Propane Water Heaters: What You Need To Know

With summer heating up, your clients’ water bills are simmering down from their cold weather readings. Use the off season to research and educate your customers on the benefits of propane water heaters.  With costs for utilities such as electricity on the rise, heating water with a propane system is not only more cost effective than using electricity; it is also more energy efficient and could result in a significant tax credit and savings for homeowners.

Choosing propane
Standard LP gas tank type water heaters can heat anywhere between 40 and 100 gallons of water, depending on the size of a home and its water needs. But advances in technology, coupled by the national push toward using greener and cleaner fuels, have also sparked consumer interest in tankless propane heaters.

“These units use 50 percent less energy, but also cost significantly more,” says Steve Clark, chief scientist for GREENandSAVE, a Philadelphia, Pa.-based green consulting firm.

Phil Squair, senior vice president with the National Propane Gas Association, adds that while they may be expensive, an Energy-Star qualified propane tankless heater with an Energy Factor (EF) of 82 percent can save a homeowner up to 60 percent on energy bills compared with a standard electric model.

“Propane appliances are truly an excellent choice from the standpoint of personal economics and environmental impact,” he says.

Tank type heaters
The common propane tank water heater has existed for decades, but thanks to technological advances, now operates more efficiently than before.  The system uses a large internal container that holds and heats water prior to use. While tanks retail from $500 and $600, Clark says the operational costs far exceed those of tankless models.

For example, the thermostat of a 50-gallon water tank could be set to 120 degrees, even when hot water is not needed for several consecutive days. As a result, the tank heats unnecessary water and creates stand by heat loss.

“It is kind of like keeping a pot boiling all day to make spaghetti at dinner time, who would do that?” Clark asks.

Despite some of its operational inefficiencies, Clark adds that propane is still a more cost effective heating solution as compared to electricity and oil.

Tankless heaters
For maximum fuel efficiency, your clients may want to consider a tankless “on demand” water heating system. The system works similarly to that of an air conditioner; water enters the unit and travels to its coils, which are heated by a propane-burner to a preset temperature. The water is only heated when it travels to the tap for use.

As a result, carbon emissions from a tankless propane water heater can lead up to 60 percent fewer emissions than a standard electric water heater, Squair says.

For all of the system’s heating efficiencies, tankless heaters can cost up to twice as much as standard systems. Depending on use, the unit can pay for itself in a matter of months; it also takes up less space than even a small, 20-gallon tank type model.

Clark says that considering a homeowner’s lifestyle is important when making a decision between a tank and tankless system.

“A tankless unit may not be cost effective for two retirees but could be for a family of six with four teenagers, a gym or a public pool,” he says, noting that the more hot water your clients need, the more money they will save with a tankless heater.

Tax incentives
Because tankless systems cost more to install, it is important to let your customers know about the available tax credits offered through The American Recovery and Reinvestment Act of 2009. Highly efficient heating, cooling and water heating equipment placed into service from January 1, 2009 to December 31, 2010 are all eligible for tax credits. In the case of water heaters, homeowners can reclaim 30 percent of installed costs; the tax credits up to $1,500 for a fuel efficient system. This carries over to both systems.

“Specifically for water heaters, they must have an EF (energy factor) greater than 0.82 or a Thermal Efficiency greater than 90 percent,” Clark says, as according to ENERGY STAR.

Regardless of which system meets your customers’ needs, 2009 presents an opportune time for installing an energy efficient water heater, such as propane system.

“Replacing older, non-efficient hot water heaters with new . . . propane models always make sense financially, but is a no brainer with these incentives.”