Do You Have a Natural Gas Furnace, But an Electric Water Heater?
Ever wonder why?
This hot water heater and heating system combo is very popular among new home builders. Whether it’s radiant, central air, hydronic or other types, if your home was built after about 2005, chances are you have this gas furnace/electric water heater combo as well. Depending on what HVAC system was installed, you may have a high-efficiency air conditioning system, or a combi-system that is a hybrid – it all depends on your central heating and cooling system/ forced air system choices and what kind of new system was chosen when the new furnace/home heating was installed.
Why does this matter? Read on!
It’s All About Efficiency
Standard electric water heating is the most expensive water heating option available. On average, a standard electric water heater will cost the average family about $600 per year in energy cost. A standard gas water heater will cost about $400 per year, while a high-efficiency gas or high-efficiency electric water heater will cost about $200 per year or less. So why would your home builder have chosen the most expensive option for you?
The answer: efficiency rating.
You see, a standard electric water heater is titled as being nearly 100% efficient. This means that nearly 100% of the energy it consumes is put into the storage tank water as heat. A standard gas water heater is only about 70% efficient. So nearly 30% of the heat source energy/warm air it consumes is wasted up and out the flue pipe without contributing to the water temperature and only about 70% of the energy it takes in is put into the water in the form of heat. So how can something that is less efficient be cheaper to operate? It all comes down to the cost of electricity versus the cost of natural gas. Natural gas is a very cheap resource. So even though a standard gas water heater is less efficient than its electric counterpart, it’s still 33% cheaper to operate, because natural gas is so incredibly much cheaper than electricity.
New home builders are incentivized to put in energy-efficient appliances into the home. So while the standard electric water heater might be energy efficient, it’s very expensive to operate. In fact, it’s the most expensive way to provide hot water for your home.
“How Can I Cut Costs?”
A common resolution homeowners have for this very expensive problem is to upgrade your water heater away from a standard electric unit, or turn down the thermostat on your domestic hot water systems. There are two options to do this. Your home’s layout and your family’s hot water usage habits will usually determine which way is best for you, in addition to considering installation costs, and going tankless or tank water heaters.
The first option is to upgrade to a high-efficiency electric water heater. These water heaters have been on the market for over 10 years and they have been proven to drastically lower your energy bills. These water heaters operate a lot like your refrigerator by using a small refrigeration unit on top of the water heater, working in reverse, to heat the water. This heat-pump style of heating only uses 1/3rd of the energy of your standard electric water heater. So, you can expect to save over $400/year compared to your current electric water heater.
Concerned about reliability? Don’t be. These water heaters come with a 10-year warranty and their durability can be similar to a refrigerator. Let’s face it, who’s ever had a refrigerator stop making things cold? You haven’t, right? So, what about the cost? As expected, the up-front cost of a heat pump water heater is more than a standard water heater, BUT (and this is a HUGE “but”) they save you so much money on your energy bills that they pay for themselves before the warranty is over (and don’t forget rebates or tax incentives). People save so much money with these water heaters that they literally pay for the new water heater with their energy savings and still have hundreds of dollars left over. THIS IS HUGE!
The second option is to convert over to a gas tankless water heater. Tankless water heaters are gas-fired and can provide you with literally endless hot water while lowering your energy costs. These water heaters are about the size of a carry-on suitcase and mount on a wall. They will exhaust their flue gasses out the side of the home through PVC piping. They are a great option in the right application, and who doesn’t love endless hot water? They do cost a little more than the heat pump water heaters and there can be some ongoing maintenance costs with a tankless depending on your water quality.
When it comes to reducing energy costs with heating, whether propane, electric, closed-loop, space heating, radiators or ductwork with forced air systems – keeping the thermostat turned down can reduce usage. That’s why energy efficient setups are so great – you can get both performance AND lower energy bills!
The Best Option for You
So, what should you do? What’s the best option for you and your family? Well, if you’re considering replacing your electric water heater soon, it’s best to have a plumber come out to help decide which option will be best for you. We can look at the layout of your mechanical room, and ask a few key questions about how you use hot water in your home, and we can help you come up with the best option for you and your family.