It’s a good idea to know the different types of water heaters available before you purchase one:
- Conventional storage water heaters offer a ready reservoir (storage tank) of hot water
- Tankless or demand-type water heaters heat water directly without the use of a storage tank
- Heat pump water heaters move heat from one place to another instead of generating heat directly for providing hot water
- Solar water heaters use the sun’s heat to provide hot water
- Tankless coil and indirect water heaters use a home’s space heating system to heat water
When selecting the best type and model of water heater for your home, consider the following:
- Fuel type, availability, and cost. The fuel type or energy source you use for water heating will not only affect the water heater’s annual operation costs but also its size and energy efficiency. See below for more on selecting fuel types.
- Size. To provide your household with enough hot water and to maximize efficiency, you need a properly sized water heater. Visit the pages on different types of water heaters (linked above) for more on sizing.
- Energy efficiency. To maximize your energy and cost savings, you want to know how energy efficient a water heater is before you purchase it. Visit the pages on different types of water heaters (linked above) for more on estimating energy efficiency.
- Costs. Before you purchase a water heater, it’s also a good idea to estimate its annual operating costs and compare those costs with other less or more energy-efficient models. Visit the pages on different types of water heaters (linked above) for more on estimating costs.
Also, be sure to do what you can to reduce your hot water use. You may also want to explore other strategies such as drain-water heat recovery to save money on your water heating bill.
Fuel types, availability and costs for water heating
When selecting a new water heater, it’s important to consider what fuel type or energy source you will use, including its availability and cost. The fuel used by a water heating system will not only affect annual operation costs but also the water heater’s size and energy efficiency.
Fuel type and its availability in your area may narrow your water heater choices. The following is a list of water heater options by fuel or energy source:
- Electricity Widely available in the United States to fuel conventional storage, tankless or demand-type, and heat pump water heaters. It also can be used with combination water and space heating systems, which include tankless coil and indirect water heaters.
- Fuel oil Available in some areas of the United States to fuel conventional storage water heaters, and indirect combination water and space heating systems.
- Geothermal energy Available throughout the United States to those who will have or already have a geothermal heat pump system installed in their homes for space heating and cooling. See Heat Pump Water Heaters for more information.
- Natural gas Available in many areas of the United States to fuel conventional storage and demand (tankless or instantaneous) water heaters, as well as combination water and space heating systems, which include tankless coil and indirect water heaters.
- Propane Available in many areas of the United States to fuel conventional storage and demand (tankless or instantaneous) water heaters, as well as indirect combination water and space heating systems.
- Solar energy Available throughout the United States — most abundantly in the Southwest — for solar water heaters.
Comparing fuel costs and water heater types
If you have more than one fuel type available in your area, it’s a good idea to compare fuel costs, especially if you’re building a new home. Even if you’re replacing a water heater, you may find that you’ll save more money in the long run if you use a different fuel or energy source. Contact your utility for current fuel costs or rates.
The type of water heater you choose will also affect your water heating costs. One type of water heater may use a fuel type more efficiently than another type of water heater. For example, an electric heat pump water heater typically is more energy efficient than an electric conventional storage water heater. Also, an electric heat pump water heater might have lower energy costs because of its higher efficiency than a gas-fired conventional storage water heater, even though local natural gas costs might be lower than the electricity rates.