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Water Heaters: The Hot Spot

Water Heaters: Burning Energy

Water heaters account for about 19% of your home’s energy use and have a lifespan of up to 15 years, so choose wisely when purchasing a new one. If you’re looking to improve the energy efficiency of an existing water heater, there are numerous ways you can lower your energy bills.

At 19% of total home energy use, heating water takes lots of watts!

Wrap pipes up in insulation, and turn your water heater down to 120 degrees Fahrenheit.

Hot tip: Turn down your water heater temperature to 120 ° F.

Let’s Talk Types


Water heaters are the second-largest home energy consumers after heating and cooling units, and can last up to 15 years before needing to be replaced. Take a good look at all the options before choosing the water heater for your living space. If you’re simply looking to upgrade your current water heater, there are several things you can do to improve your water heater’s efficiency.

Most homes in the United States use natural gas to heat their water, with electricity the second – and more costly – choice.  Other options include alternative fuels like propane, heating oil, or solar.

Let’s Talk Technology


No matter what technology you choose, you should consider purchasing the most efficient option in your budget. Additionally, you can make small lifestyle changes and improvements to your existing heater that can drastically reduce your utility bills.

A water heater’s efficiency is measured by its Energy Factor (EF): the ratio of the water heater’s energy output to the total energy going into the water heater. The higher the EF, the more efficiently the water heater performs.

Storage Tank: This is the most common type of water heater in U.S. homes. High-efficiency gas storage tanks differ from regular storage tanks in that they have more insulation, heat traps, enhanced burners, and sometimes power vents to improve gas combustion. The most advanced models have an EF of at least 0.70.

Tankless or Demand: Unlike storage tank heaters, tankless heaters don’t maintain a constant supply of hot water, so they take up less space. When you turn on the tap, sensors tell the gas burner to activate and water is heated by running through a heat exchanger. New tankless water heaters have an Energy Factor as high as 0.98. While they are more efficient and ideal for homes with low water use, a study by the National Resource Efficiency Lab found that you can save up to 50% of water heating energy by placing smaller demand heaters at each water outlet: showers, the dishwasher, and clothes washer.

Gas Condensing: This type of water heater looks and works like a high efficiency storage tank, but with the added benefit of capturing combustion gases to help heat the water. While more expensive, this technology can save $100 off your annual utility bills1 —even more for larger families.

Heat Pump: If you can’t switch to a gas water heater, a heat pump water heater is an efficient electric option. This technology is like a refrigerator, running in reverse. It also acts as a dehumidifier, improving air quality in humid climates or moist basements.

Solar: Solar water heating systems, or solar thermal systems, use the sun’s energy to heat water for your home. These systems include solar collectors, piping, values, storage tanks, and sometimes pumps. A properly installed solar thermal system can save 50-75% of water heating energy2.  Although numerous tax incentives and rebates may decrease the initial and installation costs, solar is still one of the more expensive water heating options, so you’ll need to determine if it is a cost-effective option for your home.

Use & Care

Proper maintenance, placement and installation of your home’s water heater will maximize efficiency measures. Learn more about Water Heater Use & Care, where to start, and how to care for water heaters for the most savings.

Buyer’s Guide

Before you shop for efficiency upgrades, visit the Water Heater Buyer’s Guide for easy facts and figures that can help you choose the best appliance for your home, needs and budget.

1ENERGYSTAR. (2012). Save Money and More with ENERGY STAR Qualified Gas Condensing Water Heaters. Retrieved September 28, 2012, 
from http://www.energystar.gov/index.cfm?c=gas_cond.pr_savings_benefits.
2ACEEE. (2011). Consumer Resources: Water Heating. Retrieved September 28, 2012, from http://www.aceee.org/node/3068.
Content in part adapted with permission from Rocky Mountain Institute’s Home Energy Briefs.

This program is funded by California utility customers and administered by Southern California Edison under the auspices of the California Public Utilities Commission.