Cost Effectiveness

The situation described in this article only relates to tank-type water heaters. Solar water heaters and tankless water heaters do not apply to this information.

You can do many things to keep an old heater going and make it last as long as possible. You could buy a new tank with the latest technologies. A new tank can be more effective than sprucing up the old water heater. Of course, simply repairing an old water heater could be far cheaper than doling out a lot more money for a new one. Which to do?

It's best to find ways to save energy and money with cheaper ideas like new low-flow showerheads, heat traps, insulation, vent dampers, or a water heater blanket. You could also adjust your thermostat down as well which is generally the cheapest way to save energy on a water heater. Ask a local plumbing service technician if having these devices installed is practical for your situation.

Maintaining old equipment saves the cost of new equipment, obviously. If you can double or even triple the life of your heater, you would save a bundle on not purchasing a new heater. The best thing to do is to perform money saving activities on your water heater and then with the saved money, you can upgrade to a new system. Upgrading to a new system such as a tankless system could save you even more energy and money on you electrical bill or gas bill. Also upgrading to an extremely efficient solar water heating system could save you the energy and gas bill almost completely, plus you'd receive a nice big tax credit on your income tax for the year.

In order to figure out the cost of a new water heater compared with keeping the old one we have to run the cost cycle analysis. A cost cycle consists of operating costs, fuel costs, lifetime potential, inflationary costs and purchase price.

To figure out the cost cycle you need the:

Purchase price Cost of energy or your utility bill

The yearly energy cost to use the appliance which can be found on the EnergyGuide label. The energy guide label is located directly on the water heater and is supposed to be positioned so that it can be easily seen. It's not supposed to be facing the wall, but this does happen in the installation infrequently.

The estimated life of the appliance. For electric and gas water heaters that should be on average 13 years.

A discount factor which is adjusted for inflation. The discount factor is 0.83 for both an electric and a gas water heater.

The formula is as follows: Purchase price + Yearly energy cost + Estimated Lifetime x Discount number (0.83) = Cost cycle

This information is provided by the ACEEE (American Council for an Energy Efficient Economy)