Even if you're not quite ready to replace that leaky old water heater in your basement, a bit of research will get you thinking about the return on investment that an energy-efficient water heater can yield.
Among the many types of water heaters on the market, some models — such as highly efficient gas storage water heaters, heat pumps, solar water heaters and tankless water heaters — are up to 50 percent more efficient than traditional gas storage water heaters.
Perhaps the least understood, though one of the most efficient, is the tankless water heater. As the name suggests, a tankless water heater is indeed a water heater without a tank. It provides hot water on demand, heating water only when you need it and guaranteeing that the last person out of bed doesn’t have to shiver through a cold shower.
Compare this to a conventional water heater, which stores water in a large tank (to 50 gallons in some models) and has to keep this water hot 24 hours a day to ensure an available supply whenever you need it. This means that the water is being heated even when you don’t need it. You are wasting energy and money the majority of the day.
Since tankless water heaters save energy, they also save you money. According to the Environmental Protection Agency’s ENERGY STAR program, an ENERGY STAR-qualified tankless water heater will save an average of more than $40 per year for each person in your household, compared to a conventional gas model. This translates to an annual savings of about $175 for a family of four. The lack of a storage tank means that it can't leak or burst, eliminating the risk of water damage. Additionally, tankless water heaters are typically smaller than conventional models, saving space in your basement or utility closet.
A tankless water heater does cost considerably more than a conventional gas water heater, but the amount saved on your energy bills makes up for this difference just a few years into the water heater's 20-year shelf life — which is much longer than any conventional tank water heater. The initial costs can be further offset through a federal tax credit (valid until December 2010) worth 30 percent of the cost of the unit, up to a total of $1500 for all energy-efficient home improvements.
Perhaps your wheezy basement unit still has a few seasons left yet. In the meantime, fuel costs will continue to creep up, making it all the more practical to think about a long-term strategy for saving energy and money on your next water heater.