The Ultimate Guide to Tankless Water Heaters
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Compare Water Heating Systems

Water Heating Systems

Comparing propane water heating with electric or heating oil systems? Get the facts with our research on efficiency, cost, energy use, and carbon emissions.

Water heaters are often the second largest energy user in the home, costing residents hundreds of dollars each year. As more homeowners become aware of this fact, the marketplace is responding to their desire to cut energy costs by offering an array of innovative water heating technologies, such as condensing and noncondensing tankless units, condensing storage tank systems, and cogeneration units that combine space heating and water heating — and those are just the ones that run on propane or natural gas. Factor in systems that run on other energy types and the range of choices can become overwhelming.

A critical new factor in the residential water heater market is the change brought about by amended federal efficiency standards which went into effect in April 2015. The amended standards affect electric, gas/propane, and heating oil water heaters, and fundamentally change the product offerings in the U.S. market. So, which is the right system for your project?

A study conducted in 2015 by Newport Partners, LLC helps you discuss today’s water heating options with customers in a knowledgeable, research-based way. Check out the findings below, or go in depth with Residential Water Heaters under the New 2015 Federal Standards at the Propane Training Academy.

Download the Research Findings

Water heater efficiency regulations

The new water heating standards from the Department of Energy rewrite the price-point differential between electric and propane water heaters, especially for tank storage units above 55 gallons. The video below spotlights how these changes will affect building pros. For more in-depth analysis, a 60-minute webinar, Getting Into Hot Water: What you need to know in an era of new Federal standards for water heater efficiency features research by Newport Partners, LLC, and explains how propane-powered water heaters are uniquely qualified to take advantage of the new standards.

Learn how the new National Appliance Energy Conservation Act regulations affect your water heater technology options.


The new standards require that all water heaters, regardless of size, type, or heating source, be more efficient. For tank storage units smaller than 55 gallons, the increases can be achieved simply by using more insulation, which might make the storage tank units a few inches wider, at a cost of about $50. That increased girth will likely affect space-constrained projects such as multifamily housing, where a relatively small gas tankless unit may be an easier fit than the new, wider tanks.

Download The Ultimate Guide to Tankless Water Heaters (free with registration)Download The Ultimate Guide to Tankless Water Heaters (free with registration).

For tanks of 55 gallons or more, the new rules get a lot more stringent. For instance, EF requirements for a 65-gallon electric tank heater will more than double, from .88 to 1.98. But the only way to get that efficiency out of an electric unit is to use heat pump technology. That adds significant costs — 65-gallon units start around $2,000 — along with installation concerns. Heat pump water heaters (HPWHs) require a higher vertical clearance and at least 1,000 cubic feet of space around them. Plus, without external venting, a HPWH will cool the air within that surrounding space, potentially increasing the demand on the space-heating system.

Propane tankless water heaters remain a competitive technology option for this system size. While other systems are growing in size, propane tankless systems remain compact. Nearly all units in the market already meet the new efficiency standards, so unlike other technologies, their costs will not rise as a result of the standards, making them increasingly cost competitive. Plus, tankless systems are available in a range of output capacities to meet a wide range of hot water demands.

To learn more about propane tankless water heaters, download the tankless water heater fact sheet.

A summary of how each type of water heater is affected by the updated federal NAECA standards.

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