Gas-Fired Tank Water Heaters

On a life-cycle basis, gas-fired tank water heaters are typically the least expensive means of heating water. One reason is that on a per-Btu basis, natural gas and propane are usually much less expensive than electricity; another is that tank water heaters of 100 gallons or less are mass produced and are less expensive than most other types of water heaters. In some instances, other water heater types—such as electric heaters—are a better choice. But if gas is available and the water heater is in a location where a gas vent can be installed, a gas-fired tank water heater will likely be the least expensive to own and operate.

What are the options?
this section

Residential heaters. Even though they’re designed for the residential market, these water heaters can be appropriate for many small—and even some large—commercial facilities. Residential water heaters are available with tank sizes up to 100 gallons and gas inputs of less than 75,000 Btu per hour (Btu/h). Manufactured in large quantities, they are relatively inexpensive and widely available. The term “energy factor” is used to express the efficiency of residential heaters; it represents the portion of the energy going into the water heater that gets turned into usable hot water under standard conditions, and it takes into account heat loss through the walls of the tank, up the flue, and in combustion. The higher the energy factor, the more efficient the heater. By varying the tank insulation, burner design, and a few other features, manufacturers make residential gas storage water heaters available with energy factors ranging from 0.60 to 0.71.

The energy factor of a particular water heater can be found in the manufacturer’s literature or in the Water Heater, High Efficiency Gas Storage for Consumers page.

Commercial heaters. There are two key differences between residential and commercial heaters: Commercial heaters are available with much higher gas input ratings (1 million Btu/h or more) and with larger storage tanks (up to 250 gallons). Unlike residential heaters, commercial heaters aren’t rated for energy factor. Instead, they are rated for “thermal efficiency”—the portion of input gas energy that goes toward heating the water that is drawn from the tank. With few exceptions, standard commercial heaters are available with thermal efficiencies ranging from 78 to 82 percent. These heaters must also meet government standards for standby loss (the portion of the stored energy lost when the burners are not operating). Standby losses are typically not published, but you can get them from the manufacturer.

Condensing heaters. Condensing water heaters (Figure 1) essentially work the same as standard gas heaters. The difference is that these systems redirect the burned gases through another heat exchanger and condense exhaust air in order to maximize heat output rather than immediately venting the exhaust fumes. Because the exhaust temperature is much lower than that of other systems, less expensive polyvinyl chloride (PVC) pipes can be used for venting, which—in addition to saving money—simplifies installation in new construction. Also, because condensing water heaters generally draw combustion air directly from outside through one of those pipes, their combustion processes are sealed off from the occupied space. That makes them safer than other gas water heaters (which may, on rare occasions, leak harmful fumes). Condensing units are available for both commercial and residential applications—commercial units can have efficiencies from 90 to 99 percent while residential units have energy factors of at least 0.8.

Figure 1: Condensing water heaters extract heat from exhaust for better efficiency
Condensing water heaters use the heat from exhaust fumes by passing them through a second heat exchanger where the vapor condenses, as the numbered sequence shows. The heat absorbed from the exhaust provides additional water heating and increases efficiency.
A drawing of a condensing water heater with labeling of the process it uses to condense and reuse heat.
How to make the best choice
this section

Pick a size that’s just right. Sometimes, plumbing contractors will oversize water heaters so that 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, purchase the ASHRAE (American Society for Heating, Refrigerating, and Air-conditioning Engineers) Handbook and calculate the peak one-hour draw, following the procedure from the HVAC Applications section. This quantity represents the greatest amount of hot water likely to be required over the course of a single hour. Then find a water heater whose “first-hour rating” exceeds that. Alternatively, several manufacturers provide free software on their websites for sizing water heaters.

Compare the cost-effectiveness of heaters with different efficiency ratings. The actual operating cost for any water-heating application depends on how frequently the heater will operate and on the cost of natural gas. These parameters vary greatly among applications, so we recommend that you estimate the annual operating costs for a few heaters, using a range of load assumptions, and compare them with their first costs. Use our Gas-Fired Water Heater Screening Tool to estimate the simple payback period for gas water heaters based on their efficiency and purchase price.

Use our cost-effectiveness calculators. We offer several calculators to help you make the best decision when replacing or installing a new water heater. Our Gas-Fired Water Heater Screening Tool determines the energy consumption and payback period for standard and ultra-efficient commercial water heaters and compares them with consumption and payback for residential models. 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, use 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 that compares 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.

Select a water heater that meets Energy Star specifications. Through the Energy Star program, the US Environmental Protection Agency and Department of Energy have developed a set of specifications for cost-effective, energy-efficient residential gas-fired tank water heaters. Manufacturers test their products against these guidelines, and Energy Star’s Water Heater, High Efficiency Gas Storage for Consumers page spells out the requirements and lists all qualifying products.

Consider the application. Condensing water heaters can provide high energy savings throughout their lifetimes, making them an appealing choice in some situations. Since the exhaust from a condensing water heater has been through a second heat exchanger, it’s low enough in temperature that the drain can be made of inexpensive PVC pipe. In new construction applications, where the drains can be designed specifically for the condensing water heater, an inexpensive PVC drain can contribute to a relatively low-cost installation. However, this technology may not necessarily be cost-effective in retrofit applications given the additional work that may be required to accommodate its exhaust requirements.

If safety is an overriding issue, select a sealed combustion heater. Every year, a few people are injured or killed when carbon monoxide and other products of combustion backdraft into occupied space. Certain water heaters use sealed-combustion technology so they cannot backdraft. Although backdrafting rarely occurs with professional installation—and problems can be minimized by making sure that systems are properly sized and vented, ducts are leak-proof, and carbon monoxide monitors are installed—the peace of mind offered by these kinds of heaters may be worth it for you. Additionally, if backdrafting is a concern, a professional can test building air pressures to determine whether corrections to the system are necessary.

What’s on the horizon?
this section

Though condensing technology isn’t new, it has yet to obtain a significant place in the mainstream market. Even with its high efficiencies that yield impressive energy savings, a condensing water heater’s high initial price currently inhibits cost effectiveness in many applications. However, the US Department of Energy’s 2015 residential water heater efficiency standards put an emphasis on increased efficiencies across all classes of water heaters and may make condensing units more relevant to the residential and commercial markets, creating a higher demand for more affordable products. As prices decrease and the technology becomes more robust, condensing units will likely become more prolific contenders in the water heater market.

Who are the manufacturers?
this section

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: 
01/09/2018
E Source Business Energy Advisor

Your one-stop source for actionable advice on proven business energy management strategies. The E Source Business Energy Advisor (BEA) is a library of information that integrates with your existing website and provides sector-specific energy advice for a wide variety of business types and technologies. By providing this valuable information on your website, you can improve engagement with your business customers, help them make the case for energy efficiency, and drive them to your efficiency programs. BEA also serves as a valuable resource for account managers, business contact center representatives, and demand-side management program managers.