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Question DetailsAsked on 5/19/2011

should i change my hot water tank to an electric heater?

Currently, my hot water is heated using natural gas. Will it save me money in the end?

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2 Answers

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You’ll save money on your monthly heating bill by switching to a tankless unit. The real choice you need to make is whether to pick gas-powered or electric. Electric heaters are cheaper up front and they have higher energy efficiency. But because gas is cheaper per unit, the tankless gas heaters cost less each month. Most experts recommend you go with electric. Economists agree natural gas prices will continue to rise. Electric is better for the environment, too.

Answered 7 years ago by Angie's List

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The following comment was provided by Angie's List:

"You’ll save money on your monthly heating bill by switching to a tankless unit. The real choice you need to make is whether to pick gas-powered or electric. Electric heaters are cheaper up front and they have higher energy efficiency. But because gas is cheaper per unit, the tankless gas heaters cost less each month. Most experts recommend you go with electric. Economists agree natural gas prices will continue to rise. Electric is better for the environment, too."

I want to pick this comment from Angie's List apart bit by bit, because it repeats a lot of what is in the common press today, but flies in the face of established experience and facts:

1) in almost all parts of the country, except a few with heavy hydropower sources, gas is a much cheaper heating source than electric. This is recognized in the fourth sentence where it says "because gas is cheaper per unit". Tankless units cost far more than conventional water heaters up front, especially more so because most houses require new electric installation for them, so you generally save no money on capital cost over the long run OR on monthly costs with switching to tankless, unless your hot water consumption is extremely low and infrequent through the day so you are going with a much lower hot water capacity unit than you have now.

2) electric tankless heaters are cheaper than gas tankless units, but far MORE expensive than the equivalent heating capacity conventional gas heater. This difference is far more pronounced when you conisider the average tankless installation costs around double to triple that of a conventional water heater, so for the average homeowner who moves every 5.some years, that adds up to an average annual return on investment of about negative 50% compared to a conventional water heater.

3) Most experts DO recommend you go with electric rather than gas IF going to a tankless heater because while gas operation is cheaper, most brands of tankless have had significant operational issues, and the electric ones tend to be a work or not work issue or straight water leaks rather than gas leaks, fire or explosions, boiler burn-throughs, water leaks, etc.

4) Most economists do NOT all agree that natural gas prices will continue to rise - in fact, natural gas prices are much lower now than several years ago, and with increased emphasis on drilling for "clean" gas the price is likely to stay historically low for a considerable time. In fact, from the peak of about $15/MMBTU in 2006, the gas price has dropped to $3/MMBTU, and is currently still holding below $4/MMBTU, while electric rates dropped slightly with the very low gas prices but have started risign again and are forecast to rise much more as coal and nuclear plants are scrapped, a trend that has accelerated in recent months. And, with the Obama adminstration and EPA push to drive out coal fired power generation, almost all new plants being designed and built now are gas fired and many coal fired plants are being converted to natural gas, so when gas prices do rise, electric rates will rise even faster because it is a lot less efficient to use gas to generate electricity than using gas directly.

5) Saying electric is better for the environment is equivalent to saying that you should trade in your 3 year old car on a new electric car to save the earth - first the new car took several times more energy to build than it can ever save, second it burns electricity that is usually generated in a fossil-fuel burning power plant which generally burns dirtier than a gasoline engine not to mention the 60% or so loss in efficiency from generation to consumption, plus more electric cars means more peak power usage requiring construction of MORE fossil fuel fired plants and more wasted energy in required spinning reserve capacity to handle the surge loads form electric car charging in the evenings, etc. All in all, there have been several reports by the EPA and the Rand Corporation among others that show changing from gas (either gasoline or natural gas) to electric heaters and cars results in a significant net INCREASE in pollution and wasted energy.

6) One other thing not mentioned is the high failure rate and significantly shorter life span of tankless units than promised - eventually they may get the designs right, but right now many of the brands are having startup issues that make them a risky buy, high maintenance cost items, commonly a shorter lifespan than a normal water heater, and all in all a poor investment.

I would recommend that unless you want to experiment and don't mind the possibility of getting seriously burned (in an economic sense) that you stay with a conventional gas-fired hot water heater.

Answered 5 years ago by LCD




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