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Water heater buying guide

Getting started

Used to be that when a water heater needed replacing, most homeowners just bought a new tank to replace the old one. But now with federal regulations that took effect in April 2015 requiring tank water heaters to become more energy efficient, buying a new one just got a little more complicated and possibly more expensive. Although you will save money on your utility bill over time.

If you haven’t replaced your water heater in a few years, you’ll discover that you have more choices than before so it’s worth doing your homework. In addition to conventional tank water heaters, tankless water heaters have improved since the days when the “cold water sandwich” left you shivering in the shower. And most tankless water heaters, which only heat the water you draw, already meet efficiency standards. Other choices include hybrid electric/heat-pump models, solar water heaters, and condensing gas water heaters. (Note: This report does not include Ratings.)

To comply with new Department of Energy efficiency standards, the water heaters used in most homes won’t seem that different and will get a modest boost in efficiency, according to the American Council for an Energy-Efficient Economy (ACEEE). But larger units—those 55 gallons or more—will need to shift to new technologies to achieve the efficiency gains. Doing so can cut utility bills by 25 to 50 percent depending on the technology used.

That’s good news for homeowners because water heating amounts to nearly 20 percent of a home’s energy costs. The new standards apply to gas (50 percent of U.S. households), electric (41 percent), and oil residential tank water heaters.

The majority of homes have conventional water heaters that hold less than 55 gallons of water. If you’re replacing a water heater of this capacity, the new more energy-efficient model may be an inch or two larger than the old one and can likely be placed in the same location unless it’s in a very tight spot such as a closet. For such units, the new standards will increase efficiency by an average of 4 percent. According to the ACEEE, water heaters that comply with the new standards are already on the market, including models from A.O. Smith, Bradford White, and Rheem.

Water heaters that hold 55 gallons or more will see bigger efficiency gains. But to attain those gains, the larger water heaters will need to use technologies that are less familiar to consumers including electric heat pumps, which transfer heat from the surrounding air to water, and condensing gas heaters, which capture heat that usually goes up the flue.

For homes with electric heat, replacement options include hybrid heat pumps, for the biggest efficiency gains, or two conventional models with capacities of less than 55 gallons each, which won’t be as energy efficient. Options for homes with gas heat include a large condensing gas tank water heater or, again, two smaller conventional models.

Also known as hybrid water heaters, heat pump water heaters transfer heat from the surrounding air to the water. The ACEEE says that condensing water heaters are designed to reclaim escaping heat by cooling exhaust gases below 140 degrees F, where water vapor in the exhaust condenses into water. When replacing a large water heater with either of these types, keep in mind that they may require more space. For more information on specific models, check manufacturers’ websites. Most water heater makers geared up production well in advance of the new regulations.

Repair or replace?

Before you shell out hundreds for a storage-tank heater or thousands for a tankless or solar water heater, see whether your old one can be fixed. A corroded storage-tank model is history. But a leaky drain or pressure-relief valve or a burned-out heating element can often be fixed. Rule of thumb: Consider a repair if the labor cost (which warranties often exclude) averages less than $50 per year over the years left in the warranty. Otherwise, buy a new one, especially if the warranty has expired.

Most storage-tank water heaters look alike on the outside. But sawing open a cross-section of gas and electric storage-tank models in the Consumer Reports lab confirmed that paying a little more typically buys a better water heater. Those with longer warranties tended to have larger heating elements, thicker insulation, and thicker or longer corrosion-fighting metal anodes.

Longer warranties were also a good indication of better quality for tankless water heaters. But their added complexity can mean more potential problems. Some tankless heater manufacturers shorten the warranty for units used with hard water and in multi-family homes. And most recommend service by a qualified technician once a year.

Hybrid heaters meld an electric storage-tank heater with a heat pump that captures warmth from the air. Those we tested provided annual savings of about 60 percent over electric-only models. You’ll also save by replacing a broken oil-fired heater with a hybrid. Solar heaters supplement an electric heater with heat from the sun’s rays. The best in our past tests saved us about 80 percent over an electric storage-tank heater alone during the summer months at our Yonkers, N.Y. headquarters. But those savings plummeted to about 30 percent during cold weather. How much a solar system saves you can vary widely based on where you live, your home’s sun exposure, and which system you choose.

Choosing the right capacity

Most water heaters are sold on the basis of how many gallons they hold. For example, two to four people might use 80 to 85 gallons per day—enough for about three showers, one laundry load, running the dishwasher once, and turning on the faucet nine times. But the first-hour rating (FHR) for storage-tank water heaters and the gallons-per-minute rating (GPM) on tankless water heaters are more important, because they tell you how much hot water the heater can deliver during a set period. A pro can calculate how much you’ll need.

While almost half of homeowners replace their electric water heaters themselves, it may be wise to consult a professional or at least a manufacturer to fully understand the new regulations and what they mean to your particular installation. You may also need a local building permit. Proper installation and maintenance can optimize a water heater’s energy efficiency so it may be best to have a qualified plumbing and heating contractor install your water heater. You can find an installer on phccweb.org, the website of the Plumbing-Heating-Cooling Contractors Association. For more information, check the websites of the ACEEE and the DOE as well as the manufacturer of any water heater you may be considering.


Heating water accounts for up to 20 percent of the average home’s energy budget. Some gas-fired tankless water heaters are claimed to cut energy costs by up to half over regular storage heaters. But their added up-front costs mean it pays to look before you leap. Compare the types of water heaters.

Most of these are essentially steel cylinders fed by a cold-water inlet pipe (the dip tube) that protrudes into the tank (this line includes the shutoff valve). Water is heated in the tank, and hot water exits through a hot-water pipe atop the tank. Another pipe that emerges from the tank includes the temperature and pressure-relief valve, which opens if either exceeds a preset level. You’ll also find a drain valve near the tank bottom and a control unit outside for setting temperatures and, on gas models, controlling the pilot-light valve.
Gas is the fuel of choice if you already have natural gas service or can run a gas line to your home economically. Gas models cost more than electrics. But on the basis of national-average fuel costs, a gas water heater will cost you about half as much to run as a comparable electric model. Thus, a gas heater might amortize the up-front difference in cost in as little as a year. While you’ll also find oil-fired storage heaters, they’re relatively expensive, because they include the tank and an oil burner. That’s why homes with oil heat typically use an electric water heater.

Tankless models (a.k.a. instantaneous water heaters) are suitcase-sized units that heat water only when needed by using an electric coil (typically for low demand) or natural gas (for high demand) to heat water passing through a heat exchanger inside. They eliminate the risk of tank failure and the energy lost by constantly reheating water, though their heat exchanger can clog or fail. What’s more, they’re expensive to buy and install, and include limitations on hot-water flow rates, a possible issue in large households. And cooler incoming water in winter typically means your hot water may not be as hot as you like.

These have a conventional electric storage heater paired with a heat pump that extracts heat from the surrounding air and uses it to help heat the water. Models we tested used about 60 percent less energy than standard electric heaters, which account for about half of all water heaters sold. And while hybrids cost more than electric-only models, installation is similar and payback time is short.


But hybrids also have their downsides. Because the heat pump is usually on top, they need as much as 7 feet clearance from floor to ceiling. You’ll also need up to 1,000 cubic feet of uncooled space to capture enough heat from the air, along with a condensate pump (about $150) if there’s no drain nearby. Hybrid heaters are noisier than conventional storage-tank heaters, exhaust cool air, and can rob some heated air in winter.

All solar heaters supplement an electric heater in basically the same way: A roof-mounted collector absorbs the sun’s heat and transfers it to an antifreeze-like fluid in a closed-loop system that runs to the water tank. The collector is typically a flat panel or an array of glass cylinders called evacuated tubes. The best delivered stellar savings in summer, making them an attractive option for warm, sunny areas. But savings suffered on cold and cloudy days. And even with federal and local rebates, the thousands you’ll typically spend to buy and install one can mean you’ll wait anywhere from 10 to 30 years before their savings pay for their costs.

Less familiar to consumers are condensing gas water heaters but under the new energy regulations, they have become an option for homes that need a water heater with a capacity of 55 gallons or more and that heat with gas. Condensing gas water heaters capture much of the heat that normally goes up the flue by cooling exhaust gases well below 140 degrees F, the temperature at which water vapor condenses into water.


Daily usage of hot water by a family of two to four includes water for taking showers, washing the laundry, running the dishwasher, and simply turning the faucet off and on. Here are the water-heater features to consider.

Heating source

The water-heater market is split between natural gas and electric. Oil-fired heaters account for only a small percentage of sales, most likely because of their relatively high price and the small market for oil-burning equipment.


Coverage for most heaters typically runs 3 to 12 years. While you’ll usually pay a bit more for longer-warranty models, we’ve found that they tend to have larger elements or burners that can speed up water heating, essentially increasing the hot water available, along with thicker insulation for less heat loss. We suggest choosing models with the longest warranty available.

Anti-scale devices

Some brands—notably, Kenmore, State Industries, and Rheem—advertise features that are supposed to reduce buildup of mineral scale at the bottom of the tank by swirling the water. While scale can shorten the life of the heating element inside an electric water heater, you don‘t need to invest in fancy features to get a long-lived model. Simply look for a heater with a 12-year warranty, which typically includes a longer or thicker element.

Brass vs. plastic drain valves

These valves are situated near the base of the unit to accept a garden hose for draining the heater. Look for brass drain valves, which tend to be more durable than plastic.

Glass-lined tanks

A glass-lined tank is another feature designed to reduce corrosion. During manufacturing, a coating is applied to the inside of the steel tank and heated to form a protective, porcelain glass-like layer.

Digital displays

Found mostly on hybrid and solar heaters, these help you monitor levels and customize operation. Some electric/heat-pump hybrid models let you digitally set a “vacation mode” that uses just the heat pump for added efficiency when you’re away. Displays on solar heaters often show tank and collector temperatures, along with pressure readings and other helpful data.


A top-mounted heat pump on hybrid water heaters typically makes them taller than conventional models. Tougher federal standards have also spurred companies to beef up the insulation on regular storage-tank heaters, adding a few inches of width over earlier versions—a potential problem in tight spots. (Hint: Adding insulation to hot-water pipes that exit the heater can add efficiency to any water heater.) A condensing water heater may take up more space than the one it replaces.

Flammable-vapor ignition resistance

Residential tank-type gas heaters typically include flammable-vapor ignition resistance (FVIR) to prevent flashback fires when vapors from a flammable liquid such as gasoline contact the burner or pilot light. Also be sure your home has carbon-monoxide alarms if you have a fuel-fired water heater (or any fuel-burning device, including a fireplace). And because heaters are generally vented through the same chimney as a furnace or boiler, if you change venting for one appliance, you might need to change it for the other. Considering a tankless water heater? If you run a vent pipe to the outside of your house, you’ll need to use Category 3 stainless-steel venting to resist corrosion from any condensation that forms in the pipe.


Here are profiles of four of the leading manufacturers of water heaters. Use them to compare water heaters by brand.

A.O. Smith

A.O. Smith makes residential and commercial water heaters, boilers and storage tanks that are sold exclusively by plumbing wholesalers and plumbing contractors. It manufacturers tankless, hybrid, solar and high-efficiency tank water heaters.


General Electric makes gas and electric water heaters. GE tank water heaters are available in multiple sizes, with energy-efficiency claims that vary by size and multiple levels of warranty coverage. The company’s tank water heaters are available exclusively at Home Depot. General Electric recently introduced a line of made in the U.S.—GeoSpring heat pump electric water heaters.


Kenmore makes gas and electric water heaters. Kenmore water heaters are available in multiple sizes, Power Miser, and Hydrosense electronic-temperature-control configurations. Kenmore water heaters are available at Sears.


Rheem manufactures and markets gas and electric water heaters. Rheem makes residential water heaters in tank, tankless, and point-of-use configurations and units that work with solar water-heater systems. Rheem water heaters are available in multiple sizes and with multiple warranties, with energy-efficiency claims that vary by size. Rheem tankless water heaters are available at Home Depot. Its tank water heaters are available online and through a network of dealers.


Whirlpool manufactures and markets gas and electric water heaters. Whirlpool tank water heaters are available in multiple sizes, and standard and power vent configurations. Whirlpool water heaters are available at Lowe’s.

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