Electric Resistance Tank Water Heaters

Because electricity is generally more expensive per Btu than gas, electric water heaters are typically more expensive to own and operate over their lifetime compared to gas water heaters. Despite this economic disadvantage, there are four reasons why someone might select an electric water heater instead of a gas heater:

  • Lower initial cost. Because they don’t require combustion gas vents, electric water heaters are usually less expensive to purchase and install.
  • Ease of installation. Electric heaters can be installed in locations in which it would be difficult or impossible to install a combustion gas vent.
  • Safety. Electric water heaters don’t require combustible fuel, which can leak or explode. They also don’t have pilot lights that can ignite flammable vapors or produce carbon monoxide, which can backdraft into occupied spaces.
  • Fuel availability. Not all buildings have gas supplies, but nearly all buildings have electric supply.

Given these attributes, it’s not surprising that about half of all commercial buildings in the US use electric water heaters. And owners of electric water heaters have several alternatives available that help mitigate the higher operating expense associated with electric water heating.

What are the options?
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Residential heaters. Even though they are designed for the residential market, these water heaters (see Figure 1) can be appropriate for many small commercial facilities—and even some large facilities. These units are available with tank sizes ranging from 20 to 120 gallons and are manufactured in large quantities. As a result, they are relatively inexpensive and widely available. The term “energy factor” is used to express the efficiency of residential heaters and ranges from zero to one. It represents the portion of the energy going into the water heater that gets turned into usable hot water under standard conditions and takes into account the efficiency of the electric heating elements as well as heat loss through the walls of the tank. The higher the energy factor a water heater has, the more efficient it is.

Because electric resistance elements are nearly 100 percent efficient, the efficiency of electric water heaters depends primarily on how well they are insulated. Residential heaters are available with energy factors that range from 0.81 to 0.95. To determine the energy factor for a particular water heater, either obtain it from the manufacturer’s literature or look it up in the Air-Conditioning, Heating, and Refrigeration Institute’s (AHRI’s) Directory of Certified Product Performance.

Figure 1: Electric-powered tank water heater
An electric-powered tank water heater, also called an electric resistance storage water heater, generally consists of an insulated, glass-lined steel tank with two electric resistance elements that heat the water. Thermostats cycle the elements on when the water temperature sags below a setpoint. Cold water enters through a dip tube that extends into the bottom of the tank. An anode rod in the tank reduces the likelihood of corrosion, and there’s a temperature and pressure relief valve for safety.

Commercial heaters. Water heaters designed for the commercial market are available in a nearly unlimited range of tank and electric resistance element sizes. Manufacturers provide tanks that range in size from 5 to 1,000 gallons and have electric elements with inputs ranging from a couple to over one hundred kilowatts. Commercial heaters are rated for thermal efficiency in addition to standby loss, which represents the portion of the stored energy that is lost through the walls of the tank in a given amount of time. Although manufacturers typically don’t publish standby losses, they are often willing to share this information when asked. Alternatively, the AHRI provides this data in its Directory of Certified Product Performance.

Off-peak heaters. If you pay large electric demand charges, or if you are charged much lower rates during off-peak hours, you may benefit from installing a water heater that operates primarily or entirely off peak. Water heaters that are designed to operate this way incorporate larger storage tanks and controls that only allow the electric resistance elements to operate during off-peak hours (users should be sure that controls are adequately reducing or eliminating on-peak usage). Although these heaters take advantage of lower off-peak rates, they incur much greater standby losses, as their storage tanks must be large enough to carry them through the entire on-peak period. Because of the increased standby losses and energy consumption, these systems are usually only cost-effective in locations where there’s a large premium associated with on-peak power.

Heat pump water heaters. Some water heaters employ heat pumps to transfer heat from indoor air or exhaust airstreams to hot water storage tanks, thereby offsetting the energy consumed by the water heater’s electric resistance element and yielding energy savings. Because heat pump water heaters produce cool, dry air as a by-product, the best applications are those that can take advantage of both outputs simultaneously. Heat pump water heaters are especially well suited for commercial-sector applications where the demand for hot water is relatively constant and the need for cooling or dehumidification is continuous.

The initial cost of a commercial heat pump water heater is much greater than that for an electric or gas-fired boiler, but in the right applications, the annual energy savings can be large enough that payback periods are often just a few years. Additionally, many manufacturers are now producing integrated heat pump water heaters for the residential market that may be applicable in small commercial settings as well. These units are slightly larger than comparable electric-resistance water heaters, and are easily configurable to best suit the application in which they are installed. To help consumers select energy-efficient models, Energy Star publishes specifications for residential heat pump water heaters on its Heat Pump Water Heaters page and its website enables users to Find and Compare Products. For more information on this technology, see the Heat Pump Water Heaters topic.

How to make the best choice
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Pick the right size and lining. Plumbing contractors often oversize water heaters so they can quickly specify a model they know will keep up with demand. That’s bad news for customers who have to live with those water heaters, because an oversized heater is less efficient and more expensive than an accurately sized one. To make the best selection, calculate the “peak one-hour draw,” following the procedure from the American Society of Heating, Refrigerating and Air-Conditioning Engineers’ Applications Handbook or the US Department of Energy’s Sizing a New Water Heater page. This quantity represents the greatest amount of hot water that is likely to be required over the course of a single hour. Once you’ve calculated this amount, find a water heater whose “first-hour rating”—which is dependent on the tank size and heating element capacity—matches your need within a few gallons Alternatively, several water heater manufacturers provide free software on their websites to help users identify appropriately sized water heaters. Note that when there’s a large premium associated with on-peak power, an oversized water heater may be appropriate, as previously discussed in our section on off-peak heaters.

Beyond size, users have the option of various tank linings. Generally, glass-lined tanks are the most common, but some manufacturers offer concrete-lined tanks. Concreate-lined water heaters are more difficult to install, but they typically have a much longer life compared to glass-lined tanks.

Calculate cost effectiveness. To assist in this calculation, we offer two calculators that can help you make the best decision when replacing or installing a new water heater. For a broad overview of expected annual costs for different water-heating technologies based on your water use, and to compare otherwise similar gas and electric water heaters, see our Water Heater Fuel Costs calculator. If you already have a general idea about what technology and fuel sources you’re interested in, our Water Heater Economic Comparison Calculator provides a side-by-side economic analysis of up-front and annual costs, life cycle costs, and simple payback period. By necessity, these calculators make assumptions to simplify the calculations, so use them for initial screening only. For more accurate performance predictions, conduct a detailed analysis that includes such factors as actual usage patterns, hot water loads, and part-load performance of equipment.

Ongoing efficiency. Once a user selects and installs a water heater, there are a couple of measures that can ensure maximized energy efficiency over the water heater’s life. Within any electric resistance water heater is an anode rod that’s designed to reduce corrosion. To maintain optimal performance and prolong the appliance’s life, this rod should be inspected every three or four years and replaced as necessary. Also, adding insulation to water pipes will help users maximize the benefits of a high-efficiency water heater. Without proper insulation, standby losses through the pipes can be significant and, in some cases, can hinder energy savings.

What’s on the horizon?
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Because of its design, a conventional electric resistance water heater offers few opportunities for efficiency and performance improvement. However, these opportunities do exist with newer alternative electric technologies, such as heat pump water heaters and electric tankless water heaters. Both of these approaches offer reduced energy costs; tankless units can also offer greater capacity and, if installed at the point of use, quicker delivery. See the topics Heat Pump Water Heaters and Tankless Water Heaters for more information on these options.

Who are the manufacturers?
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Here is a partial list of residential and commercial water heater manufacturers.

Neither this list nor any mention of a specific vendor or product constitutes an endorsement or recommendation by E Source, nor does any content the Business Energy Advisor constitute an endorsement or recommendation, explicit or otherwise, of your service provider’s various technology-related programs.
Content last reviewed: 
01/12/2018
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