Water Heaters and Other Things

Today is the story of water heaters. Why? Because the water heater in my home failed on Friday night (of course) and I got to go through the exercise of replacing it yesterday. It is of course hot in North Carolina this time of year and normally I work in my garden and at the gym and get hot sweaty and dirty, so the absence of hot water is more than a little inconvenient.

An electric water heater is one of the larger contributors to a normal household’s electric bill. It is the second largest energy consumer behind the HVAC systems running at 12-15% of the bill. That means that reducing the amount of energy used here can have a significant impact on my bill. Because I don’t have a smart water heater, we have to estimate how much we really spend here, so I will assume that it is 15% of our electricity bill. We can’t switch to natural gas, nor do I really want to, as most of my electricity is generated with nuclear power and is therefore carbon free.

So, what are the “green” options? There seems to be three basic possibilities. Solar water heaters, tankless water heaters, or a “hybrid” water heater that uses heat-pump technology.

The tankless water heater was eliminated almost immediately based on a Consumer Reports review that found NO acceptable electric tankless water heaters for large families. While there are only two of us (plus my cute dog), the house is large and could be sold sometime in the future to a large family, thus we need to size the water heater accordingly.

The hybrid electric option would cost about 2.5X a basic water heater. Without confirming the veracity of the claims, it appears that these systems reduce electricity use by about 50%. Even with tax credits it would take 4.5 years to get back my initial investment. Our average time in a home has been around five years, making this payback period problematic. We have lived in this house seven years, but it is very large for two people and we believe at some point in the next five years, we will be moving.

So that leaves solar heating. This option is even more expensive than the hybrid electric. There are several different systems ranging from 2X to 10X the cost of a basic water heater. Then there is installation. While I do have an expansive south facing roof, it is steep and has several trees casting shade. I didn’t get a quote for installation, but after reviewing on the web, it would appear that the all-in cost of a typical system might be about 4X the all in cost of a basic hot water heater. Impressively, these systems claim to reduce water heating costs by about 70%. However, even with tax credits it would take 11 years for this system to pay for itself, well beyond my 5 year horizon.

The impact of a solar water heater on a home would be significant. With no other changes, residential electricity use could drop by 8-11%. Unfortunately at current electricity rates, even with 30% tax credits, it simply does not pay for itself in a timely fashion, extending well beyond the payback period acceptable to most home owners. The cost of solar water heating systems must drop by another 30% or the price of electricity must rise significantly to get to a payback period of less than 5 years that would begin to be acceptable to most homeowners. The hybrid system would also have a positive impact (6-8%) and is more attainable by homeowners. It would not take much decrease in cost or availability to make this option truly viable.