Easily make the right choice on how to buy the right new hot water heater.

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Do you buy a tankless heater (then choice is propane, natural gas or electric) or do you buy a storage heater and which one ... propane gas, natural gas or electric? See tables lower down for help in estimating water heating costs.

First of all the golden rule ... be aware that hot water heater sales pitches tend to favor that company's products and may not take into account highly variable energy costs, and the fact that there are major energy factor differences (efficiency factors) between types and fuel systems.

It can never be stated categorically that system "X" is always better than system "Y" ... you must always do the calculations or at least understand what you are being told. In this case never accept that tankless hot water heaters are better than storage hot water heaters just because they are far more energy efficient.

The answer will be different also depending upon which part of the USA you live in ... just take a quick look at the bottom of this page to see how much the electricity costs vary by state. New England is about 50% more expensive than other places.

Another "trick" employed to bamboozle consumers is to claim that the energy factor of a hot water heater is say 30% greater than that for another sort of water heater implying that 30% less energy will be used .... such an improvement is not immediately equivalent to the amount of energy you will save. It will be less than 30%.

It is not always a matter of which system seems to save the most energy either ... other critically important hot water heater considerations are installation costs, (new or retrofit), space considerations, maintenance and availability of fuel source and so on.

In general if you go for gas to create your hot water supply always choose natural gas in preference to LPG or propane gas.

This applies whether you use tankless gas hot water heaters or storage water heaters. Some use both so lets say that your area is not yet on the natural gas grid but will be in the future then it may be a good idea to go for a hot water heater that can use either propane or natural gas.

In a new construction it is fair to say that electric tankless heaters are probably lowest cost to install. It is also true they have highest energy factors but it is also true that electricity normally costs more per unit of energy than propane gas or natural gas

If installation costs, maintenance costs and on demand peak flow rates of hot water are not critical then it is probable that a tankless hot water heater will be a better choice purely based upon efficiency factors.

This site will provide you with impartial sound advice. Once you understand the principles just go to various advertised suppliers you will find on Google for example and apply the reasoning to the products offered.

If in doubt then do detailed calculations ... they ARE NOT DIFFICULT.

Come back here for re-assurance before making any final decision.

Calculations for gas heaters

The energy factor is important especially in times of rising crude oil prices and is used to calculate the amount of energy used in a year as follows where you must use the cost of gas used as $ per therm (1 therm is = 100,000 BTU). Average US cost per therm is $0.6 as assumed here and used in table below.

From the table below you can estimate your annual cost taking into account your approximate water consumption per day for every day of the year and you can see in the red section the impact that Energy factor has on the total cost per year. For example take the purple line .... and compare to the bottom red line and you will see that if you use 65 gallons per day of hot water (77 degrees above cold water inlet) using an efficient .85 Energy factor unit that you will save (151.40-115.78 = $35.62) per year. Over a period of 10 years this will come to $356 saved

Water per day in gallons	50	55	60	65	70
Annual cost 100% Energy factor	$  70.29	$   77.32	$   84.35	$  91.38	$  98.41
Energy factors impact showing annual cost of gas for different flows and different Energy factors
0.45	$ 156.21	$ 171.83	$  187.45	$203.07	$218.69
0.5	$ 140.59	$ 154.65	$  168.70	$182.76	$196.82
0.55	$ 127.81	$ 140.59	$  153.37	$166.15	$178.93
0.6	$ 117.16	$ 128.87	$  140.59	$152.30	$164.02
0.65	$ 108.14	$ 118.96	$  129.77	$140.59	$151.40
0.7	$ 100.42	$ 110.46	$  120.50	$130.54	$140.59
0.75	$  93.72	$ 103.10	$  112.47	$121.84	$131.21
0.8	$  87.87	$   96.65	$  105.44	$114.23	$123.01
0.85	$  82.70	$   90.97	$   99.24	$107.51	$115.78

Do take note that any percentage saving in Energy Factor has a lower percentage saving effect upon the bill you will pay .... this leads to what can be considered misleading advertising.

Calculations for Electric water heaters

The energy factor is important and is used to calculate the amount of energy used in a year as follows where you must use the cost of electricity per kiloWatt hour. I have assumed $0.06 per kiloWatt hour

From the table below you can estimate your annual cost taking into account your approximate water consumption per day for every day of the year and you can see in the red section the impact that Energy factor has on the total cost per year. For example take the purple line .... and compare to the bottom red line and you will see that if you use 65 gallons per day of hot water (77 degrees above cold water inlet) using an efficient 0.99 Energy factor unit that you will save (315.00 - 270.45  = $44.55) per year. Over a period of 10 years this will come to $445 saved. Remember that a gas fired tankless heater could have cost only $107 per year for a similar duty.

Clearly there are significant saving in converting from electricity to gas hot water heaters .... despite the higher efficiency of the electric hot water heaters.

Water per day in gallons	50	55	60	65	70
kWhr per year	3433	3776	4119	4462	4806
Cost per kWhr	0.06	0.06	0.06	0.06	0.06
Annual cost 100% Energy factor electricity	$  205.96	$  226.56	$  247.15	$  267.75	$  288.34
Energy factors impact
0.85	$  242.31	$  266.54	$  290.77	$  315.00	$  339.23
0.9	$  228.84	$  251.73	$  274.61	$  297.50	$  320.38
0.99	$  208.04	$  228.84	$  249.65	$  270.45	$  291.26

Do take a look at the two example sites that I have created ...

How much money saved by converting from storage propane to tankless natural gas?and How much money saved by converting from storage gas heater to tankless electric?

These will provide you with enough detail to be able to check out any sales pitch or at least ask very important questions about hot water heaters be they tankless heaters or storage heaters.

The one common factor in choosing any system is the cost of the energy source. Note that this can change dramatically in a short space of time and especially in winter months. A second factor si the energy factor which really determines how efficiently the equipment utilizes the energy used to heat the hot water.