Residential Water Heater Guide

• Pros: Widely available and relatively low upfront cost. Generally simpler technology than heat pump water heaters and tankless water heaters. 
• Cons: 
  • Standby heat loss (the energy lost as heat from the stored water to the surrounding environment when the water isn’t being used).
  • Propane, oil and electric conventional storage tank water heaters have high operating costs.
  • Propane and oil water heaters have especially high carbon emissions compared to other fuel types. 
• Lifetime: ~ 15 years^source
• HG&E Incentives:
  • Rebates for electric water heaters
  • Financial assistance at 0% interest for gas and electric water heaters

2. Indirect Water Heaters (Sidearm Tanks)

These systems use your home’s boiler to heat water stored in a separate tank. They are especially efficient when paired with high-efficiency boilers and typically have longer lifetimes than storage tank and heat pump water heaters due to fewer internal components, no direct flame, etc.

• Pros: Long lifespan
• Cons: Requires a boiler
• Lifetime: ~20 years^source
• HG&E Incentives:
  • Financial assistance at 0% interest for gas water heaters

3. Tankless Water Heaters

Heats water only when needed, eliminating standby energy loss. Powered by gas, propane, or electricity.

• Pros: Energy efficient, compact
  
• Cons: May struggle with high simultaneous demand in large households
• Lifetime: 20 years^source
  
• HG&E Incentives:
  
  • N/A

4. Heat Pump Water Heaters (Hybrid)

Uses electricity to extract heat from surrounding air to warm the water—making it about 3x more efficient than conventional models. Can switch to electric resistance heating during high demand.

• Pros: High efficiency, low carbon emissions, less stand-by heat loss than conventional storage tank water heaters. 
• Cons: Higher up-front costs, cool the surrounding air as they operate, potentially higher repair costs than conventional storage tank water heaters
• Best For: Basements or utility spaces with existing heat sources like furnaces or boilers
• Considerations:
  • Slower recovery time—consider a larger tank size
  • Can cool the space it's installed in (thus requiring additional space heating energy use, an estimate for which is accounted for in the calculator tool below)
  • Loses some efficiency in unconditioned spaces, but still offers low annual operating costs
  • Lowest carbon emissions by far of all types of water heaters listed on this webpage, especially in Holyoke which has a very high percent of carbon-free electricity
• Lifetime: ~15 years^source
• HG&E Incentives:
  • Rebates of up to $750
  • Financial assistance at 0% interest
  • Connected Homes Program ($5/month) 

Water Heater Temperature Tip

Most systems are set to 140°F by default, but Energy.gov recommends 120°F for most homes. Lowering the temperature can save $36–$61 annually in standby heat loss.^source

Cost Comparison Calculator tool

CLICK HERE to use the cost comparison calculator tool (requires Microsoft Excel). Please Note:

• This calculator has many default assumptions which can be tailored to your particular project. 
• Various factors can significantly affect overall cost-effectiveness including actual installation costs, the number of people in the household/amount of hot water that is used daily, etc. 
• To make an informed decision, consider getting quotes from multiple installation companies and potentially for multiple types of water heaters.
• Many water heaters have a yellow Energy Guice label which estimates the annual energy use of the particular model.
• This calculator is for comparison purposes only. Actual performance may vary.