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The Cost of Water Heating

Paul Kando

After space heating, the next largest energy user in a house is water heating. It is a year round need poorly addressed in all too many Maine houses. Among the most popular options, a propane fired tank water heater ($800 - $1,300 to install) is currently the most expensive to operate for two reasons: (1) the system’s tank full of hot water constantly loses heat, whether we draw hot water or not, and (2) propane is an increasingly expensive fuel to burn. While the efficiency of these heaters hover around 85%, tank losses can be as high as 40%. At $3.16 a gallon for propane, the annual fuel bill can reach $1,050 for a family of four. (Natural gas, if you have access to it, costs about 70% less).

solar water heating tubes
Solar Hot Water Heater
photo credit: inhabitat.com

Another popular way to heat water is to use the boiler of the home’s heating system. However, this means the boiler must operate year-round, rather than just in winter. Oil fired boilers equipped with a heat exchanger coil to heat domestic hot water, turn on the boiler every time a hot water spigot is turned on. There is no tank to lose heat, however the large home heating boiler must fire in response to even the slightest hot water demand – e.g. hand washing. This is very inefficient. Using this method, at $3.75 a gallon for oil, the annual water heating bill for a family of four comes to about $980.

Alternatively, a “boiler-mate” tank is hooked up to the boiler, much like a heating zone. (Cost: $2,000 - $4,000). Now the boiler must heat and keep warm a tankful of water, just like any other tank water heater. Since the boiler now fires less frequently, making this process somewhat more efficient, the annual cost may come to $866 for a four member household.

Direct-fired water heaters operate the same way as the propane fired water heater mentioned above. The tank heat loss is similar; the only difference is in the energy-source. An oil fired tank water heater will cost a family of four about $820; one heated with electric resistance heating elements $736 per year to operate and $400 - $1,400 to install. But the same tank of water heated with an electric heat pump ($1,500 - $4,500 to install) gets the job done for a lot less, $526 a year, because of the heatpump’s superior efficiency.

Tankless water heaters heat water by means of a heat exchange coil wrapped around a heating element, turned on and off in response to a flow sensor. Drawing hot water faucet turns the heater on. Because it must raise the incoming temperature in the short time it takes for water to traverse the length of the coil, these intensely hot water heaters use lots of energy, but only over the relatively short time the hot water is running, e.g. during a shower. Because there are no heat losses from a tank, these units are relatively efficient. They also come in various sizes, to serve individual points of use (a sink, a shower, a tub) or a whole house. A family of four, using propane fired tankless heater will pay (@3.16/gallon) about $765 per year for its hot water; but only about $575 if the energy source is electricity. Tankless heaters cost anywhere from $350 to $4,000 to install, depending on the amount of hot water they are expected to produce.

The most environmentally friendly, and on the long run by far the least expensive way to heat water is using solar energy. There are a number of designs. They all have a heat-absorbing surface exposed to the sun that collects solar energy in the form of heat, which is used to heat a tankful of water. Insulation, glazing, controls, methods to prevent freezing and a back-up heater to use during sunless periods complete a solar water heating system. All costs are incurred up-front, since the energy collected is free. Operating expenses are limited to the cost of backup-heat and minor maintenance. A seasonal, ”bread box”, build-it-yourself water heater kit, which must be drained down during the frosty months, costs about $600; a fully frost-protected, all-season kit for do-it yourself assembly about $2,800. A professionally installed system, depending on design and size can cost up to $12,000 installed. Annual operating costs, for a four-member household come to about $250, assuming 70% solar input with a 30% oil backup) and $214, when the backup is electricity. That’s 80% lower than operating a propane-fired tank heater; 75% less than a boiler-mate; and 70% less than a plain electric water heater.

What’s the payback? To my mind, the better question is “what’s the impact on the family budget?” The cost of relying on fossil fuels is bound to increase in tandem with rising fuel costs – historically about 6.8% per year. Has your family income kept pace with this rate? Any investment in a less energy consuming system will reduce the impact of this fuel price inflation on the family budget. Not to mention the environment.