One of the main features to consider when deciding between various water heater options is the operating cost; The heater with the lowest price is not necessarily the cheapest in the long run. Operating cost is largely determined by equipment efficiency, but there are other equally important factors to consider:
- Energy sources have different unit prices. In the case of heating systems, the input is usually electricity, natural gas, propane, or fuel oil. There are also zero-cost energy sources, such as geothermal energy and sunlight.
- Operating hours may vary depending on the type of heater. Rated power is not the only factor that determines total energy consumption; The operating schedule must also be considered. For example, tankless water heaters have a high power rating but operate in short bursts, saving energy compared to a storage heater that consumes less energy but operates continuously, assuming the energy source is the same.
This article will provide a guide to calculating and comparing operating expenses for different types of heaters. Once these values are calculated, they can be compared to the initial cost of each heating system to find the most economical option .
As with any equipment investment, considering the total cost of ownership is very important when purchasing a heater: to calculate the actual heating cost per BTU or kWh produced, you need to take into account the initial investment and any maintenance expenses. or repair. For example, saying that solar heating is free would not be entirely true; Although energy input is free, there are equipment and installation costs, and in multi-story buildings a small pump may be needed to get the water to the roof.
Energy factor: the basis for calculating heating expenses
Energy factor (FE) is the relationship between heating output and energy input offered by a heating system. It considers how effectively the heater converts its energy input into an increase in water temperature, but also takes into account other aspects of the heater's operation:
- Standby Losses – These losses are found in storage heaters and represent the heat loss associated with maintaining the tank water at the desired temperature. Although adequate insulation reduces standby losses, they are impossible to eliminate completely.
- Cycling Losses – These losses occur as water circulates through the heater's internal piping and storage tank, if present.
Heaters that run on fossil fuels have energy factors well below unity, electric tankless heaters operate close to an EF of 1, and heat pumps have EF values greater than unity because their reverse refrigeration cycle allows them to extract heat from the surrounding environment.
Comparing water heaters: an example
Suppose you have four water heaters for a home that consume 80 million BTUs per year and you want to calculate the operating costs associated with each alternative:
- A gas heater with an EF of 0.55
- An electric tankless heater with EF of 0.97
- A tankless gas heater with EF of 0.80
- An electric air source heat pump with an EF of 2.5
Since the example is for New York City, assume the cost of natural gas is $1.20 per 100,000 BTU and the electricity rate is $0.18 per kilowatt-hour.
- For gas heaters, the calculation procedure can be performed directly because the heating power and energy input are both in BTU.
- The electric tankless heater and heat pump run on electricity, so the heating power must be converted to kWh before proceeding.
- Heating power (kWh)=80,000,000 BTU x 1kWh/3,412.14 BTU= 23,446 kWh
Other than that, the calculation procedure is the same for all four heaters. Annual heating production is divided by the energy factor (EF) to calculate annual energy consumption, and this value is then multiplied by the unit energy price, per kWh or BTU.
This formula is applied to all four water heaters to determine which is the cheapest to operate.
Gas Storage Heater Operating Cost:
Operating cost (USD/year)=80,000,000 BTU/0.55×1.20 USD/100,000 BTU=1,745 USD
Electric Tankless Heater Operating Cost:
Operating cost (USD/year)=23,446 kWh/0.97X.18 USD/kWh=4351 USD
Tankless Gas Heater Operating Cost:
Operating cost (USD/year)=80,000,000 BTU/0.8 X 1.20 USD/100,000 BTU=1,200 USD
Air source electric heat pump operating cost:
Operating cost (USD/year)=23,446 kWh/2.5 X 0.18 USD/kWh=1,688 USD
Operating Cost Comparison
In this case, the tankless gas heater has the lowest operating cost. Next are the heat pump and the gas water heater, although the heat pump wins by a slight margin. The electric tankless heater is by far the most expensive to operate.
| Classification | Energy Factor (FE) | Economic Operation |
|
1st 2nd 3rd 4th |
heat pump Tankless Electric Heater Tankless Gas Heater Gas heater |
Tankless Gas Heater heat pump Gas heater Tankless Electric Heater |
Total cost of owning and operating heaters
The above calculation is for operating cost only. For a complete assessment, the initial cost and useful life must also be considered. For this example, assume the following nominal cost and useful life values:
| Heater | Installed Cost | Service life |
| heat pump | $1,800 | 15 |
| Tankless Electric Heater | $1,500 | 20 |
| Tankless Gas Heater | $2,000 | 20 |
| Gas heater | $1,200 | 10 |
For simplicity, the analysis will be limited to initial and operational costs. The annual cost of ownership for each heater option would be:
- Heat pump cost = $1,688/year + ($1,800/15 years) = $1,808/year
- Electric Tankless Heater = $4,351/year + ($1,500/20 years) = $4,426/year
- Tankless gas heater = $1,200/year + ($2,000/20 years) = $1,300/year
- Gas Storage Heater = $1,745/year + ($1,200/10 years) = $1,865/year
The tankless gas heater is still the winner in this case, despite its higher initial cost. The heat pump and gas heater have a similar cost of ownership, and the electric tankless heater is very expensive to operate due to New York City's high electricity rates. However, keep in mind that this is just an example and that different results may be obtained for different locations.
Final Observations
To determine which type of heater is best suited for your property, it is highly recommended to obtain a professional assessment. For example, if you don't have a chimney, the cost of installing any gas heater will increase significantly. Keep in mind that electricity and gas prices also vary by location, and what's true in New York City may not always apply to another city or state.
