The new Department of Energy (DOE) efficiency standards for water heaters went into effect this spring with some discomfort to homeowners.

Yes, replacing an existing water heater will cost more, but how much depends on the equipment and technology chosen.

What you get in return for that extra dinero is moderate-to-significant energy efficiency, again depending on the equipment and technology chosen.

In this post we look at the impact of the new DOE water heater efficiency standards, the types of equipment available to homeowners, and purchase considerations.

If you have any questions regarding the new standards and what it means for your home, discuss with your plumber or plumbing contractor. Some plumbers even specialize in "water heaters."

Impact of New Water Heater

If you are replacing a water heater that holds 55 gallons or less, which is used in most homes, expect the new water heater to be an inch or two larger and most likely can be placed where the old one was installed . . . unless that was in a very tight spot like a closet.

If you are replacing a water heater that holds more than 55 gallons, these probably will be larger and you may encounter issues when placing the new equipment where the old one was installed.

In either case, be aware that new water heaters will be at least an inch or two taller and you could encounter problems when installing the equipment yourself.

If the installation location is too tight and you don't want to mess with it, call a plumber or plumbing contractor, who will make alterations to the location to properly fit and hook up the new equipment.

The new DOE efficiency standards can cut utility bills by 25 to 50 percent, depending on the technology used. The standards will save approximately 3.3 quads of energy and result in approximately $63 billion in energy bill savings for products shipped from 2015-2044.

Quick Water Heater Facts

About 90 percent of water heater replacements are of an emergency nature. Homeowners don't plan on replacing an existing unit with a higher efficiency model. When a water heater fails, they typically rely on what the plumber or contractor has available (or represents) and at what cost. The new DOE standards will at least force homeowners to stop and think about what options are available to them and at what cost.

Water heating is the second largest expense in a home, accounting for 14 to 18 percent of your utility bills and behind heating, ventilation, and air conditioning (HVAC).

Each year homeowners spend between $400 and $600 on water heating and that's if the water heater is in good shape and taken care of by you or a plumbing professional.

The average household use 64 gallons of water a day.

Setting your water heater temperature high can waste $31 to $61 a year in standby heating loss, not to mention more than $400 a year in demand losses.

Types of Water Heaters

There are five types of water heaters available to homeowners through home improvement centers like Lowe's and Home Depot or from plumbers and plumbing contractors. For each we will look at cost, life expectancy, and the pros and cons.

Storage water heaters

Cost: Relatively inexpensive ($), particularly at home improvement stores. If you are able to do the installation yourself, you obviously can save hundreds of dollars. If you can't do the install, that $300 water heater becomes $700-$800.

Life Expectancy: 10-15 years with reasonable service and/or maintenance.

Pros: Lower purchase cost.

Cons: There is usually a moderate to significant standby heat loss, where energy is wasted as it sits in the tank heated to a set temperature. The temperature is recommended at 120 degrees, but many homes bump that up to 140 degrees or more, wasting energy and costing more per month to operate.

Solution: Look for an insulated tank to reduce heat loss and lower operating costs.

Tankless Water Heaters

Cost: Moderately priced ($$) at home improvement stores. Beware: Depending on the brand of tankless water heater, some retrofitting may be needed, which adds expense. Much of this retrofitting will require a plumber or water heater specialist to do the work.

Life Expectancy: 20+ years with reasonable service and/or maintenance.

Pro: provides consistent supply of hot water and is 8 to 34 percent more efficient than a storage water heater, according to You can save at least $100 a year with a tankless water heater, depending on the amount of hot water used in the home.

Con: Tankless water heaters have a limited flow rate, which means that two people taking hot showers at the same time — or multiple simultaneous uses of hot water, even in the kitchen — can tax the water heater to its limit. Depending on how long you own the home, savings for a tankless water heater may not cover the purchase and installation.

Solution: Install two or more tankless water heaters connected in parallel or separate units for appliances that use a lot of hot water. You can coordinate this setup with your plumber or plumbing contractor.

Heat Pump Water Heaters

Cost: Moderately priced ($$) at home improvement stores.

Life Expectancy: 10-15 years with reasonable service and/or maintenance.

Pro: Two to three times more energy efficient than a storage water heater with lower operating costs. An Energy Star heat pump water heater can save homeowners nearly $300 a year.

Con: Performance is dependent on the installation location and the heat pump water heater exhausts cold air, which increases the load your heating during the winter.

Solution: Switch the heat pump water heater to regular resistance mode will stop cold air exhaust but also reduce its efficiency.

Solar water heaters

Cost: Expensive ($$$) and not readily available at home improvement centers or through plumbers.

Life Expectancy: About 20 years with reasonable service and/or maintenance and upkeep. Solar devices demand additional attention from installation, troubleshooting, and upkeep perspectives.

Pro: Solar water heaters are 50 percent more efficient than gas or electric water heaters.

Con: Solar water heaters may require a backup system for prolonged days of cloud cover and times of high demand. Also, higher efficiency products like solar water heaters come with a smaller margin of error for installation. Nine out of 10 early water heater failures are due to incorrect installation, according to one industry source. Solar water heaters are not for average, everyday homeowners but interest those interested in alternative energy sources and the environment

Solution: Buy a solar water heating system that includes a side storage tank as part of the water-heating system. You may end up working with not only a plumbing contractor but solar specialists.

Choosing a Water Heater

It's about fuel type and what's available for your home. Home improvement centers carry cheaper to moderately priced water heaters. Plumbers and water heater specialists most likely will carry brands at prices you cannot find at a home improvement store.

Here are the fuel options:

  • Electricity: Available for storage, tankless, heat pump, tankless coil and indirect types of water heaters but not solar.
  • Fuel Oil: Available for storage and tankless coil and indirect water heaters, not tankless, heat pump, or solar.
  • Geothermal: Available for heat pump only.
  • Natural gas: Available for storage, tankless, heat pump, tankless coil and indirect water heaters, not solar.
  • Propane: Available for storage, tankless, and tankless coil and indirect water heaters but not heat pump or solar.

Efficiency Considerations

An energy efficient water heater maximizes energy and cost savings and is based on Energy Factor (EF), which is based on the amount of hot water produced per unit of fuel consumed. EF includes:

  • Recovery Efficiency: how efficiently the heat from the fuel is transferred to the water.
  • Standby Losses: percent of the heat loss per hour from the stored water compared to the water's heat.
  • Cycling Losses: the loss of heat as water circulates through a tank or pipes.

Cost Gotchas

When purchasing a water heater don't just look at the price. Factor in the cost to install, for a service technician to come to your home, the cost to operate, and the cost to maintain to determine if it's worth investing in a more efficient water heating system.