Q. Do the energy savings provided by instantaneous gas water heaters justify their higher cost?

A.Martin Holladay responds: Before you consider installing an instantaneous gas water heater for energy efficiency, consider whether your customers will be satisfied with the flow rate of the model chosen. The most common models of instantaneous water heaters have maximum flow rates in the range of 2 to 3 gallons per minute. Three gpm is the bare minimum to supply two simultaneous showers, and most American families expect their water heater to provide up to 6 gpm of hot water when necessary.

Assuming you’ve decided to install an instantaneous gas water heater with at least 3 gpm of flow, a typical choice would be the AquaStar 240FX (800/642-3199, www.controlledenergy.com), which is available for about $900 to $1,030, depending on whether you need the outside vent hood. The AquaStar 240FX has an efficiency factor (EF) of 0.84. An ordinary 40-gallon gas water heater with an EF of 0.56 costs about $270, so you would need to save around $700 on your fuel bill before your energy savings would repay the added cost of the instantaneous heater. An instantaneous water heater will probably last 10 to 20 years, compared with 7 to 10 years for a conventional gas water heater.

  Purchase price of water heater Annual gas in therms consumption Annual natural gas bill (at 87¢ per ccf) Annual propane bill (at $1.40 per gallon)
Conventional gas water heater (EF 0.56) $270 267 $233 $409
Instantaneous gas water heater (EF 0.84) $970 187 $163 $275

Investing in an instantaneous model makes the most sense for those with high fuel costs. (See the table above, which is based on hot water use of 64.3 gallons per day, or 23,470 gallons per year, by the “average U.S. household,” as shown in the Energy Guide Labels.) If you have access to natural gas, you won’t save much, since the payback period (assuming that gas costs $0.87 per ccf) is 10 years. If you’re burning propane, however, the payback period is shorter: At $1.40 a gallon, it would be a little over 5 years. In some areas of the country, including northern New England, where I am currently paying $2 a gallon for propane, the payback period is less than 4 years.

Of course many other factors can affect payback calculations, including how much hot water is used (high-use families see a quicker payback), differences in maintenance costs, the likelihood that an instantaneous heater will not need to be replaced as frequently as a conventional heater, and possible differences in installation costs (an instantaneous heater may require a larger gas supply line and a larger flue than a conventional water heater).

Martin Holladay is editor of Energy Design Update. For subscription information, call 800/638-8437.