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Upgrading your hot water system

If soaring energy prices have you worried about rising home energy costs, you're not alone. Everyone is looking for ways to cut energy bills and, consequently, more are turning their attention to hot water expenses. As water heaters are the second-largest users of energy in a home, guzzling about 20 percent of your energy dollar, it makes sense to re-evaluate your options.

The average lifespan of a hot water heater is 10 to 12 years. If your tank is older than that, or is too big or not a high-efficiency model, then you're paying more than you need to, for hot water.

"This season, more than ever, people are panicking about utility costs," says Michael Nepom, president of McKinnon Heating/Cooling in Toronto, who is fielding an unprecedented number of calls from those wanting information about saving money.

Energy choices
The first thing people should assess is their energy source -- electric, gas or propane -- and decide if they want to make a change. Most use the same type of energy to heat their home and hot water, but it's not a requirement.

An electric hot water heater is the easiest to install, as it can be located almost anywhere in the home. On the downside, energy costs are traditionally higher, and hot water recovery time is longer than with other sources.

Natural gas's hot water recovery time is about twice as fast as electric. However, the tank requires a gas line, so its location is restricted because it must be vented through a chimney or outside wall vent. Liquid propane performs much the same as gas; however it requires a storage tank and you have to arrange for fuel delivery.

When investing in a hot water tank, the two main factors to consider are fuel costs and efficiency. "Most people with electric are looking to convert to gas," says Nepom. When comparing gas and electric, the upfront costs are about the same -- anyone buying a high-efficiency, 225-litre electric or gas tank can expect to spend about $800. While gas has traditionally been the cheaper energy source, rising prices are putting the two near par. Natural gas tanks, however, are more economical because of their hot water recovery rate. "They're about 30 percent more efficient," says Nepom.

If you want to stick with electric, you should at least consider a slightly more expensive high-efficiency model. For example; while a high-efficiency electric hot water tank, with an energy factor (EF) of 0.94, costs about $75 more than a conventional electric hot water heater, with an EF of 0.88, the high-efficiency system results in savings of about $214 over 10 years.

Deciphering the lingo
Energy-efficient water heaters perform as much as 40 percent better than conventional models. A tank's energy factor (EF) indicates efficiency -- the higher the number, the better. A well-insulated tank is also a better tank. The level of insulation is reflected in the tank's R-value.

In addition, consider a tank's first hour rating. It's a combined measurement of how much hot water is stored in the tank and how quickly it can heat cold water. The FHR is a good measure of how much water the heater will supply during peak demand periods.

Size matters
Hot water demands vary from family to family, and choosing the right size tank is essential. "You have to consider what's going on in the house -- the number of bathrooms, showers, loads of laundry being done, Jacuzzis, everything," says Nepom. "Most people need about 50 gallons (225 litres)."

A small home occupied by three people or fewer requires a tank in the 135-litre range. A four- or five-member family in a three-bedroom home, with two washrooms and a washing machine, will likely need a 180-litre gas tank, a 225-litre electric tank or a 180-litre propane tank. Families with four-bedroom homes and a dishwasher would be advised to look into a 225-litre gas, propane or oil tank and 360-litre electric tank.

Experts recommend going up one size if you have teenagers in the house. Visit Natural Resources Canada for more guidelines on determining tank size.

Where to shop
Hot waters heaters can be purchased through a utility supplier. Installation and service are usually included in the cost and often the purchase can be financed monthly. However, contractors or retail outlets also sell tanks. When comparing prices, ensure installation, delivery and removal of your old tank are included.

Many people opt to rent hot water heaters -- which costs from $120 to $400 a year depending of the type and size of the tank -- because it avoids investing in a system, as well as repair costs. Hot water heaters require an average of three service calls during their lifetimes.

Think outside the tank
With concern about rising natural-gas prices, "people are really trying to think outside the box," says Nepom. An increasingly popular alternative is a tankless water heater, which heats water on demand, rather than having it sit in a tank for 24 hours a day (which means you pay to keep the water hot, even when you aren't using it).

"In general, when you're comparing it to a traditional tank system, you're looking at savings of 40 percent to 50 percent," says Jeffery Fehr, director of sales for The Tankless Water Heater Company in Kamloops, B.C. The initial investment is less than $1,000.

Other options include integrated space and water heating systems, which combine household heating with hot water needs and result in savings on total system installation. However, initial savings are soon eaten up by the cost of running the system year-round.

Heat pump water heaters can cut the lifetime operating cost in half compared to conventional electric water heaters. However, they're not great in cold climates as they lose efficiency when the temperature drops below -8 degrees Celsius.

Solar water heaters use the sun's energy, but because of varying climate conditions, they only supply 50 percent to 70 percent of the energy needed to heat water for an average household. "We try to integrate our solar system with tankless hot water heaters," says Michael Holm, general manager of Solarco Manufacturing in Toronto. The combination can save people about 80 percent, or $400 to $500, per year compared to a traditional gas water tank. Lower-end solar systems cost about $4,000 installed, while higher-quality products run about $7,500.

Michelle Warren is a writer in Toronto.

-- Posted: Nov. 21, 2005
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