Tank, tankless or heat pump water heater

Heating water takes about 18 percent of a home's energy, which makes it the second-largest energy expense in the home.

Tank (storage) water heaters

A storage water heater keeps a tank of hot water ready. It's the most common kind, and it lasts 10 to 15 years.

Two numbers describe how much hot water a tank delivers: the capacity in gallons and the first-hour rating. The first-hour rating is how much hot water the heater can deliver in a busy hour. If your current heater meets your needs most of the time, a replacement of the same size probably will too.

Tankless water heaters

A tankless heater heats water only when a tap is opened, so it doesn't lose heat from stored water. Tankless heaters last more than 20 years.

In a home using 41 gallons of hot water a day or less, a tankless heater is 24 to 34 percent more efficient than a storage heater. At around 86 gallons a day, the gain drops to 8 to 14 percent. A home running several showers and appliances at once may need two or more units.

Tankless heaters are rated in gallons per minute rather than tank size. On average, a shower or bathtub uses 2.5 gallons per minute and a clothes washer 3.3. A sink uses 2.2 and a dishwasher 1.3. For a gas tankless heater, the installer checks whether the gas line is large enough, whether power is needed nearby and how the exhaust will be vented.

Heat pump water heaters

A heat pump water heater takes heat from the surrounding air and moves it into the water in the tank. It's 2 to 3 times as efficient as a conventional electric water heater.

It needs an indoor space that stays between 40 and 90°F all year, with 1,000 cubic feet of air around it. It can cool the space it's in, and it may take longer to install than a standard water heater.

Labels and planning

ENERGY STAR certifies heat pump, high-efficiency gas storage, gas tankless and solar water heaters. Standard electric tanks and electric tankless heaters aren't eligible. The yellow EnergyGuide label gives a model's estimated yearly operating cost, so you can compare models.

An annotated example

What to do next

Photograph the nameplate and the EnergyGuide label on the water heater you have. The tank's capacity is on one or the other, and it's the starting point for sizing a replacement. Note the fuel, the age and the temperature of the room it's in, and keep those details with your home records.