Most Efficient Water Heaters – Comparing Tankless, Solar, Electric, Gas, and Hybrid Models

A water heater is an important investment for any home. The type you choose will provide your home with hot water in a variety of different ways.

Heating water takes a lot of energy, so when shopping, looking at efficiency is invaluable, as it will make a huge difference when it comes to operating costs. Heating water takes a large amount of energy and should be an important factor when choosing the right water heater for your needs.

Water Heater Efficiency

Heating water is one of the larger energy consumers in the home. In fact, heating and cooling are the only other aspects of running a home that takes more energy and thus more money.

With this in mind, energy efficiency is incredibly important when choosing a water heater, whether you are simply concerned about costs or you want to do your part to reduce your energy consumption and reduce your burden on the environment.

Whether you are building a new home, retrofitting, or your water heater broke down, efficiency should be a prime consideration when choosing a water heater. Many people aren’t aware of the wide range of types of water heaters that are on the market today.

There are a number of things that you will want to consider to choose the most efficient water heater. Firstly will be the power source you want. The most common power sources for water heaters are gas, electric, solar, and hybrid systems.

The capacity of the system will also be important. If you choose a traditional system, you will want to pay attention to the capacity the tank holds.

If you choose a tankless heater, you will need to consider how many gallons a minute the heater can handle and whether or not this will be sufficient for your needs.

The most important thing you will need to consider is the type of water heater you want.

The most common types of water heaters are storage tank heaters (gas or electric), tankless or on-demand water heaters (gas or electric), hybrid pump heaters, and solar water heaters.

Tankless Water Heaters – Most Energy Efficient

Tankless water heaters are also often called on-demand water heaters. Unlike traditional water heaters, there is no hot water storage tank involved in this system. Rather, water is heated on demand at the point of use.

A tankless system will consist of multiple heating units that are located somewhere near the desired hot water source (for example near the water line in a bathroom).

So how this works is that when hot water is needed and the hot water faucet is turned on, cold water runs over the heating element before coming out of the faucet. This saves energy by not having a large tank of water kept heated at all times like in a traditional system.

These systems can typically handle 2-5 gallons of water per minute. If you want to do something that uses a lot of water, for example doing laundry and taking a shower at the same time, you may need more than one tankless system. Tankless systems can be either gas or electric.

One of the benefits of tankless heaters include the space-saving nature of this system. You don’t need a large space for a hot water storage tank when you use this system. The downside is that they tend to cost more on the outset, but this is also offset by the fact that they typically last almost twice as long as a traditional water heater.

Most Efficient Tankless Water Heater: Rinnai Tankless Water Heater

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Rinnai is a trusted and reputable brand that makes a wide range of appliances, both for residential and commercial use. Their product line ranges from wall vent furnaces, convectors, and commercial water heaters, to tankless water heaters for home and commercial use.

Their natural gas-powered tankless water heater is a high-end, powerful, and environmentally-friendly hot water heating system that has the capacity to provide for the hot water needs of average-sized homes.

This system is installed on the outside of the home (there are tankless systems from this brand that can be installed inside) and can heat up to 11 gallons per minute, which is an incredibly high amount of water per minute for a tankless system. The system also utilizes Circ-Logic technology that provides the ability to set different recirculation patterns, depending on when and how you use hot water.

This system makes it easy to have on-demand hot water anywhere and anytime you need it. It may require professional installation. It isn’t recommended to self-install unless you have extensive experience with HVAC. This system is Energy Star certified.

The tankless system also comes with a temperature lock function which keeps the system from having accidental temperature changes to the water system. It has low-emission levels and is wi-fi ready. The heater comes with a 15-year or 12,000-hour warranty for the heat exchange, 5-year parts warranty, 1-year labor warranty, and these can be extended if desired (this costs extra).

Specifications:

• 120-volts
• Outside installation only
• 11 GPM
• 0.92 Uniform Energy Factor

Key Features:

• Energy Star Certified
• 11 GPM capacity
• On-demand hot water
• Circ-Logic recirculation system
• Highly efficient
• 15-year or 12,000-hour warranty

Solar Water Heaters – No Electricity Costs

Most often solar water heaters are attached to a holding tank and will operate in a similar way inside the house as any other traditional water system. The biggest difference is the power source, this system uses the sun as opposed to combustion power via electricity or gas.

A solar water heater will have a photovoltaic installation that you put on your roof to capture solar energy and convert it into heat to keep your water hot. If you don’t live in a place where you have regular strong sun exposure, this might not be the best system for you, but if you have access to regular strong sunlight, this is a great option as it doesn’t use any energy that has to be paid for via a power company.

It should be noted that these systems tend to cost quite a bit more than other types of water heaters and may require professional installation. However, with the proper set up in the right conditions, the system can begin to pay for itself immediately.

Most Efficient Solar Water Heater: Sunbank 40-Gallon Solar Water Heater

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This solar water heater by Sunbank is an incredibly efficient way to get hot water. It is pretty costly, and may require professional installation – but it will pay for itself eventually.

Although it’s 40 gallons, this heater is most suitable for households of 1-3 people. Sunbank also makes an 80 gallons solar water heater, so if there are more than 3 people in your household, you may want to look into that one instead.

The heating mechanism is comprised of evacuated tube solar collectors, which absorb up to 96% of the solar radiation that hits them. This makes for very efficient water heating. With the sun beating down on them, the tubes will reach temperatures of 350 degrees Fahrenheit.

Over night, heat is maintained quite well. If the water is 140 degrees F in the evening, by morning it will have only dropped to 130 degrees.

This system has no moving parts, so it’s virtually maintenance-free once installed.

Like anything solar-powered, this water heater will work best if your area gets regular sunshine. If you live in a climate that gets very cold temperatures, the freezing outside air can keep the water from heating up. So, it would be best to use it seasonally, during warmer weather.

Specifications:

• 40 gallons
• Approx. 6 feet in length
• SRCC certified

Key Features:

• No moving parts
• 10-year warranty on the collector tubes
• 1-year warranty on all other components
• Easy to install for DIYers

Electric Water Heaters

A traditional electric water heater utilizes a tank system that fills with water that is heated using a heating element, keeping the water inside of the tank warm at all times. Since heat rises, the hot water rises to the top of the tank to be used first.

Electric water heaters are some of the most affordable water heaters on the market. However, operating costs associated with electric water heaters will typically be higher than a traditional gas water heater.

They are highly efficient and provide large amounts of hot water. However, when the tank is empty, you will not have access to hot water. You can run the tank out of hot water.

Most Efficient Electric Water Heater: Gladiator 50 Gal. Electric Water Heater

Rheem is a trusted and well-known maker of a wide range of home appliances. Their Gladiator 50 gallon electric water heater is an affordable and high quality water heater. It features built-in EcoNet, which allows you to control and monitor your system, even if you are away from home. The app will also warn you if you are getting close to running out of hot water.

The 50 gallon tank provides a large capacity of hot water that makes it possible to both take a shower and run a dishwasher without worrying about running out of hot water. The system features built-in leak detection and automatic shutoff to protect your home against leaks and flood.

The system has a self-cleaning feature that will help to reduce the buildup of minerals and other debris that can shorten the lifespan of the water heater.

The system requires a 240-volt connection and is energy efficient. The water heater also comes with a 3-year in-home warranty and a 12-year limited warranty on the tank and parts, which gives added peace of mind.

Specifications:

• Dual 5500-Watt heating element
• 240-volt connection
• 0.92 Uniform Energy Factor
• 150 Fahrenheit maximum temperature

Key Features:

• 50 gallon large capacity
• Smart technology allows for remote management
• Leak detection and auto shutoff
• Self-cleaning
• 3-year in home warranty; 12-year limited warranty

Gas Water Heaters

When it comes to basic operation, traditional tank-style water heaters that are powered by natural gas operate in the same way as their electric counterparts. The difference is the power source. When it comes to outright costs, a gas-powered water heater may be a little bit more expensive than an electric one, however, this will be offset by lower operating costs.

Most Efficient Gas Water Heater: A.O. Smith Signature 40-Gallon Natural Gas Water Heater

A.O. Smith is a trusted and well-known maker of a wide range of household and commercial appliances. Their Signature 40-gallon tall natural gas water heater is an affordable and quality water heater that is efficient and space-saving in design.

The heater features an electronic gas valve to more accurately select the optimal temperature for your hot water. It runs on 34,000 BTU, making it a powerful but environmentally-friendly water heater with low NOx emissions. The system is also high altitude certified.

This water heater has a built-in safety system and a self-diagnostic LED status indicator.

Specifications:

• 34,000 BTU
• Certified for 0 to 10,1000 feet
• 0.57 Uniform Energy Factor
• 36 GPH recovery

Key Features:

• Space-saving
• Low NOx emissions
• High altitude certified
• Built-in safety system
• Self-diagnostic LED status indicator

Hybrid Water Heaters

A hybrid water heater is an ingenious combination of a traditional water heater along with a highly efficient heat pump. This is a great option for people who live in mild climates and for those who have all electric power.

Heat is drawn in from the outside and over an evaporative coil. Refrigerants in the coil will absorb the heat and heats water in a tank via a heat exchanger.

Due to the way this heater operates, it isn’t suitable for people who live in cold climates or places with harsh winters. The system needs warm outside air in order to operate. However, if you live in a mild or hot climate, this is an excellent choice and is highly energy efficient while being powerful enough to provide for the hot water needs of an average household.

Most Efficient Hybrid Water Heater: A.O. Smith Voltex Hybrid 50 Gal. Water Heater

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Since A.O. Smith is such a reputable and trusted maker of household appliances, we had to include another model from this brand. Known for their combination of quality and value, their Voltex Hybrid water heater is a high-end electric water heater that combines the benefits of a traditional water heater with the energy efficiency of a heat pump.

The system is Energy Star certified and can reduce water heating costs by as much as 73% when compared with a traditional electric hot water heater. The system is dual voltage compatible.

It has three different operation modes that can be selected depending on climatic conditions as well as hot water needs. You can operate the system on efficiency, hybrid, or electric mode.

There is also a “vacation mode”, which keeps the hot water heater and lines from freezing, but also saves energy since hot water demand is low or non-existent. The system also has an electronic user interface for easier operation.

The compressor dehumidifies the air while the heat is transferred. The system also comes with an easily removable air filter that can be washed. The system comes with a 10-year limited warranty for added peace of mind.

Specifications:

• 120- or 240-Volts
• 3.45 Uniform Energy Factor
• 4,500 max wattage

Key Features:

• Energy Star certified

Water Heater Buying Guide

When choosing the best water heater for your household, there are a number of things you want to consider.

Cost

First off, you need to consider the cost. Water heaters are a large investment, so knowing how much you can afford to spend ahead of time will save you a ton of time when shopping.

Installation

Another thing you will want to consider is how difficult the heater is to install. If you are replacing a traditional water heater with another traditional water heater, there aren’t going to be a ton of installation costs or issues. If you, however, choose a tankless system, you may need to have a professional install the system.

Space

It is also important to measure the space you have available to you. Different water heaters will require a different amount of space. Failure to have enough space for your heater can not only reduce the efficiency of the system, it can also be a fire hazard. It is vital that you know the required space needed for any system you care about and ensure that you have the proper amount of space.

Water Consumption

You also need to consider how much water your family uses in a day. If you are a heavy-use household, solar water heaters or tankless water heaters might have trouble keeping up with your needs. If you are efficient with your use of water, alternative systems like hybrid water heaters, tankless systems, or solar water heaters may be a better choice. The capacity of the water heater is important.

Tank vs Tankless Water Heaters

Traditional water heaters will have a storage tank that holds some number of gallons of water. Tankless heaters have the ability to heat a certain number of gallons of water per minute.

Keep these figures in mind when choosing the perfect water heater for your family’s needs. If you live in a warm or hot climate, you might consider a hybrid water heater which is a more efficient way of heating water that utilizes a holding tank like a traditional water heater. This type of water heater is only suitable in certain climates and is more affordable for those whose homes are already all electric to begin with.

Warranty

You will also want to consider the warranty that comes with the heater you are considering. A long and inclusive warranty will give you peace of mind in case anything happens to your water heater while it is under warranty.

Additional Features

Other features that come with certain water heaters include anti-scale devices which are designed to help reduce mineral buildup which can reduce the life of the heating element and thus your water heater. You will also benefit by selecting brass drain valves versus plastic drain valves since they last longer.

Glass-lined tanks can help reduce buildup as well as corrosion of the inside of the tank. Some models will have digital displays which will provide you with valuable information about the operation of the heater.

Pros and Cons of Energy Source Types

Electric Tank-Style Water Heaters

Electric Hot Water Tank-Style heaters use one or two heating elements. In most units, these heating elements can be replaced if needed. They are one of the more affordable systems at the outset and operating costs will depend on the price of electricity in the area. Other types of heaters tend to be cheaper to operate than electric heaters.

Electric tank-style heaters can range in size from a small 28-gallon tank to over 100-gallons. This is the type of heater that is often used in commercial operations due to the large size you can get.

Gas-powered Tank-Style Water Heaters

Gas-powered tank-style heaters use a pilot light and burner to heat water. These systems need air circulation to properly and efficiently operate, so they require more space. You also need to be careful about materials that are stored close by the heater since they can pose a fire hazard.

At the outset, gas-powered tank-style heaters are often more expensive to purchase, but they also tend to be more energy efficient in operation. This style of hot water heater comes in a wide range of sizes from 30-100 gallons.

Solar-Powered Tank-Style Water Heater

Solar-powered water heaters are most effective in areas where there is strong and regular sunlight. This type of system utilizes a traditional tank-style system, but utilizes photovoltaic panels or evacuated tube solar collectors, placed on the roof, to gather sunlight and heat the water.

Since these systems typically use a tank-style water storage solution, they can range in size just as other tank-style systems.

Hybrid Hot Water Heaters

This type of water heater also tends to use a tank-style system. The biggest difference is that it uses a heat pump that uses outside or circulating air to heat refrigerant to heat water in a storage tank.

These systems tend to be more expensive and larger than traditional gas or electric hot water heaters. While they are often more expensive at the outset, they are incredibly energy efficient.

Hybrid systems typically range in size between 50-80 gallons.

Tankless Water Heaters

Tankless water heaters can be gas or electric and are the one style of heater that does not have a tank that holds water to be kept hot until use.

Rather, the system is comprised of a number of heating elements that are near the source of water, which heat water on-demand for use. This is incredibly efficient and doesn’t have the residual power usage that tank-style heaters have.

Frequently Asked Questions

What is the most efficient water heater?

The most energy-efficient type of water heater is a tankless water heater.

With a tankless heater, water is not kept warm in a large tank like traditional water heaters. Instead, water is run over a heating element near the point it comes out of the faucet, heating the water right before it comes to you. This on-demand style of heating water means that the heater is not constantly running, rather it only operates when you need hot water.

There are limits to the amount of water that can be heated per minute when using a tankless heater, so taking a shower while using the laundry machine might not be possible unless you have multiple heaters.

The reason that tankless heaters win the efficiency battle is that they tend to last longer. Depending on how much water your household uses a day, tankless heaters can be from 8-34% more energy-efficient than traditional water heaters according to Energy.gov.

What is the most important factor when choosing a water heater?

The short answer to this question is “it depends”. If efficiency is most important then you want to use this as your main concern when looking for a water heater.

If you want to make sure you never run out of hot water, then what will work best for you will be different. To determine what is most important to you, you need to think about what you are looking for in a water heater and rank these things in order of importance. Use this ranking when shopping.

In Closing

Buying a hot water heater is a large investment, and water heaters are the second largest consumer of home energy, right behind heating and cooling systems. With this in mind, it just makes sense to do your homework to ensure that you make the right choice for your needs, taking into account your budget, water demands, energy preferences, and operating costs.

Electric and gas-powered tank-style water heaters are the most well-known and commonly used. They tend to be cheaper at the outset and can handle a large family’s water needs. Gas water heaters tend to be more energy efficient than their electric-powered counterparts.

All tank-style water heaters necessitate keeping a large amount of water hot at all times to be ready for when it is needed. This means that there is constant energy use to keep water hot, whether it is needed or not.

Some people use solar or hybrid systems as a way to find a more efficient way of using a tank-style system. Using solar power to keep a tank full of water hot is far more environmentally-friendly than a heater that uses non-renewable resources.

Hybrid systems utilize an energy efficient heat pump to keep a tank of water hot. This system takes outside air or the air circulating in the room the tank is stored in. This type of system is best suited for mild or hot climates.

Tankless systems are the most energy efficient as they are the only type of hot water heater system that doesn’t necessitate keeping a tank of water hot at all times. Instead of keeping water hot at all times, this system provides hot water on demand.

Heating units are installed near the source of water (ex: near faucets) and cold water is run over the heating element to be heated before coming out of the tap.

This is an incredibly efficient way to get hot water, without having to use a ton of indirect energy such as with tank-style systems. A tankless system is often much more expensive at the outset, but the incredible efficiency allows these systems to quickly pay for themselves by way of reduced energy usage.