We get this question a lot. First, it is important to understand how a tankless water heater works vs. a traditional tank-type storage water heater. No doubt, conventional hot water tanks may become a thing of the past considering all of the modern-day advances now available. With the innovation of the tankless water heater, consumers are promised a quick and abundant supply of hot water anytime they need it. Are the cost and space savings beneficial enough for consumers to make the change? To make that determination, we need to look at the one-time installation costs, annual maintenance and the monthly cost of electricity.
How much does it cost to install a water heater?
Storage water heaters generally cost less initially. According to Angie's List, the average electric tankless water heater costs $1,063 for the unit and a full eight to 10 hours to install. Our MODEL 3 Water Heater retails for $699. Comparatively, electric storage water tanks average $750 and will take a professional two to three hours to install it.
It is also important to keep in mind that due to the metal heating elements inside, both storage water heaters and tankless models should be serviced and cleaned annually, and that annual maintenance will cost about the same for both of them. However, one exception does exist — Heatworks water heaters use graphite electrodes in place of traditional metal heating elements so no annual maintenance is required. Read more about the technology here.
Let's now take a look at how energy efficiency plays into the equation.
The cost of electricity
According to the U.S. Department of Energy, the typical U.S. family spends at least $2,200 per year on energy—with nearly half of that paying for heating and cooling. Of course, this cost fluctuates depending on where you live, the size of your house or apartment, and the extent to which you make smart decisions about conserving energy.
Today’s new homes are 1,000 square feet larger than in 1973, and average living space per person has doubled according to the American Enterprise Institute. And even though homes built now have greater energy efficiency than their earlier counterparts, the average price per kWh is 12.43 cents up from 7.25 cents per kWh in 2001. No wonder homeowners everywhere are doing everything they can to save energy, and therefore save money.
While heating and cooling account for most of our energy expenditures, there’s a lot more going on inside our homes. PG&E (Pacific Gas & Electric, providing gas and electric in California) breaks down energy use by appliance, basing energy use on 14 cents per kilowatt-hour and average conditions.
- Air conditioner: $23-$137 per month
- Electric clothes dryer: $0.33-$0.56 per load
- Washing machine (cold water): $0.04 per load (not including the cost of water)
- Refrigerator: $8.69-$9.84 per month
- LCD or plasma TV: $0.02-$0.06 per hour
- Cable box, standby mode: $19.98 per year
- Hair dryer: $0.02 per use
- Nightlight: $0.02 per month
How do the different types of water heaters compare in energy efficiency?
Beginning, June 12, 2017, EF ratings was replaced with the new industry standard for measuring energy efficiency in water heaters called, Uniform Energy Factor (UEF). The new UEF rating method improves the industry's ability to:
- Define consistent standards for measuring energy efficiency performance
- Simplify the water heater selection process
- More accurately reflect real-world scenarios that impact energy efficiency ratings
- Enable apples-to-apples water heater comparisons across brands
The higher the UEF value is, the more efficient the water heater. Product labels are now required to show estimated yearly energy cost and annual energy use, as well as as First-Hour Delivery (FHD), the amount of hot water a tank-type water heater can provide in the first hour of operation, or the maximum gallons per minute (GPM) that a tankless water heater can handle.
Did you know? The first national appliance efficiency standards for water heaters took effect in 1990. Updated standards, effective in 2015, required that, in storage water heaters, at least 95% of the fuel energy reaches the point of use. (In a conventional gas storage water heater, less than 50-60% of the fuel energy reached the point of use. Yikes!) Ours was 99%.
So, will a tankless electric hot water heater save you money?
If you purchase a Heatworks water heater, the answer is a resounding yes. Sure, the initial cost to install one may be slightly more. The exact cost will depend on unit placement, location of your home, fuel types available and if it is a new home or a replacement for an older home. However, with our family of water heaters requiring zero annual maintenance costs and offering almost complete elimination of standby losses when used in place of storage tank hot water system, one will pay for itself in a few years and will save you even more money in its lifespan.
For more information about Heatworks or to order one of the world's most advanced water heaters, click here.