Value, Not Cost: How to Choose between Tankless and Heat Pump

Look beyond monthly energy costs to see why propane tankless water heaters are a better value than heat pump water heaters.

Winter is officially here, and as heating bills go up, builders and remodelers will likely get more questions from potential customers looking to reduce monthly energy costs.

When it comes to water heating, how can construction professionals justify the value of propane tankless systems, which can have noticeably higher monthly energy costs than electric heat pump water heater systems?

In fact, our very own Heating Energy Cost and Carbon Calculator, modeling a comparison in a mid-Atlantic state, estimates that the monthly energy cost for a heat pump water heater is nearly half that of a tankless unit. And aren't lower monthly energy bills what motivate consumers to buy new homes or replace existing systems?

Of course, the flaw in this logic is that energy cost is only one part of the full cost of owning a system and doesn't account for initial cost (appliance purchase and installation) or service life (how long the unit will last).

In both cases, the full cost of the heat pump system begins to show: In new homes, the purchase and installation costs for a heat pump water heater are 34 percent higher than those for a tankless system; in retrofits they are 18 percent higher. A calculation of the annual cost of ownership (ACO) — which is the cost of buying a water heater spread out over the system's rated service life, plus the energy costs — shows a 13 percent lower ownership cost for the tankless system.

But even an ACO analysis doesn't capture the additional value of a tankless heater's higher hot-water delivery capacities — three times as high as that of heat pump water heaters, on average. And they're responsible for fewer carbon dioxide emissions (about 40 percent less in the comparison developed using the calculator).

For a more complete summary of the economic reasons for choosing a propane tankless water heater, see our previous coverage of findings by Newport Partners, a Davidsonville, Md., company that performs technical, regulatory, and market research and analysis related to the built environment. The full report by Newport will be available early next year.

So when those homeowners come asking you to lower their monthly energy bills, say you can do better: You can help them find the most economical — and environmentally friendly — system that will provide them with an endless supply of hot water.


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