Why electric water heaters could be the hot new home improvement

Newly proposed federal standard would save Americans money, energy

Johanna Neumann | TPIN

Rapid access to hot water is a hallmark of modern society and has made life a whole lot easier. With the turn of a knob, we can take a hot shower, wash our dishes, clean our clothes and and more.

Heating water requires energy. Tucked away in some corner of our homes is a machine whose job it is to do just that. In most households, water heating is the second-biggest use of energy.

Advances in technology—such as the introduction of heat pump water heaters—present big opportunities to reduce how much energy we need to use to heat water. That’s why the U.S. Department of Energy (DOE) recently proposed a rule to make water heaters more efficient. 

Austin Kirk | CC-BY-2.0
In most households, water heating is the second-biggest use of energy. Proposed standards would reduce the amount of energy most of us need to use to heat water, reducing pollution and lowering energy costs.

How much energy would updating the efficiency of water heaters save? 

The DOE estimates that the proposed efficiency standards for water heaters would save 27 quadrillion Btu (“quads”) of energy from water heaters sold over 30 years. To give you a sense of perspective, the entire U.S. economy consumes about 100 quads of energy per year. Proposed standards for water heaters would save more energy than any DOE appliance efficiency standard adopted to date. 

The environmental benefits of these energy savings are huge. If finalized, updated water heater standards would cumulatively avert 501 million metric tons of carbon dioxide emissions and reduce other air pollutants—such as nitrogen oxides—that harm human health and the environment.

Consumers stand to benefit too. In particular those consumers purchasing electric water heaters would see large utility bill savings as a result of the proposed standards. Electric water heaters meeting the proposed standards would save households $238 on utility bills every year. Taking into account additional upfront costs, households would save more than $1,800 over the lifetime of the product. 

What would the proposed water heater efficiency standards do?

Impact on electric water heaters

Today, most electric water heaters sold in America rely on decades-old electric resistance technology that consumes large amounts of electricity to heat water. The proposed standards would prompt manufacturers to transition from electric resistance technology to heat pump technology for most electric water heaters. You can learn more about how heat pumps work and why they are so much more efficient than resistance heating here

Impact on gas-powered water heaters

For gas storage water heaters, the proposed standards would reduce energy use by about 9% relative to models just meeting the current standards. Manufacturers would be able to meet the gas storage standard by including mechanisms that reduce heat losses up the flue when the water heater isn’t firing. For gas instantaneous (“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. About half of current sales of gas instantaneous water heaters already meet the proposed standard levels.

How would updating the efficiency of water heaters impact consumers?

Consumers—in particular those purchasing electric water heaters—would see large utility bill savings as a result of the proposed efficiency standards. DOE estimates that for electric storage water heaters, consumers would save $238 per year on average relative to the current standards. For gas storage and gas instantaneous water heaters, consumers would save $19 and $22 per year, respectively. 

How might stronger efficiency standards affect electrification?

Updated efficiency standards would make sure that any consumers switching from a gas water heater to an electric model would get an efficient water heater that lowers their water-heating energy use. 

Updated efficiency standards also have the potential to boost efforts to switch from direct combustion of fossil fuels over to electric technologies. Heat pump water heaters still represent a tiny portion of the market and are considered a premium product. The proposed efficiency levels for electric water heaters would effectively ensure that most models are heat pumps while allowing manufacturers to innovate and develop lower-cost heat pump designs intended for the mass market. Once the standards take effect, consumers looking to switch from a gas water heater will have a much wider range of heat pump options to choose from, including lower-cost models than those available today.

What’s next?

The Department of Energy will consider comments submitted on the proposed water heater efficiency rule and then issue a final rule in 2024. Any new standards would take effect five years after DOE publishes the final rule. 


Johanna Neumann

Senior Director, Campaign for 100% Renewable Energy, Environment America Research & Policy Center

Johanna directs strategy and staff for Environment America's energy campaigns at the local, state and national level. In her prior positions, she led the campaign to ban smoking in all Maryland workplaces, helped stop the construction of a new nuclear reactor on the shores of the Chesapeake Bay and helped build the support necessary to pass the EmPOWER Maryland Act, which set a goal of reducing the state’s per capita electricity use by 15 percent. She also currently serves on the board of Community Action Works. Johanna lives in Amherst, Massachusetts, with her family, where she enjoys growing dahlias, biking and the occasional game of goaltimate. 

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