Originally Posted by Consumer Reports
Look past capacity. Most water heaters are sold on that basis. But a water heater’s first-hour rating (FHR) is more important, since it tells you how much hot water the heater can deliver in an hour of use.
Determine how much hot water you need based on the busiest hour of an average day. Figure on roughly 2 gallons for shaving, 4 gallons for washing face and hands, 5 gallons for preparing food, 10 gallons for a dishwasher, and 20 gallons each for a 10-minute shower and a load of laundry. Factor in growing children and other issues that can increase your water needs.
Once you’ve arrived at a total, be sure that the FHR on the new heater’s yellow EnergyGuide label meets or exceeds that amount.
Look for a long warranty. Most cover 6, 9, or 12 years. Heaters with the lowest and highest warranties differ by just $60 to $80 for electric models and $50 to $100 for gas units. But we found much bigger differences inside.
Electric water heaters with 9- and 12-year warranties typically had larger heating elements, thicker insulation, and thicker or longer corrosion-fighting metal rods, referred to as anodes.
Most higher-warranty gas heaters had bigger burners and better heat transfer for faster water heating, along with more anode material and thicker insulation. An exception: Whirlpool’s 40-gallon gas heaters, whose 9- and 12-year models are identical inside.
Longer coverage is especially important considering that warranties typically cover only the heater, not the $200 to $300 you’ll pay a pro to install a new one. You’ll also welcome a longer warranty if you have hard water and use water softeners. These softeners can speed up the rate of anode corrosion. While anodes can be replaced if there’s enough clearance to remove them, you’ll need a plumber unless you’re handy.
Measure before you buy. Last year’s tougher federal energy standards require about 10 percent higher efficiency for gas water heaters and about 5 percent for electric models. But the insulation addded to meet those standards has made some heaters up to 4 inches fatter, a potential problem for closets and other tight spots.
Consider gas. Based on national average fuel costs, gas heaters cost roughly half as much to run as electric models and can pay for their higher up-front cost in as little as a year. Factor in the cost of running a gas line to your home if you don’t have one. Also consider adding insulation to hot-water pipes and the cold water pipe exiting the water heater.
You may have heard about tankless water heaters, which save energy by heating only the water you draw. Those savings can add up to some $50 per year compared with conventional heaters. But even at that rate, it will take more than 25 years for an average household to recoup the extra $1,300 or so those units cost to buy, install, and maintain.