Water Heater Replacement

Highlights

Heating the water in your house accounts for about 11% of your annual energy costs. Save up to 10% in water heating costs just by setting your water heater to 120 degrees compared to a 140 degree setting. You will not feel the difference in your shower, and silverware and plates in the dishwasher will still be sterilized.

If you need to replace your water heater, consider a gas model that costs a few hundred dollars more than an electric one, but it can save you more than $100 annually on your energy bill. Also consider going solar. The majority of states offer financial incentives for using solar technologies, increasing their cost effectiveness. The $1,500 federal 'cap' on the 30% tax credit for solar water heating has been lifted with the 2009 American Recovery and Reinvestment Act (2009 ARRA, so this provides considerable advantages for property owners.

For Water Heater replacements, the ROI Calculation is based on saving $4 a month with a high efficiency water tank.

TAX CREDITS

The American Recovery and Reinvestment Act (ARRA) provides you with a 30% Tax Credit for a new Water Heater that is put into service by the end of 2010. This tax credit item is only for existing homes, not new construction, that is your primary residence and it includes the cost of materials and installation.

3 KEY POINTS

1. The tax credit cap is $1,500 on collective home improvement elements other than Geo-Thermal 'Ground Source' Heat Pumps, Solar Hot Water Heating, Solar Photovoltaic, and Fuel Cell systems - which each have no cap and are eligible through 2016.
2. The tax credits for exterior 'weatherization' improvements like windows, doors and insulation do not include the cost of installation!
3. If you reach the $1,500 cap in 2009, you are not eligible for additional tax credits in 2010.

Choose a new Water Heater that meets these criteria to get the Tax Credit; and check products carefully, because in many cases an ENERGY STAR certification does not necessarily meet the tax credit requirements below:

Gas, Oil, Propane Hot Water Heater:

• Must have an Energy Factor at or above .82 or a thermal efficiency rate of at least 90%.
• Note: Not all ENERGY STAR gas storage and gas condensing water heaters will qualify for the tax credit.

All ENERGY STAR gas tankless models will qualify. For a partial list of qualifying products go to the Air Conditioning, Heating, and Refrigeration Institute (AHRI).

BONUS: Water Heater Economizer

This tactic is for gas or oil fired boilers that heat your home as well as the water for your showers, sinks, and all of the other domestic needs. You may have considered installing a High Efficient Water Tank or an On Demand 'Tankless' system, but installing an Economizer will save you energy and money. Choose a device that has a microprocessor like the 'Intellicon HW' (HW stands for Hot Water). It optimizes the energy use for gas fired tanks or combined oil fired boiler and water heating systems, but not electric water heating. The whole cost with installation is typically $300 - $500 and the product guarantees a 10% savings on your domestic water and on your space heating. Many property owners have seen 15% - 20% or more in savings. With average domestic heating at $600 or more plus water heating at $400, you could save at least $100 a year if not $200 or more in colder climates with rising fuel costs.

Other than checking the age, a quick way to see if you need a new water heater is to unscrew the filter on a faucet and check for residue that starts to break down over time on the inside of the tank and make its way up to your faucet. Clean it out with an old toothbrush, and you’ll find that you get better pressure. Then look into a new water heater, save money on utilities, and avoid cleaning up after the old one breaks and floods your basement.