How to Save Money with Your Water Heater Purchase

How to Save Money with Your Water Heater Purchase
November 1, 2012 Lorelie

A water heater purchase along with installation can be costly.  However, if you think smart and think about tax credit being given to water heaters, if you take advantage of this, then you will save yourself a lot of money.  A tax credit was first announced by the U.S. Department of Energy for tank and tankless water heaters back in April 2008.  This tax credit also includes heat pump water heaters and solar water heaters.  The truth is the Energy Star criteria announcement for water heaters was influential in transforming the water heater industry.  This compelled water heater manufacturers to develop a new generation of water heaters that are far more energy efficient as the demand for them will have likely increased due to the tax credit announcement.  It is estimated that in around 5 years time, these Energy Star certified water heaters will be in hundreds of thousands of homes saving lots of energy in the process while also avoiding tons of CO2 emissions.

To further stipulate the transformation of the water heater industry, President Barrack Obama signed the Stimulus Bill where owners of Energy Star certified water heaters are qualified to apply for tax credits for energy efficiency.  These days, the purchase and installation of Energy Star compliant water heater can reduce its total cost by up to 30%, all thanks to the tax credit.

In order for a water heater to qualify for an Energy Star rating, it first needs to satisfy certain criteria such as the Energy Factor rating, first hour rating, along with other requirements.  To date, there are five types of water heating technology that are qualified for the 30% tax credit.  The tax credit for tank and tankless units are currently capped at $1,500, while the solar water heater and the heat pump water heater are not capped.

High Efficiency Gas-fired Storage Tank Water Heaters

High efficiency gas-fired storage tank water heaters are similar to the traditional gas-fired tank water heaters that we know.  However, due to their improved efficiency along with better quality materials used such as insulation, highly efficient burners, ignition system, heat trap as well as venting systems, they have become far more energy efficient than their regular cousins.

Before such a unit qualifies for the Energy Star tax credits, it first needs to pass the minimum Energy Factor required for water heaters in this category which is 0.62.  High efficiency gas-fired storage tank models would include Rheem’s “Professional Series” and Bradford White’s “Defender Safety Series.”

Whole House Gas-fired Tankless Water Heaters

Whole house gas-fired tankless water heater are in some ways similar to gas-fired storage tank water heaters.  The main difference though is that they have rid of the tank and instead heats water instantaneously when it is on demand.  Whole house tankless water heater caters to the whole house as opposed to point-of-use tankless water heaters that only heats the specific tap it is installed on.

Before such a unit qualifies for the Energy Star tax credits, it first needs to pass the Energy Factor rating required for water heaters in this category which is greater than 0.82.  Recommended whole house gas-fired tankless water heaters would include brands such as Bosch, Noritz, Paloma, Rheem, Rinnai, and Takagi.

Gas Condensing Water Heater

Condensing water heaters are practically the most efficient type of gas-fired water heater.  Instead of directly venting their exhaust gasses towards the outside, it instead utilizes the heat from the exhaust and uses it further in the water heater process.  This is possible through the use of a second heat exchanger where the combust gasses pass through.  Gas condensing water heaters would include storage tank models and tankless models and they have an energy efficiency rating of over 90%

Recommended storage tank gas condensing water heater would include A.O. Smith’s “Vertex Series,” Heater Transfer Products’  “Phoenix Series,” and American Water Heaters’ “Polaris Series.”   Recommended tankless gas condensing water heaters would include the Navien CR Series which has a 98% energy efficiency.  Bosch, Noritz, and Takagi are the other manufacturers that have models with very high efficiency ratings.

Heat Pump Water Heaters

Heat pump water heaters are also one of the most efficient types of water heaters as they draw less power than conventional electric storage tank water heaters.  Heat pumps basically draw heat from the surrounding air and use this to heat the water inside the tank.  Since they do not generate heat on their own, they have an Energy Factor rating of 2.0 or higher.  Most heat pump water heaters have an electric backup element which in effect makes them hybrid water heaters.

Recommended heat pump water heater brands would include G.E., Rheem, and Stiebel Eltron.  However, if you are unable to afford these models, you may convert your standard electric storage tank water heater by purchasing a stand-alone add-on heat pump.

Heat pump water heaters are the only electric model water heaters that are Energy Star compliant and qualify for energy efficiency tax credits.

Solar Water Heaters

Since the energy coming from the sun is free, then solar water heaters are therefore the cheapest type of water heater to run.  There are actually a wide variety of solar water heating systems and all of them have either gas or electric as backup system should there be bad weather conditions and the heat or ray of the sun does not directly shine on the solar panels.  This means that there is still some operating cost in running the system.  Nevertheless, it is a system that is efficient and will keep on running for many years.  The main issue with solar water heating systems is that they are far more expensive than other types of water heating systems.  However, due to the savings that you get from your annual operation cost, the extra price you pay in getting a solar water heater will likely pay for itself in around 10 years time.

Since solar water heaters and heat pumps are not capped at the $1,500 mark, then you are likely to get substantial savings when you get these water heating systems during your water heater purchase.  Rheem manufactures solar water heating systems and has had good reviews on their “Solaraide” passive solar water heating system and their “Solpak” active water heating system.

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