This month’s newsletter looks into demand (tankless or instantaneous) water heaters which provide hot water only as it is needed.

If you decide to stick with a conventional water heater there are plenty of ways to reduce its energy use. The Department of Energy makes the following recommendations:

Insulate your heater and hot water pipes with kits available at hardware stores and building supply stores. Your local utility company may provide these at a discounted cost. Follow the manufacturer's instructions and don't cover the thermostat when insulating your heater.

Lower the thermostats on your water heater to 120 degrees Fahrenheit.

Install a timer on an electrical water heater that can automatically turn the hot water off at night and on in the morning. The DOE says a simple timer can pay for itself in less than a year.

Install a heat trap above the water heater. A heat trap is a simple piping arrangement that prevents hot water from rising up the pipes so it will minimize standby losses.

Drain a quart of water from your hot water tank every three months to remove sediment that prevents heat transfer and lowers the unit's efficiency. If your water heater is more than ten years old, it probably has no higher than 50 percent efficiency, according to the DOE. Consider replacing it with a new, higher-efficiency model. Look for the EnergyGuide label required on storage water heaters. They indicate either the annual estimated cost of operating the system or energy efficiency ratings.

State and Local Tax Incentives

The $300 Federal Tax Credit offered through the Energy Policy Act has not been extended for 2008.

(Note: Gas tankless water heaters with an Energy Factor (EF) of at least 0.80, as certified by the U.S. Department of Energy, qualified for the tax credit.)

News Highlights

Tax breaks big and small sweeten financial bailout

Wind power developers, disaster victims, college students, teachers and millions of taxpayers and businesses stand to see substantial benefits from the tax relief package that lawmakers added to the huge financial rescue plan.

President Signs Green Building Tax Deduction and R&D Tax Credit

SourceCorp announces the extension of the Energy Efficient "Green" Building Tax Deduction and the two-year extension of the R&D Tax Credit.

Incentives to Go Green Plentiful

Federal and state governments and your utility companies all have programs and incentives to help you "green" your business.

Tankless Water Heaters

Water heating uses up to 25 percent of the energy in U.S. homes and is the second largest energy expense in U.S. households, according to the U.S. Department of Energy (DOE), so it's definitely worth it to invest the time and effort in researching different water heating options. In fact, the DOE points out in its guidelines for selecting a new water heater that most people don't get to do their homework before buying one, because they are usually forced to make a quick decision when their current heater fails unexpectedly. Storage Tank models are the most popular water heaters in the United States today. A typical tank heater stores anywhere from 20 to 80 gallons of hot water. The water is heated up slowly and stored for later use. As water sits in the tank waiting to be used it often loses heat and has to be reheated to maintain a pre-set temperature. "Standby heat loss" occurs as energy is lost from warmed water sitting in a tank and not being used. As long as there is hot water in the tank you can use hot water appliances simultaneously. However, once the tank is emptied there is no hot water available until it refills and reheats.

Tankless water heaters, on the other hand, heat water as needed and provide water continuously. They first began appearing in the United States about 25 years ago. Tankless models, also known as "demand" or "instantaneous," are common in Japan and Europe. As their name implies, they do not have a holding tank. The heating process begins when you turn on a hot-water tap. Cold water travels through a pipe into the unit, and either a gas burner or an electric element heats the water up quickly. And according to Richard H. Karney, Energy Star program manager for the DOE, tankless water heaters "do save energy because they eliminate parasitic energy losses in the tank."

Before you go out and buy a tankless water heater, though, it is important to understand the technology's limitations. While manufacturers say that tankless heaters don't run out of hot water, they can only supply a set volume of hot water at once, so it's hard to run a dishwasher, washing machine and your kitchen faucet at the same time. Each model has a "flow rate," which is measured in gallons per minute (GPM). You can get plenty of continuous hot water at one time as long as your water use is within the limits of the system's flow rate. And Karney points out that in other countries where tankless heaters are more popular, the houses are much smaller and distribution is much smaller.

Tankless heaters are generally more expensive than their conventional counterparts but are said to make up for the higher sticker price with increased energy savings (though how long it takes to make up those costs is subject to debate). You might not get as much energy savings with gas units powered by pilot lights so if operating costs are important you should consider an electronic ignition, but check to make sure it is compatible with your appliances.

Selecting a Tankless Water Heater

Because the cost of gas is generally lower than electricity, gas tankless systems are usually cheaper; they also tend to have higher flow rates than electric systems. (fpl.com)

Compare and contrast flow rates of the different models you are considering. To calculate your peak demand, make a list of how many hot water devices you expect to have open at one time and add up their flow rates. Figure at least 2 gallons per shower, about 1 gallon per faucet, and about 1 to 2 gallons per dishwasher and clothes washer you want to have run at the same time.

You'll also have to find out your incoming water temperature (ground water is warmer in the summer), and the desired outgoing temperature. Call a local plumber to determine your ground temperature or rely on the manufacturer. Once you figure out your peak demand, incoming water temperature, and desired outgoing temperature, choose a model that meets your peak flow rate and temperature rise needs. Remember manufacturers calculate flow rates based on different temperature rise requirements, so make sure you get the proper GPM for your temperature rise needs. (fpl.com, builderswebsource.com).

Consider the size of gas line and vents needed to run your tankless heater choices and the costs associated with conversion.

Find out what the servicing needs are, who is available to service it, and if replacement parts are readily available.

Disadvantages of Tankless Water Heaters

Some disadvantages of tankless water heaters include the following.

• Presently, installing a tankless system comes at an increased cost, particularly in retro-fit applications. They tend to be particularly expensive in areas such as the US where they are not dominant, compared to the established tank design. Since the water must be heated instantly, tankless water heaters use a very large amount of electricity or gas while they are on. If a storage water heater is being replaced with a tankless one, the size of the electrical wiring or gas pipeline may have to be increased to handle the load and the existing vent pipe may have to be replaced, adding significant expense to the installation. Gas units are efficient but require a large volume of gas when operating at high firing rates. Many tankless units have fully modulating gas valves that can range from as low as 10,000 to over 1,000,000 BTUs. For electrical installations, AWG 10 or 8 wire, corresponding to 10 or 6 mm², is required for most POU heaters at North American voltages. Larger whole house electric units may require up to AWG 2 wire. In gas appliances, both pressure and volume requirements must be met for optimum operation.
• There is usually a short delay between the time when the water flow starts and when the flow detector activates the heating elements. This results in cold water followed quickly by hot water, and these sudden changes are particularly noticeable when a hot water faucet is turned on and off repeatedly.
• A tank water heater tends to heat idle water in the surrounding piping somewhat, through the process of convection. A tankless water heater only heats water upon demand, so all idle water in the piping is cold. Thus there is a more apparent "flow delay" for hot water to reach a distant faucet.
• Since a tankless water heater is inactive when hot water is not being used, they may be incompatible with hot water recirculation systems.
• Tankless water heaters often have minimum flow requirements before the heater is activated, and this can result in a gap between the cold water temperature, and the coolest warm water temperature that can be achieved with a hot and cold water mix.
• Similarly, unlike with a tank heater, the hot water temperature from a tankless heater is inversely proportional to the rate of the water flow -- the faster the flow, the less time the water spends in the heating element being warmed. Mixing hot and cold water to the "right" temperature from a single-lever faucet (say, when taking a shower) takes practice; one might consider installing a temperature compensating valve.

Links to Information on Tankless Water Heaters

Click on the links below for more information on tankless water heaters.

Tankless Water Heater Buying Guide

EERE Consumer's Guide: Demand (Tankless or Instantaneous) Water Heaters