Selecting a New Water Heater

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.

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Exploring Water Heater Options by Fuel Type

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 for 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.

However, if you are converting from one fuel type to another, there are other cost considerations, such as adding a breaker or running a gas line to the water heater and venting it outside. 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 than a gas-fired conventional storage water heater, even though local natural gas costs might be lower than the electricity rates.

Which would be cheaper to run, an electrical or propane tankless water heater?

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' David

Hi David,

That would depend on the energy prices in your area. Usually natural gas is the cheapest way to heat water, followed by electricity, with propane being the most expensive.

To find out, plug in the prices you pay for electricity and propane on your utility bill in the hot water energy cost calculator to compare the fuel prices in your area.

The calculator is designed for tank type water heaters, and tankless models are 20% to 30% more fuel efficient, but it should still give you a comparison of which type of fuel is the least expensive for heating water in your area.

While electric tankless water heaters are available, they're usually smaller 'point of use' units designed to supply hot water to a single sink or shower. Most of the tankless water heaters used to heat water for an entire home run on gas, since it would take a very large electrical line and breaker to supply enough electricity for multiple hot water users.

Also, keep in mind that gas tankless water heaters requires a larger gas line, so you will probably have to replace the gas line you have now running to your tank type water heater.

Good luck with your project,

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