to two and a half years, according to Davis.

Over the long term, tankless, natural-gas heaters cost about half of what electric heaters cost to operate and about 20 percent less than full-tank, gas models.

Although natural gas is by far the leading water-heater technology in the Pacific states, some homes use heating oil. For those residences, tankless also is an option.

"The nice thing about heating oil is that it's not flammable; it won't explode," says Karen Ferguson, who works for Medford Fuel. "A gallon of fuel oil has 40 percent more BTUs than natural gas. The Toyotomi model can easily handle two showers and a kitchen sink at the same time."

The designations of "tankless" or "on-demand" are not interchangeable, says Ferguson. The former has a 2-gallon reservoir; the latter holds 5 gallons. That distinction can mean hundreds of dollars of difference in federal tax credits.

Solar is gaining in popularity, but high up-front costs — $7,000 to $8,000 — make it tough for many people to afford, even with superior long-term cost savings and with rebates and tax credits totalling $3,300 or more.

"You're looking at a five- to seven-year payback period for solar," says Davis. "Part of that is that the system needs an electric backup for the winter. On cloudy or rainy days, you don't get any benefit, but in the summer, you have all the water you need."

The system Davis installs uses a passive-solar collector that heats a food-grade antifreeze. This heated liquid passes through a heat exchanger to warm the water. Houses receiving more sunlight — on south slopes or in the middle of a wide valley — are natural candidates for solar.

"On sunny days in winter, the water can get up to 160 degrees," says Mike Mollett, an Ashland homeowner who had a solar heat-exchange hot-water system installed last September. "And even on cloudy days, I sometimes get decent heating."

After researching solar technologies, Mollett decided to start with a solar water heater rather than photovoltaic panels.

"I'm trying to save energy and money, and hot water seemed to give more bang for the buck," says Mollett.

Heat exchange also powers new technology for water heaters. The "hybrid electric" heat-exchange models draw heat from the air and use it to heat water. Like the solar heat-exchange component, these models are best stored in a garage, so in the winter they will neither freeze nor pump cold exhaust air into living spaces.

"In our area, they work very efficiently in the summer," says Rick Stauffer of Mr. Water Heater in Medford. "But just like the heat pump for your home, it doesn't work well below 45 degrees. For that, it has a hybrid mode that comes on like a standard, electric water heater."

When converting to the hybrid, electric heat pump, or even tankless water heaters, people often make one big mistake that drinks up their energy savings. It's great to have all that hot water, but the more you use, the more you pay — just like the older-technology heaters.

"You have to change how you think about and use hot water," says Stauffer. "Take shorter showers, and not as hot."


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