A properly sized water heating unit is essential to provide the necessary quantity of hot water and operate efficiently. Tank style heaters typically have a capacity of 30 to 70 gallons (113.56 to 264.97 liters) with about 70 percent of that as usable capacity. Most manufacturers have software that will help you calculate the proper size to install. Sizing will take into consideration the client’s flow rate demand, the temperature of the water entering the tank, and the desired output tem­perature of the water.

The size of on-demand heaters is rated by the maximum temperature rise possible at a given flow rate. To properly size these units you need to know how much water is demanded from each fix­ture connected to the heater and the starting temperature of the water. Instructions on how to calculate this are on the Department of Energy’s (DOE) website, energysavers. gov.

For tank style units use the water heater’s first hour rating (FHR). The first hour rating is the amount of hot water in gallons the heater can supply per hour (starting with a tank full of hot water). It depends on the tank capacity, source of heat (burner or element), and the size of the burner or element. The FHR will be listed as "capacity" on the EnergyGuide label (or Canadian EnergyGuide label) for the product (see below for more information on energy labels). To determine your FHR you will need to select a time of day when the maximum amount of hot water is used and then calculate how much water is used during an hour within that time. The DOE’s website, energysav- ers. gov, has more precise calculations for this FHR.

Energy Efficiency

The energy efficiency of a tank storage, demand (on-demand or instantaneous), or heat pump water heater can be determined through the use of an energy factor (EF). The energy factor indi­cates a water heater’s overall energy efficiency based on the amount of hot water produced per unit of fuel consumed over a typical day. According to the DOE, this includes the following:

• Recovery efficiency—how efficiently the heat from the energy source is transferred to the water

• Standby losses—the percentage of heat loss per hour from the stored water compared to the heat content of the water (water heaters with storage tanks)

• Cycling losses—the loss of heat as the water circulates through a water heater tank, and/or inlet and outlet pipes

The standby losses can be minimized with better tank insulation and insulation on hot water pipes, especially those that run through unconditioned space. Heat traps, which allow water to flow into the water heater tank but prevent unwanted hot-water flow out of the tank, will eliminate cycling losses. Other water heater conservation measures, including lowering the water temperature, can be found on the DOE’s Energy Savers website.

A couple of labels can assist you in finding the most energy-efficient water heater. The EnergyGuide is a black and yellow label established by the DOE and required on many products, including water heaters, to allow consumers to compare the average yearly operating costs of different water heaters, using the same criteria for all models tested. The EF is listed on the EnergyGuide label on the water heater. The other label to look for is the Energy Star logo. For more information about Energy Star, see chapter 3, "Environmental and Sustainability Considerations."

The Canadian EnergyGuide label is required by federal law in Canada, under Canada’s Energy Efficiency Regulations, on all new electrical appliances manufactured in or imported into Canada. This black and white label includes the average annual energy consumption of the appliance in kilowatt hours (kWh), the energy efficiency of the appliance relative to similar models, the annual energy consumption range for models of this type and size, the type and size of the model, and the model number. This information is determined by standardized test procedures. A third-party agency verifies that an appliance meets Canada’s minimum energy performance levels.


The cost of heating water will depend on the cost of the unit, installation costs, and the long-term operating cost. To calculate the most cost-efficient option, you need to consider all three. A unit may be inexpensive to buy, but will probably be the most expensive to operate in the long run. Calculat­ing the yearly operating cost for a particular type of water heater will help you compare the "actual" cost over the life of the unit. The EnergyGuide label is one tool to help you compare energy costs.

Updated: October 6, 2015 — 12:00 pm