Heating water in instant, on demand or storage hot water heaters uses considerable energy.
More is wasted in hot water storage heaters.On Demand Tankless & storage hot water heaters energy factor. Understand the Energy factor defined for all hot water heaters
All hot water heaters must by law in the USA have the energy factor rated and displayed for that particular hot water heater. The factor can be very different based upon the type of hot water heater and the fuel or energy source used to heat the water. A second very important factor is called First Hour Rating which will be described on another page.Do not be bamboozled by these factors, understand how to to use them and save money for ever ...
About 25% of a household's energy use is in heating hot water using in most cases storage tank gas fired hot water heaters. Instant on demand tankless water heaters are relatively new and certainly are useful in particular applications ... mainly low demand heating requirements in restricted areas and also in new buildings. retrofitting tankless hot water heaters can be very expensive relative to any energy savings.
Energy Factor ... every hot water heater (instant or on demand or storage tank heater) must be provided with a certified Energy Factor. This factor in simple terms means that if the Energy Factor is high then the annual cost of power to run the tanklless hot water heater or the storage heater will be lower than it would be for a low rated Energy Factor. Gas instant or on demand water heaters Energy Factors typically range from 0.64 to 0.85 based upon information published by GAMA.
Let's take a closer look and use a gas fired instant or on demand heater as an example ...
When the tap is opened the gas fire is immediately turned up so that cold water entering the pipe into the instant or on demand heater is quickly heated to the temperature set. This means a lot of gas is burned in a short time. The gas burns in the presence of air and hot residual air leaves the house through some kind of venting system.
Obviously since the air is hot and it is being vented to atmosphere then energy is being wasted ... depending upon design of the gas the energy in the gas to heat the water itself. In addition if a pilot light burns continuously then gas is always being wasted.
The test to determine Energy Factors takes all losses into account and it is a measure of what percentage of the available energy in the gas is actually wasted by virtue of the design rather than usage by the consumer.
Now lets take a look at a gas fired storage tank heater ...
When you get up in the morning the hot water storage tank is full of hot water and has been for most of the night. However during the night heat (ie energy) was being lost through the sides of the tank even though it is almost certainly insulated ... by the way about 1 and a half inches of foam is a good thickness for economic insulation purposes. Putting more on would cost more and probably not save its value in energy.
An average heat loss from such a system is reckoned to be about 6 to 7% of the heat in the water and this in turn means you will use at least this (in fact some more) in extra gas just to keep the water temperature constant. In addition to this heat loss there is the heat loss associated with the burner starting up and burning in air as described above.
Compare this to an electric instant or on demand or storage hot water heater of any kind ....
the instant or on demand hot water heater will nearly always be more efficient than any storage hot water heater but any electrical hot water heater will almost always be more efficient than oil or gas burning units. The fundamental reason is that the fuel is not burned thereby wasting heat in exit air ... and no pilot light is required. However electrical energy is more expensive than the other two types so it is impossible to get the correct answer just looking at Energy Factor.
Life is made even more complex when you note that each energy type is rated in different units as follows
hot water instant or on demand using oil .... gallons of oil
hot water instant or on demand using gas .... therms or BTU's of gas
hot water instant or on demand heaters .... kiloWatt Hours
In summary electric hot water heaters have highest Energy factors and
You will note significant differences between electric and gas instant or on demand or storage hot water heaters in the table below and you will also note and this is very important the significant difference between highest efficiency and lowest efficiency hot water heaters of ANY type except electrical. As an example the best instant or on demand gas fired hot water heater has an Energy Factor 33% better than the worst one.
| Type | Energy Factor Parameter | Energy Factor |
| Oil Storage tank heater | MAX value | 0.68 |
| Oil Storage tank heater | MIN value | 0.51 |
| Oil Storage tank heater | AVG all values | 0.59 |
| Storage Propane Gas heater | MAX value | 0.65 |
| Storage Propane Gas heater | MIN value | 0.46 |
| Storage Propane Gas heater | AVG value | 0.56 |
| Storage Natural gas heater | MAX value | 0.65 |
| Storage Natural gas heater | MIN value | 0.46 |
| Storage Natural gas heater | AVG all values | 0.56 |
| Storage Dual gas heater | MAX value | 0.63 |
| Storage Dual gas heater | MIN value | 0.48 |
| Storage Dual gas heater | AVG value | 0.57 |
| instant or on demand Hot Water Heaters ... gas | MAX value | 0.85 |
| instant or on demand Hot Water Heaters ... gas | MIN value | 0.64 |
| instant or on demand Hot Water Heaters ... gas | AVG all values | 0.75 |
| Storage Electric heater | MAX value | 0.95 |
| Storage Electric heater | MIN value | 0.77 |
| Storage Electric heater | AVG value | 0.89 |
| instant or on demand Hot Water Heaters Electric | MAX value | 0.99 |
| instant or on demand Hot Water Heaters Electric | MIN value | 0.00 |
| instant or on demand Hot Water Heaters Electric | AVG all values | 0.90 |
Data source GAMA 2003