Choosing the Right Water Heater for Your Home

October 06, 2015

In “The Top 7 Most Energy-Hungry Appliances”, we wrote that the water heater is the second-most energy-hungry appliance in the average American home, after heating and cooling systems. A water heater generally consumes about 15% of the annual energy bill. That means that if you’re not using the right one for your home’s needs, you could be wasting hundreds of dollars every year. Another problem many people run into is that they buy a new water heater in an emergency: when their current one breaks. This causes them to make a decision in a rush, which could lead to them purchasing an option that isn’t right for their needs. Do your research before you have an emergency. Fortunately, there are some easy ways to determine which water heater is the right one for your home.



There are four basic types of water heaters.

  • Conventional Storage. These are the most widely used water heaters. They maintain a reserve of hot water—between 20 and 80 gallons—and provide that hot water by releasing it when you turn on a hot water tap somewhere in the house. Cold water then enters the tank, is heated, and moves into the reservoir to replenish the used water. The one downside of this type of water heater is that it is constantly using energy to heat the water — a process called stand-by energy loss.


  • Tankless or On-Demand Water Heaters. This type of water heater avoids stand-by energy loss. Rather than constantly maintaining a reserve of hot water, it heats water only when a hot water tap is turned on. When the tap is on, cold water travels through a pipe into the water heater, and a gas burner or electric heating element heats the cold water as it travels through the tank.


  • Indirect Water Heaters. These water heaters are integrated into a home’s heating system and use that heat to heat water. Indirect Water Heaters maintain hot water in a storage tank, but instead of using its own heat source to heat the water, it relies on the heat from a furnace or boiler. Because these water heaters are integrated with a home’s heating system, they can be highly energy efficient.


  • Solar Water Heaters. Solar water heaters use solar power to heat water in a storage tank. There are two types of solar water heaters: active, which have circulating pumps and controls; and passive, which don’t.  


Energy Source

The most common energy sources in America—electricity, natural gas, and propane—can be used to power the most common water heater types: conventional storage, tankless or on-demand, and indirect water heaters. So in general, energy source should not limit your options for a water heater.

If you power your home with solar energy—or would like to use solar energy for some of your energy needs—then you can use it to fuel a solar water heater.



Once you’ve decided the type of water heater you’d like to use with your energy source, you need to determine the size you need. Choosing the right size is one of the best ways to ensure you’re maximizing the efficiency of your water heater. For example, if only one to two people live in your house and you buy a conventional storage water heater with a larger reserve of water than you need, you’ll be paying to heat more water than you need at your disposal.

Conventional storage water heaters generally come in four sizes: 30 gallons for 1-2 people, 40-50 gallons for 2-3 people, and 50 gallons or more for 4 or more people. There can be variations in storage capacity depending on power source, with larger tanks being available for electricity but not natural gas or propane.

For tankless and on-demand water heaters, sizing is more complicated, as it is not about the water heater providing a steady reserve of hot water for your needs but producing hot water when needed. If you choose one of those water heaters, a professional can help you determine the right size.


Energy Efficiency

No matter what water heater you choose, be sure it is energy efficient. Older water heaters—particularly those made in the early 1990’s or before—are far less efficient than current models. In today’s market, there are many options for energy efficient water heaters. A water heater’s energy efficiency is measured in its Energy Factor. The Energy Factor measures the quantity of hot water the unit produces per unit of fuel it consumes. A higher energy factor means a more efficient water heater.

Because the water heater consumes so much of your annual energy bill, take your time choosing the next one for your home. Research the types and sizes, and get professional input before your water heater dies and leaves you with an emergency decision. As with so many home appliance purchases, remember that spending more up front can save you a lot of money in the long run.

Rebates may be available for the following types of water heaters

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