Everything You Need to Know About Hot Water Systems


Water heaters matter more than you know. In fact, it comprises the second-largest spending for any household. If you’re looking for hot water systems, then let us guide you on how to choose the right one for you.

According to the Department of Energy, water heaters account for 14% to 18% of utility bills. This makes your choice of water heaters crucial in the long run – not only for your convenience but also for keeping your energy costs at a minimum.

There are 4 types of water heaters that keep your water warm in an insulated storage tank until you use it. All four are systems for the whole house, except for point-of-use.

Here are the 4 types of water heaters:

  1. Standard
  2. High-efficiency
  3. Solar
  4. Point-of-use water heaters

There’s a fifth type – tankless water heaters – that heat cold water on demand, only as needed. This makes them, by far, more efficient than standard tank models. However, they cost more to buy and install. Plus, tankless models aren’t that reliable to take care of hot water needs in high-demand homes. However, you need to hire only experts for installing such complex heating devices. Just Google plumbers and compare your options before getting the water heater installed.

Most tank water heaters use gas or electricity. The type of energy available in your home will play a role in deciding which water heater you should buy.

Standard Storage Tank Water Heaters

By far the most popular option, standard water heaters use a gas flame or electric heating element to heat water. They type of standard storage tank water heaters that you will use depends on your local utility costs. In general, gas water heaters are cheaper to operate and maintain as compared to electric. Gas water heaters cost more upfront than electric water heaters. However, when it comes to energy savings, gas water heaters make up the price difference in a year or so.

Cost: $300 to $600 for gas; $250 to $500 for electric. Installation costs add $700 to $2,000.

Standard Residential Tank Water Heaters

This type of water heaters has 20- to 80-gallon capacities. However, this isn’t what counts. Rather it’s a measure of efficiency called first-hour rating.  Standard residential tank water heaters are cheaper than other water heater types and have an average lifespan of 8-15 years.

High-Efficiency Storage Tank Water Heaters

High-efficiency (HE) models are the most energy-efficient storage tank water heaters in the market. You’ll find both gas and electric models. Most gas-fired water heaters have an energy factor (EF) number. This is set by the U.S. Department of Energy to help consumers compare the efficiency of similar appliances. The bigger the EF number, the more efficient the appliance.

Cost: About $620 to $1,500. Installation adds about $700 to $2,000, depending on your location.

What if you want a high-efficiency electric? Your option is a heat pump, or hybrid, water heater. They’re more expensive than gas high-efficiency. They pull heat from the surrounding air into the water in the tank. This makes them best for mild to hot climates.

They are more expensive than standard electric heaters. But, they can pay back the difference in price in less than 2 years. They use up to 65% less electricity than a standard electric water heater, and can save up to $3,000 over the life of the appliance.

Heat-Pump Water Heaters

This type of water heater needs a lot of space. A rough estimate would be about 1,000 cubic feet of air space around the unit. You also need to store this in an area in your home that consistently remains between 40 degrees and 90 degrees so they can draw on warm surrounding air. This type of heater has an average lifespan of 8 to 15 years.

Cost: $1,100 to $3,000. Installation costs add $1,400 to $2,000.

Solar Water Tank Heaters

Cut your water heating costs in half with a solar water heater, compared with a standard water heater.

They have two basic components:

  • A thermal collector located on your home’s roof or in its yard, and
  • A storage tank and a back-up source of hot water — either a gas or electric tank water heater — to ensure a supply of hot water on cloudy and cold days.

Cost: about $8,000 to $10,000 for equipment and install in regions that experience freezing; costs are half that in areas where freeze protection for equipment is not needed.

It can take up to 30 years (longer than their projected lifespan) before their energy savings pay back the upfront costs. Local rebates and tax credits can reduce their cost.

Solar Water Heaters

This type of water heater is best suited for mild to hot climates because energy savings can be reduced or diminished on cold and cloudy days. Solar water heaters have an average lifespan of 20 years and work most efficiently when the collector is located close to the tank.

Point-of-Use Water Heaters

These augment your home’s whole-house water heater by providing hot water for a specific application, like a kitchen faucet.  They reduce the amount of water wasted waiting for the tap to run hot. If you have basic plumbing skills, you can DIY install a point-of-use water heater.

Cost: about $200 for 2.5-gallon heater to $400 for a 30-gallon heater.

Long Warranties

Warranties span 3-12 years. Tank water heaters with longer warranties tend to be better quality. They also have a bigger heating element that combats mineral scale buildup at the bottom of the tank. Buildup can shorten a tank’s lifespan.

Gas vs. Electric Water Heater, Which Is Better?

You will need to decide on which type of water heater to purchase based on your specific needs or what you want in your heating system. You need to explore the differences between the two choices in order to make an informed decision.

Understanding the differences between your two options will help you make a wise, educated decision on your purchase – one that meets your water heating needs and budgetary requirements.

Gas vs. Electric Water Heater, Which Is Cheaper?

Electric furnaces have lower upfront costs than gas water heaters. However, in the long run, gas furnaces are usually less costly to operate because gas prices are less expensive than electric bills.

Your home will need a natural gas connection if you buy a gas water heater system. If you’re not using natural gas in your home, then you will need to hire a contractor to install a gas line and get permits, which are additional expenses.

Gas furnaces are more costly to install than electric heating systems because you will need to add vents, making the process more complicated. Plus, you will need higher annual maintenance requirements because they use combustible fuel.

Gas vs. Electric Water Heater, Which Is More Efficient?

Electric water heating systems waste less energy than gas furnaces because the former don’t use flues through which heat can escape. However, gas furnaces can heat up your home faster because they produce the required maximum heat as soon as the burners run, which means they waste less energy to generate heat.

Gas vs. Electric Water Heater, Which Is More Environment-Friendly?

Gas furnaces may look like the more environment-friendly choice at first. However, if your home is powered with hydro, wind, or solar energy – clean, renewable energy sources – an electric system might have a smaller carbon footprint than its gas-powered counterpart.

Your home environment matters too. So, if you’re using a gas water heater, you should prioritize safety and ensure that you hire a licensed professional to regularly inspect and maintain your gas-powered systems. You want to avoid gas leaks, which lower the quality of indoor air and might even cause carbon dioxide poisoning, which no one wants to happen.


Electric heat makes the most economic sense if you live in an area with mild winters or if gas heat is not available. Gas heat is ideal for homes in colder climates that rely on the heating system several months of the year and are already equipped with natural gas utilities.

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