Stand-alone water heaters come in two basic types: gas and electric. Gas water heaters, fired with piped natural or LP gas, are the most common. Gas water heaters are usually smaller than electric water heaters, because their burners produce more heat than an electric heating element. A capacity of 40 to 50 gal. is typical for most houses. Electric water heaters in single-family homes often hold 50 to 80 gal. Electric water heaters don’t require a fuel supply in the house, so they are a common choice for homes where piped natural gas is unavailable.

The temperature of many hot-water heaters can be lowered without any noticeable reduction in the hot-water supply. Lowering the temperature of stored hot water saves energy by reducing conductive heat loss through the tank surfaces, called standby loss. Standby losses depend on the location of the tank (how cold it is outside the tank), how well the tank is insulated, and where the tank is located (in a cold climate, most losses in the winter just contribute to heating the house). The better insulated the tank and the greater your hot-water use, the less savings a temperature setback will provide.

Reducing the temperature setting by 10°F may save 2 percent to 5 percent of your water heating costs. The investment is $0, and it’s easy to readjust if you turn it down too much. In addition to energy savings, a lower tank temperature reduces scaling and corrosion and increases the life of the tank. The thermostat knob on a gas water heater is usually located at the front of the gas valve. Look carefully at the markings; on many gas water heaters, counterclockwise rotation increases the temperature setting. Electric tanks have two thermostats—one for each element—located behind metal covers near the bottom and the top of the tank. Because there is exposed wiring inside, shut off the circuit breaker before unscrewing the covers. Set both elements to about the same temperature, or set the top element just slightly cooler so the bottom element activates first.

Hot water stored below 120°F may increase the risk of Legionella pneumophili bacteria, which can cause pneumonia. But Legionella infections in single-family homes are quite rare compared to the risk of scalding, which increases rapidly at tank temperatures over 120°F. The U.S. Consumer Product Safety Commission recommends all home water heaters be set at 120°F, and even at that temperature third degree burns can occur with exposures of five minutes or more. Antiscald mixing valves can help keep children and elders, who are at higher risk for burns, safe.

Typically, gas water heaters don’t have degree markings, but the recommended target temperature of 120°F is usually between “Warm” and “Medium.” It may take some trial and error to find a setting that’s just right. Photo Credit: John Curtis

There are three basic types of replacement water heaters that work on their own (without a boiler): storage tanks, on-demand units (sometimes called tankless water heaters), and heat pump water heaters. Any of these types except the heat pump are available in either gas or electric models. Most have high-efficiency versions, and all have pros and cons. Every new water heater has an efficiency rating (called a uniform energy factor, or UEF) listed with AHRI. Today’s water heaters have UEFs that range from about 0.55 to 0.97 (except for heat pumps, which can have UEF ratings between 3 and 4); try to get a water heater with the highest UEF rating for the type of application you need.

All new water heaters are required to have an Energy Guide label, which compares the energy use of this model to that of similar models. Buyers beware: “Energy Saver” is a common name found on water heaters, but it can be almost meaningless. Few water heaters have their UEF rating listed on the tank, but you can look it up in the AHRI directory online. Photo Credit: John Curtis

Most standard gas water heaters have UEF ratings in the high 50s—that means over 40 percent of the energy is wasted. Until recently, the highest efficiency tank-type units you could buy were in the low 60s; most had efficient burners, electronic pilots, and high insulation levels. There is a new generation of high-efficiency tank-type water heaters emerging that have higher uniform energy factors. For example, the Kenmore® Elite uses a special air intake and other features to achieve an UEF of 0.7. Both the Kenmore and the Rheem® Fury (0.67 UEF) use electronic vent dampers. Although not the highest efficiency available, these products provide a sizable performance boost at a modest price increase over a standard gas water heater.

The most efficient units on the market are condensing gas water heaters; they typically have UEF ratings of 0.90 or higher. The best ones have stainless-steel tanks and high firing rates—typically around 90,000 to 120,000 Btu per hour, two to three times that of a typical tank. Because of their high cost—roughly $1,500 to $2,500—condensing water heaters may be more appropriate for supplying whole-house heating as well as hot water. Their high heat output makes them well suited for supplying a hydro-air system. A hydro-air handler used in conjunction with a condensing gas water heater is probably one of the most efficient replacements for an old, inefficient gas furnace and a standard electric or gas water-heating tank, especially if you have piped natural gas and live in a cold or mixed climate. Standard electric tank-type water heaters appear to be more efficient than gas units, with UEFs ranging from about 0.86 to 0.95.

The uniform energy factor, or UEF rating, is based on a standardized test that takes into account burner efficiency, pilot usage, and standby losses for “typical” hot-water usage. UEF ratings for gas, oil, and electric water heaters can be found at www.ahridirectory.org under “residential water heaters.” The directory also shows first-hour ratings and the burner efficiency, which is called “recovery efficiency.”