People are always asking us for water heater advice and it seems the biggest issue is with information they need to make the best decision for their family when choosing a new water heater type. With all the choices for water heaters out there these days it’s really hard to distinguish which one is the best for your particular situation. At Yes! Plumbing we understand the confusion and hope our clients and prospective clients will find this brief article helpful when trying to decide the type and size of the water heater which will best satisfy the needs of your family.
There are basically two types of water heaters available these days—tank type storage water heaters and tankless water heaters (sometimes referred to as “instant water heaters”). We’ll try to help you decide which one is best for your family by explaining the differences between them regarding things you will find important. These things are feasibility, how well they fit your budget, cost of operation, and the needs of your family. So let’s get down to the nitty gritty!
Of course a big consideration is budget. You can only afford what you can afford, right? Let’s try to look at this from all sides and maybe you will be able to afford a little more than you think. A storage (tank type) heater has a lower cost up front until you start getting into really big water heaters (around 100 gallons). Until then, the storage water heater will cost about ½ of the installation of a tankless heater. That’s more or less, depending on the difficulty of installation and the work required to bring your new heater up to code.
But that’s not all you need to consider to make your correct choice. You will also want to factor in the operational costs of both heaters over the expected life of the heater. We’ll do that next.
This is where tankless heater shine but maybe not for the reason you would think. So let’s go over them both. We’ll tackle storage heaters first.
STORAGE TYPE WATER HEATERS
Storage heaters in our area have an average life expectancy of around 8 years. Some longer, some shorter depending on water characteristics and water heater quality. So the first operational cost is replacement cost. If you have to replace the heater every 8 years, it will cost you 1/8 of the purchase price every year as a very real expense. For the purposes of ease of calculation, let’s say the heater cost $1500.00 installed. Then every year, the replacement cost will be $187.50.
Next you have fuel usage which will vary by family and heater size, as well as fuel type, so for this example we’ll use a 50 gallon gas residential heater. Let’s say you use $50.00 worth of gas per month with this heater. Now, $20.00 of that is for keeping the water hot all the time. And $10.00 more is to pay for the gas that goes up the chimney because the storage type water heaters only absorb about 60-70% of the heat created when burning fuel. So you spend 240.00 per year heating the water, another 240.00 per year keeping the stored water hot and $120.00 per year goes “up in smoke” so to speak.
But wait a tick (credit for that to Austin powers), storage heaters have a dirty little secret that rather have you forget. That is they become less and less efficient every year and have to burn more and more fuel every year to produce the same amount of water . Why? Because every day, more and more sediment builds up and burns onto the bottom of the tank, right where the heat comes from. So by the time your heater needs replacement (if the gas price stays the same) the efficiency is so low your monthly fuel burn will be more like double what it was when new. Lets just say the real average cost is more like 75.00 per month over the life of the heater.
Of course all new storage water heaters require that filters and screens be cleaned every 6 months and the heater needs to be flushed every 6 months so if you can’t do that yourself, add the price of water heater repair or a service call into the maintenance cost. For our purposes we’ll assume the owner does his own maintenance. So the operating cost of a tank type heater of this size can be reasonably estimated at $787.50 per year.
TANKLESS WATER HEATERS
It’s pretty common knowledge that a tankless heater installation costs roughly twice that of a tank type heater and can be up to 3 times as much for premium heaters and/or difficult installations. So it can be possible that a tankless heater could have operating costs close to storage heaters, right? Well, lets run the same numbers and see.
Using the same formula as above and figuring twice the initial cost of the storage heater, $3,000.00, it would seem at first glance that the replacement cost per year would be double also, correct?
The fact is, quality tankless heaters actually have a life expectancy of up to 25 years in this area. So if you take that initial cost of $3000.00 and divide by 25, the replacement cost per year is $120.00 per year. That’s a savings of 67.50 per year over the storage heater. But wait a minute, you say, what if I want the premium tankless water heater and it costs me $4500.00??? Excellent question. That water heater installation has a replacement cost of 180.00 per year which is still a small savings over the tank type. Figure in escalating labor costs and water heater price inflation and you would probably save much, much more.
Then there’s fuel cost. In our example from above the storage heater cost 50.00 per month as a fuel cost. And remember with decreasing efficiency every month it’s really more likely closer to $75.00 per month over the life of the heater. With Yes! Plumbing tankless heaters the comparable fuel burn would be around ½ of the tank type when the storage unit is new. So using the figures from the tank type heater example above, you would have fuel costs on the tankless heater of 25.00 per month. But it gets better. Tankless heaters never lose efficiency because they don’t create build up on the heating surface. So the cost remains constant throughout the life of the heater. Because of this feature alone, your operating costs are 50.00 per month less than with a storage heater. So the cost of fuel (again with no price increases) is expected to be 300.00 per year.
So the operating cost of an average tankless heater would be projected at $420.00 per year. That’s a savings of $387.50 per year over storage type heaters. Even if you had the “difficult” installation or wanted the premium variety of heater your cost would only be $480.00 per year, which is still savings of $327.50 over the cost of storage tank heater operation.
So if you have the money available and it’s sitting in the bank “earning” less than 1%, a better use for that money would be to use it to invest in your tankless system and let the gas company “pay you” over 325.00 per year in the form of a lower gas bill and operating costs. At least then you’re making over 7% on your money. No brainer, right?
And if you don’t have enough for that and want to finance it (Yes! Plumbing offers financing to qualified clients), you are still making the 7% on your investment towards finance costs, and you have the advantage of never running out of hot water—-even if you leave a faucet running while your on vacation for 2 weeks!
Another consideration is the configuration of your home. Fact is some homes cannot use tankless technology in its current state for a variety of reasons . There are length of vent requirements, combustion air requirements, economic feasibility restraints based on water and gas pipe sizing and distance and more. For help with this decision you should call on the expertise of Yes! Plumbing. We are experts in water heater system configuration and feasibility. Give us a call at 855-254-3434 and we’ll be glad to help you out!
Tank type water heaters are manufactured in lots of different sizes and can be installed in multiple numbers to fit any family’s hot water usage. The one issue to consider is that whatever size and configuration works at the start of the storage water heater’s life, may not work as it ages due to the continually decreasing a production of the heater as sediment and age creep up on it. And there’s always a chance that even when it’s new, the perfect storm of dishwasher, washing machine, daughter and wife both taking showers at the same time could leave some shivering and soapy bodies while the heater tries to catch up.
Properly sized and installed, tankless water heaters will produce hot water continuously at the set temperature regardless of usage, albeit with pressure drops as the usage increases. The advantage is, you never have to wash the shampoo out of your eyes with cold water and you can run the dishwasher and washing machine along with the shower and never worry about running out of hot water!
So now you have all the numbers to make a sound decision on your family’s water heating needs. If you have questions or need advice on something we forgot to cover, please feel free to give us a call at (708) 847-7045