Understand High Efficiency Water Heater Technologies

High Efficiency Water Heaters Provide for Less

Heating water accounts for approximately 15% of a home's energy use. High efficiency water heaters use 10 to 50% less energy than standard models, saving homeowners money on their . Actual energy savings from high-efficiency water heaters depend on family size, heater location, and the size and placement of water pipes.

  • Storage (Tank) Water Heaters. Water is kept hot and ready for use at all times in insulated storage tanks with capacities ranging from 20 to 80 gallons. Many fuel options are available, including electricity, natural gas, oil, and propane. One drawback of these units is the energy used to keep the water hot at all times, otherwise known as “standby losses.”
  • Demand (Tankless) Water Heaters. Water circulated through a large coil is heated only on demand using gas or electricity; there is no storage tank continuously maintaining hot water. A possible concern with this technology is the limitation on the number of fixtures that can simultaneously use hot water. However, there is an endless supply of hot water and standby losses are eliminated.
  • Heat Pump Water Heaters. Heat pumps transfer energy from the surrounding air to water in a storage tank. These water heaters are much more efficient than water heaters and most effective in warm climates with long cooling seasons.
  • . While the initial purchase price of solar water heaters is high compared to standard models, they can be cost effective. That is because the sun's energy is harnessed to reduce operating costs up to 90 percent. Solar water heating systems require a conventional water heater as a backup water heating source to ensure hot water is available when solar energy is not.

Comparison of Water Heaters

High Efficiency Water Heater Type Energy Savings vs. Minimum Standards Best Climates Expected Energy Savings Over Equipment Lifetime Expected Lifetime Major Advantages

High Efficiency Storage (Tank) (Oil, Gas, Elec.)



Up to $500

8–10 Years

Lowest first cost

Demand (Tankless) Using Gas or Elec.



Up to $1,800

20 Years

Unlimited supply of hot water

Heat Pump

65% (Compared to electric resistance)


Up to $900

10 Years

Most efficient electric fuel option

Solar with Electric Back-Up



Up to $2,200

20 Years

Largest energy savings using a energy source

Important Water Heater Metrics

  • First-Hour Rating (FHR). FHR measures how much hot water will be available during the busiest hour of the day. A large tank does not necessarily translate to a higher FHR. The recovery rating is important as it indicates the water heater's ability to replenish hot water as it is drawn from the tank.
  • Efficiency. The water heater's efficiency is measured as an Energy Factor (EF), which is usually listed beside the EnergyGuide label. The higher the number, the more energy efficient the water heater.
Passive batch solar water
Passive Solar Water Heater