Buying a New Water Heater

Conventional "storage" water heaters most often run on natural gas, oil, propane, or electricity and typically have tanks that range in size from 20 to 80 gallons. These water heaters operate by releasing hot water from the top of the tank when the hot water tap is turned on. Cold water then enters the bottom of the tank to replace the hot water that has been used, keeping the tank full.

Most consumers purchase a water heater on the basis of tank size, but its ability to deliver hot water when you need it, or the “peak hour demand capacity,” is more important. Peak hour demand capacity, referred to as the FHR (first-hour rating) on the Energy Guide label, is a measure of how much hot water the tank can deliver during a high demand hour.

Once you have determined what capacity tank you need, pick the unit that is most energy efficient. The water in the tank is constantly heated and energy is used even when no hot water has been drawn! This is referred to as “standby” heat loss. The Energy Factor (EF) is the best guide to a water heater’s efficiency. The EF is based on recovery efficiency (how efficient heat is transferred to the water), standby losses (percentage of heat lost per hour from water sitting in the tank), and cycling losses. The higher the EF, the more efficient the water heater. Gas fired models typically range between 0.5 and 0.6 with some high-efficiency models rated at over 0.8.

When buying a new water heater, look beyond the purchase price. Spending more initially may save you money over the “life cycle” of the water tank. Consult the Energy Guide label for information on the annual cost to operate and look for the Energy Star logo to help you easily spot models having the highest efficiency.