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ECM: Domestic Water-Heating Systems

W5. Replace Inefficient Water Heaters


Usually, a water heater is replaced only when it fails. But if the existing water heater is at least ten years old, it is near the end of its useful life, and it may make sense to replace it before it fails. By replacing the water heater before it stops working, the PHA may enjoy significant energy savings, in addition to avoiding a situation in which residents are without hot water while a new system is being selected. Replacing old, oversized water heaters generally yield higher savings than if the system is old but appropriately sized. In any case, if the old water heater is leaking or shows signs of heavy rust or water streaking in the combustion chamber, it should be replaced.


  • Single-family and multifamily buildings with old, inefficient water-heating systems


  • Individual tank
    • gas
    • electric
  • Central
    • gas
    • oil


  • Energy efficiency can be compared on each unit by the EnergyGuide labels on the tank.
  • Consider the Energy Factor (EF) and the First Hour Rating (FHR).
  • When selecting a new hot water heater, an experienced professional should be consulted.
  • Water heaters should be appropriately sized to ensure adequate hot water and minimal energy waste.
  • Select models with a minimum of R-16 internal insulation.
  • Where electricity is relatively expensive compared to gas, the PHA may wish to consider switching to gas during replacement.


  • Replacing a conventional gas-fired central water heater with a high-efficiency condensing water heater saves approximately 28 percent.


Selecting a New Water Heater, Part of the U.S. Department of Energy's Consumer's Guide. Discusses water heater types, considerations for selection, and costs.

Energy Conservation for Housing – A Workbook, HUD, September 1998. Pages 7-109 through 7-112 address replacing inefficient water heaters.

Energy Performance Contracting for Public and Indian Housing: A Guide for Participants, HUD, February 1992. Pages 26 and 27 address replacing inefficient water heaters using performance contracting.

Improving Energy Efficiency in Apartment Buildings, American Council for an Energy-Efficient Economy, 1995. ISBN 0-918249-23-6. Pages 104 through 115 address replacing inefficient water heaters.

Consumer Guide to Home Energy Savings, American Council for an Energy Efficient Economy, 1999, ISBN 0-918249-38-4. Chapter 6 addresses replacing inefficient water heaters.