Proposed Home Water Heater Standards: A First Look at the Big Impacts

Energy efficiency standards for residential water heaters proposed by the Department of Energy (DOE) today would significantly reduce utility costs and greenhouse gas emissions. 

If the standards are finalized, many households could see their annual energy bills reduced by more than $200. By mid-century, the standards would be cutting carbon dioxide emissions by an amount equivalent to shutting off 36 gas-fired power plants. 

More efficient electric models would shrink demand on power plants while more efficient gas models would reduce fuel use. The single largest impact of the rule would be from effectively phasing out most old-fashioned models that use inefficient “electric resistance” heating in a large tank in favor of models that use a far more efficient heat pump to do so. 

The proposed standards are generally similar to recommendations submitted to DOE last year by a multi-stakeholder coalition, which included two of the largest water heater manufacturers (Bradford White and Rheem), energy efficiency organizations (American Council for an Energy-Efficient Economy, Appliance Standards Awareness Project, and Northwest Energy Efficiency Alliance), environmental advocates (Natural Resources Defense Council), and consumer advocates (Consumer Federation of America). Members of the coalition issued a statement today welcoming the proposal. 

Residential water heater standards—last updated in 2010—set separate minimum efficiency levels for different types of models, including electric tank water heaters and gas-fired tank water heaters (which each make up nearly half of new sales) as well as gas-fired instantaneous (“tankless”) models. The proposed DOE standards would strengthen the efficiency levels for these types and several less-common types.  

Shifting electric models to heat pumps 

Most electric tank models still use century-old “electric resistance” technology. These models draw about a quarter of a home’s total electricity use, on average, according to federal data. 

The proposed standards would shift most new electric tank models to use heat pump technology, which generally uses less than half as much energy to do the same job. These models can deliver even more hot water over a short period of time. Each of the largest water heater manufacturers makes a variety of such models. The smallest electric water heaters designed for low usage could continue to use electric resistance technology. 

A typical household buying a new electric tank model meeting the proposed standards would save $238 on utility bills every year, according to DOE’s calculations. Taking into account additional upfront costs—which would pay off in only 3 years—households would save more than $1,800 over the lifetime of the products. 

Cutting energy waste in gas models 

Most of today’s gas-fired water heaters similarly do not use the most efficient technologies. For gas-fired tank models, the proposed standards would reduce energy use by about 9% relative to models just meeting the current standards, saving consumers $19 annually. Manufacturers would be able to meet the standards by reducing heat losses up the flue when the water heater isn’t firing. (DOE analysis found this efficiency level to be the highest level that would ensure users save money overall.)  

For gas tankless water heaters, the proposed standards would effectively require models to use condensing technology to capture more heat, saving about 13% of the energy used relative to the current standards and saving consumers $22 annually.