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What Type of Water Heater Is Most Energy Efficient?

Energy efficiency is not only about money savings, it is also about reducing your carbon footprint. So, choosing the most energy-efficient water heater will bring benefits not only to your wallet but also to our planet.

All water heaters certified by Energy Star are more efficient than the rest of the units available on the market. Heat pump and solar water heaters are overall the most energy-efficient types while condensing gas water heaters are the most energy-saving gas-fueled appliances.

What Type of Water Heater Is Most Energy Efficient?

Not that long ago, manufacturers used the High Efficiency (EF) ratings to describe how energy-efficient a certain water heater is. However, these ratings were replaced by the new industry standard – the Uniform Energy Factor (UEF).

The new standard takes into consideration the amount of hot water the unit can provide within the first hour, the storage capacity of the appliance, and the estimated energy cost savings.

The conventional electric and gas water heaters should have a UEF rating between 0.65 and 0.95 to be certified by Energy Star. For comparison, heat pump water heaters usually have a UEF rating of over 2.75.

Such water heaters use up to 60% less energy than the conventional units which makes heat pump models incredibly energy-efficient. 

With that being said, solar water heaters are the most energy-efficient units available on the market nowadays. That is because such models use a renewable source of energy. 

Read: Why Gas Hot Water Heater Is Not Heating? – Troubleshooting Guide

Water Heater Efficiency Comparison Chart

Water Heater TypeEnergy-Efficiency
Conventional water heaterEnergy Star certified gas units have an energy factor between 0.67 and 0.70.Electric water heaters have a minimum efficiency of 0.90.
Tankless water heaterThey are 24-34% more energy-efficient than conventional water heaters (for households that use up to 41 gallons of hot water per day).
Heat pump water heaterHeat pump units are 2-3 times more energy-efficient than conventional water heaters.
Solar water heaterWith such a unit, the water heating bills should drop by 50-80%.
Condensing water heaterWith an energy efficiency of around 95%, condensing units can cut energy costs by up to 30%.

Are New Water Heaters More Efficient?

Modern water heaters are a lot more energy-efficient than the older units as new industry standards are introduced every few years.

Generally, manufacturers choose to improve the efficiency rating of the water heaters by adding insulation and improving the heat exchangers.

Moreover, new units are being designed. For example, heat pump water heaters that are able to transfer heat from the air to the water and solar units that use the energy of the sun. 

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Read: Gas Water Heater Thermocouple Possible Issues

Are Large Water Heaters More Efficient?

The most efficient water heaters are the ones that can keep up with your household’s hot water demand. So, you can’t really go for a small unit, if there are quite a few people living in the house.

In general, the smaller the water heater, the higher its energy-efficiency rating. That is because large tanks have a greater surface area through which they can lose more heat.

When it comes to tankless units, the size doesn’t really affect the energy efficiency. 

Read: Why Water Heater Is Leaking?

What Is More Efficient Oil or Electric Water Heater?

Some features of an oil-filled water heater make it more efficient than an electric water heater.

All in all, oil-fueled units require less power to run. Such heaters heat the water a lot faster than the electric and gas models which means that you wouldn’t have to leave the system operating for too long.

Which Is More Energy Efficient Tankless or Tank Water Heater?

Tankless units are 8-34% more energy-efficient than conventional water heaters. The exact number would depend on the water consumption (the less hot water the household consumes, the more it is going to benefit from a tankless heater).

The units without a tank are more efficient because no energy goes on keeping the water in the tank hot (when you’re not using it). 

Most Efficient Gas Water Heater

High-efficiency condensing gas tank water heaters function the same way as traditional water heaters, but with one important difference.

Condensing heat exchangers have more surface area which enables water condensation from flue gases. Such units also have better insulation and more efficient burners. 

Read: Ideal Temperature Of The Water Heater

Most Efficient Electric Water Heater

A hybrid water heater or a heat pump water heater is one of the most energy-efficient electric water heaters available nowadays.

Such units do require electricity to move heat. The fact that the system doesn’t need the energy to create the heat makes it 2-3 times more energy-efficient than traditional electric water heaters.

Heat Pump Water Heater – Pros, Cons


  • Energy-efficiency – Energy Star certified heat pump water heaters can save around $300 on annual electric bills.
  • Safety – the unit doesn’t generate heat and doesn’t use gas that can leak.
  • Environmental friendliness – the more energy-efficient a unit is, the fewer emissions are let out into the atmosphere.


  • Initial cost – these units can cost twice as much as traditional water heaters.
  • Might not be the right option for large families and for cold climates – due to the fact that heat pump water heaters do not generate heat, they might struggle to keep up with high demand. Moreover, some units won’t be able to perform during the colder months.

Read: Is Furnace And Water Heater The Same?

Energy Star Water Heater – What Does It Mean?

If a unit is Energy Star certified, it means that it doesn’t use as much fuel as the units that don’t own a certificate.

To earn it, the products must meet a wide range of energy-efficiency criteria set by the US Department of Energy and the US Environmental Protection Agency. 

What Is the Most Economical Way to Heat Your Water?

Natural gas is cheaper than electricity and propane, so using it to heat your water might be the most economical choice.

However, if taking the long-term benefits into consideration, picking a more energy-efficient water heater could be a better way to go (savings-wise).

Is Electric Water Heater Better Than Gas?

Here are the main advantages that electric water heaters have over gas units.

  1. A lower upfront cost
  2. A higher efficiency
  3. Accessibility (the chances are high that you’re already connected to the electrical grid)
  4. Safety (you wouldn’t have to think about gas leaks and carbon monoxide poisoning)
  5. Installation is, in general, simpler and quicker
  6. Require less attention maintenance-wise

What Is the Difference Between Single Point and Multi Point Water Heater?

A single-point water heater serves only one location. For example, you can have an instantaneous single-point unit located directly above the sink – and that is the only area where you’ll be receiving hot water from it.

What Is a Multipoint Water Heater?

A multi-point water heater, in its turn, serves more than one point in your house (combi boilers and heat pump water heaters are only a few examples of such units). 

What Does Point of Use Mean for Water Heaters?

Point-of-use water heaters are units that are often used to increase the temperature of the water at a fixture that is farthest away from the main water heater.

With such an addition, the water is heated right next to the shower, sink, or bath.

What Is Multiple Water Heater?

You can choose to install multiple water heaters around your house. This might be a great decision, if:

  • Your main water heater isn’t able to keep up with the household’s peak demand.
  • You have a large house with 3-4 bathrooms (installing a couple of in-demand units in parallel might help meet your hot water needs).
  • You have appliances or fixtures located far away from the water heater (in such a case, opt for point-of-use units).

Does a Hot Water Heater Run on Electricity?

Electric water heaters, including heat pump water heaters, and some gas units need electricity to operate

A lot of modern gas-powered water heaters utilize electricity to power the ignition system. Moreover, on-demand units usually have a control panel powered by electricity. 

The models with a standing pilot that are connected to a pilot might not require external electricity. 

Do Rheem Gas Water Heaters Need Electricity?

The unit requires electricity to create the spark for the pilot light. However, once the pilot is lit, it’ll continue to burn even without electricity

Do Tankless Water Heaters Need Electricity?

Even gas-powered tankless water heaters need electricity to function. Such models depend on a digital remote, a PC board, and, at times, direct electric ignition.

So, even though natural gas and propane tankless water heaters use less electricity than electric units, they still need such a power source in order to work.