Electric Water Heaters – Will They Save You Money?

I was thinking about what to post this weekend and got a call from my sister. she asked; Where can I get a tankless water heater? This was a coincidence, because I just read an article on gas water heaters and the comparative costs of installing one versus a standard gas water heater. The comparison in this article was not very favorable, so my sister asked; why do you want to know? Well, it looks like she’s renovating her utility room and wanted to reclaim the space in the corner that her standard water heater occupies. So I did some quick research.

My sister does not have a gas service, so I checked out the electric heaters that are available without a tank. Now two things you need to think very carefully regarding tankless water heaters, especially electric ones, are your family’s lifestyle. If you have 4 teens and 2 working adults, it is possible to pay more to heat the water with a lower tank than if you had a regular water heater.

This is especially true if you live in cooler climates or the water comes from a deep well. In these cases, your incoming water will be cooler than if you lived in Florida or Texas, so you’ll need to raise the water temperature more than if you lived in Florida (average water temperature from a tap is about 70 degrees in winter, in Cold climates, the water is as low as 40 degrees from the tap). As teens take longer to shower, the savings may not be there.

General physics will tell you that it takes 1,000 watts to raise 4.1 gallons of water 100 degrees. Accordingly, if you were importing water at 40 degrees, it would take 10,000 watts to raise 40 gallons (typical volume of a standard water heater) of water to a standard storage temperature of 140 degrees. Now once you lift it up, it will start to cool, but slowly with the improved insulation in newer water heaters.

At a kilowatt-hour of 10 cents, the cost of heating this water was $1.00. Now compare that to a tankless electric unit that produces a temperature rise of 65 degrees at 2 gallons per minute (appropriate in Florida with an input temp of 65 degrees, not enough in New York or Maine). This unit is rated at 14KW. This means that while it is heated, it will burn 14,000 watts of electricity per hour. Heating the same 40 gallons would take 26 minutes and cost about 60 cents to heat up. Sounds like a huge savings right.

Well, not exactly. You see, when the standard fuel tank is full, it reduces the energy needed to heat the incoming water as the incoming water will absorb some of the heat from the already hot water which somewhat reduces the input to raise the water temperature. In a tank without a tank there is no stored hot water, so the electricity required to heat the water is expended in direct proportion. In an economy test comparing tankless water heaters to standard water heaters, it fell in the 10-40 percent range (higher ranges are on gas-powered appliances).

So the next consideration is the installed cost. In this regard, you will spend about $1200.00 on labor and equipment to install a tankless electric heater, provided you have sufficient capacity in your electrical panel. Assuming this, we compared this cost to an approximate cost of $600.00 for a standard electric water heater. In addition, the expected savings according to government research:

For homes that use 41 gallons or less of hot water per day, required water heaters can be between 24% and 34% more energy efficient than traditional tank water heaters. They can be 8% to 14% more energy efficient for homes that use a lot of hot water; About 86 gallons per day. You can achieve greater energy savings of 27% and 50% if you install an on-demand water heater at every hot water outlet.

Source: http://www.eere.energy.gov/consumer/your_home/water_heating/index.cfm/mytopic=12820

So let’s analyze this. If you have 4 teens in the house, you probably use more than 120 gallons of hot water per day, so your savings will be gone unless you are able to install 3 units (which cost about $3600) to cover both the bathrooms and the kitchen and wash clothes. Even then, your savings will be between 27% and 50% of the cost of heating water.

Government figures now say that the average electricity bill allocates about 13 percent to water heating If your monthly bill is around $100.00, your savings could be 3-6.00 per month. Additionally, showering and washing dishes or clothes at the same time will probably increase the capabilities of the electric tankless heater I’m using in the example, so you’ll need one or the other larger and a larger electric service unit. The installed cost will increase significantly. So saving is not there.

On the other hand, if there are only two people and your lifestyle can be easily adjusted to meet the demand between showering, washing dishes and washing clothes, you can make some savings by installing the tankless heater. At this point, looking at the numbers, I couldn’t see any justification in my family. Another factor to consider is that tankless heaters have a life expectancy of 14 to 18 years, and a standard water heater will last 6 to 12 years depending on the hardness of the water and the maintenance performed on it. So I had to tell my sister the facts that installing a tank without a tank would save a lot of running costs, but it would save her 7 square feet of space or until the current water heater took up the utility room. In the end she will have to decide if it is worth it.

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