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Choosing a Water Heater for Zero Energy Ready Homes
It’s now time to dig into individual ZERH upgrade costs! First up, the domestic hot water heater.
With an Energy Star Zero Energy Ready Home (ZERH), we can use gas or electric water heaters. To meet the ZERH requirements for gas water heating, a tankless gas water heater must be used. For electric water heaters, a heat pump water heater fits the bill. Now, the question is which one is less expensive to use for the build? The answer may surprise you.
Comparing Gas vs Electric Water Heater Options
Here in Minnesota, we’ll need an interior gas tankless unit. We can get a tankless 199,000 BTU, 0.96 UEF model for $1469 at the big box retailer down the street. It will work well for the home and meet the ZERH requirements.
That same big box retailer has a 65-gallon heat pump electric water heater rated at 4.07 UEF, which will work well for the home and meet the ZERH requirements for $1539.
Gas vs Electric Water Heater – Which One Makes More Sense?
When it comes to new home builds, one of the most important decisions is choosing between a gas vs electric water heater. While gas water heaters have long been seen as the cheaper option, with advances in electric water heater technology—particularly heat pump water heaters—are changing the game. These newer systems are not only more energy efficient but are also proving to be more cost-effective over time in both installation and ongoing energy use.
Understanding Energy Efficiency (UEF) and Real Costs
A quick note about the UEF (Uniform Energy Factor) rating. A 1.0 UEF rating is 100% energy efficient. For 1 unit of energy input we get 1 unit of hot water produced. In the case of the heat pump electric water heater, 1 unit of energy in and 4 units of hot water produced. The 4.07 UEF water heater is 407% efficient. A heat pump water heater is about 3x-4x more efficient then any type of gas water heater.
Installation Cost Breakdown
The purchase costs are close for the tankless gas or the heat pump water heater, but what about a standard gas water heater? We can’t use those in a ZERH build, but let’s take a look anyway. I can get a standard tanked 50-gallon, 12-year, 84% efficient 40,000 BTU at the same big box retailer for $819. That meets the current MN Energy code and the 2021 National Energy Code. The $819 price tag appears to be far less expensive at face value. Well, let’s install the water heaters and see which one stands out.
For the gas units, we have to run a gas line to the unit and vent the exhaust gases. For the gas line installation, we have about $500 in parts and labor involved in getting the gas line installed and run to the unit. That discounts all the other costs of running the gas line from the meter to the distribution point and other pieces required. The venting for the tankless unit uses PVC pipe, which is relatively inexpensive and will run around about $400 in parts and labor. The standard gas water heater requires B-vent, which is more expensive and has extra installation requirements that have to be followed. So, at a minimum, we have another $900 in additional installation charges for the gas units that the heat pump electric water heater will not need.
So, let’s review the total cost of the units with installation.
- 65-gallon HP water heater $1539
- Tankless gas $1469+$900+150 =$2519
- Standard gas $819 +900 = $1719
For a ZERH build, we have to install an extra 220v outlet by the tankless gas water heater for a future HP water heater, which adds another $150 to the total cost.
Heat Pump Water Heater vs Gas Cost – What’s Cheaper Over Time?
For the Zero Energy Ready Home build, the electric heat pumpwater heater stands out as our most cost-effective option for the water heater. In fact, even for a standard new home build, the electric heat pump water heater would be a good choice when we consider the additional installation costs involved in running the gas line and venting the gas water heater. Then there is the point that the heat pump water heater is almost 3x-4x more efficient than either gas unit. The whole point behind a natural gas or a propane water heater is that they were cheaper to use vs. an electric water heater, i.e. lower monthly bills. That is not the case anymore, the gas water heaters are more expensive to install and to more expensive to use for the home owner.
Since the heat pump water heater total cost is less than the standard 12-year gas water heater with extra installation charges, and is less expensive to use, it’s time to remove the heat pump water heater from our ZERH build upgrade cost list. An heat pump water heater makes sense for any new home.
I should note that this is typical for technology-based items. They become better and cheaper over time.