Getting started

Before you shell out $500 or $600 for a storage-tank heater or up to $1,200 for a more-efficient tankless model, see whether the old water heater can be fixed.

While a corroded, leaking storage-tank model isn’t salvageable, a leaky drain valve or pressure-relief valve or a worn-out electric heating element can be repaired. A rule of thumb: Consider a repair if the labor cost (which warranties often exclude) averages less than $50 per year for each remaining year of coverage. Otherwise, put the $100 you’d pay just for the plumber’s service call toward a new unit, especially if yours is out of warranty.

Tankless water heaters save energy by heating only the water you draw. Many factors dictate the energy savings, including how much hot water you use and how often you use it. But these units can cost two or three times as much as a storage unit and can require expensive upgrades in gas- or electric-supply lines and venting.

Most storage-tank and tankless water heaters look alike on the outside, but the innards tell a different story. Sawing open 18 gas and electric storage-tank models in our lab confirmed that paying a little more buys a better water heater.

The difference in price between models with a six- and a 12-year warranty is only $60 or $80 for electric models and $50 to $100 for gas units. Storage-tank water heaters with longer warranties typically have larger heating elements, thicker insulation, and thicker or longer corrosion-fighting metal rods, or anodes.

Manufacturer warranties on tankless water heaters we tested ranged from three to 12 years for the internal heat exchangers and two to six years for all other parts. As with storage-tank water heaters, the length or warranty is a good indication of internal build quality. Some tankless water heater manufacturers shorten the warranty in areas with hard water and when used in multiple family homes. Most tankless manufacturers also recommend that the units be serviced once a year by a qualified technician.

Long warranty coverage is especially important because warranties typically cover only the heater, not the $200 to $300 cost of installation. A long warranty is also desirable if you have hard water and use water softeners, which can speed up anode corrosion or cause scaling in the heat exchangers of tankless water heaters. One of our tankless water heaters had to be descaled at a cost of $344 for special tubing and the services of a plumber.

Most water heaters are sold on the basis of how many gallons they hold. But the first-hour rating (FHR) for storage-tank water heaters and the gallons-per-minute rating (GPM) on tankless water heaters is more important, because it tells you how much hot water the heater can deliver during a set period of use. Use our free hot water calculators at

http://www.consumerreports.org/hotwater to determine how specific tasks like showering and clothes washing will affect your peak usage.

to determine how specific tasks like showering and clothes washing will affect your peak usage.

Recent tougher federal energy standards require about 10 percent higher efficiency for gas water heaters and about 5 percent for electric models. The insulation added to meet those standards has made some heaters up to 4 inches wider, possibly a problem for installations in closets and other tight spots. (For added efficiency, consider adding insulation to hot-water pipes and the cold-water pipe exiting from the water heater.)

New 30-, 40-, and 50-gallon gas heaters are designed to prevent the heater’s flame from igniting flammable vapors in the room. But as with any fuel-burning appliance, you’ll still need smoke and carbon-monoxide detectors. Note that heaters are generally vented through the same chimney as a furnace or boiler. If you change venting for one appliance, you might need to change it for the other. Also, tankless water heaters’ higher combustion temperatures require installing Category 3 stainless-steel venting; the cost will vary with the length of the venting needed. (In warmer climates, tankless heaters can be installed outdoors to eliminate this cost.)

Types

Heating water accounts for up to 30 percent of the average home's energy budget. Some makers of gas-fired tankless water heaters claim that their products can cut your energy costs by up to half over regular storage heaters. So is it time to switch? Compare the types of water heaters.

Most of these are steel cylinders whose internal tanks are fed by a cold-water inlet pipe (the dip tube) that protrudes into the tank, a shutoff valve is also on this line. The water is heated as it exits through a hot-water pipe atop the tank. Another pipe that emerges from top of the tank contains the shut-off valve, which opens up if the pressure within the tank exceeds a preset level. Near the bottom of the tank, a spigot-like drain valve allows the tank to be periodically emptied. A small control unit outside the tank allows temperatures to be set and controls the pilot-light valve on gas models.

Gas is the fuel of choice if you already have natural-gas service or can run a gas line to your home economically. Gas models cost more than electrics and are harder to install. But on the basis of national-average fuel costs, a gas water heater will cost you about half as much to run as a comparable electric model. Thus, a gas heater might amortize the up-front difference in cost in as little as a year.

Tankless storage tanks are suitcase-sized units that heat water only when needed by using an electric coil or natural gas to heat water passing through a network of copper pipes inside. They eliminate the risk of tank failure and the energy lost by constantly reheating water. Consumer Reports did not test electric tankless water heaters because they were judged not capable of providing for the needs on an entire household.

We’ve also tested a high-efficiency gas-fired storage water heater. The manufacturer claimed that its installation costs were similar to that of a regular storage model. But its high cost offsets much of the estimated annual savings.

Features

Our tests simulated daily use of 76 to 78 gallons of hot water. That's the equivalent of taking three showers, washing one laundry load, running the dishwasher once (six cycles), and turning on the faucet nine times, for a total of 19 draws. Here are the water-heater features to consider.

Most electric and gas heaters with long warranties have bigger burners and better heat transfer for faster water heating. An exception: Whirlpool’s 40-gallon gas heaters. The nine- and 12-year models were identical inside.

Buying a model with an extra anode can reduce corrosion and extend the life of your tank. While anodes can be replaced if there’s enough clearance above the tank to remove them, you’ll need to hire a plumber unless you’re handy.

Some brands—notably, Kenmore, State Industries, and Rheem—advertise features that are supposed to reduce buildup of mineral scale at the bottom of the tank by swirling the water. While scale can shorten the life of the heating element inside an electric water heater, you don‘t need to invest in fancy features to get a long-lived model. Simply look for a heater with a 12-year warranty, which typically includes a longer or thicker element.

These valves are situated near the base of the unit so that a garden hose can be attached and the heater drained. Look for more durable brass valves instead of plastic ones.

A glass-lined tank is another feature designed to reduce corrosion. During manufacturing, a glass-bearing-powder coat material is sprayed into the steel tank and baked solid.