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Heating water is one of the biggest users of energy in your home, so it’s important to do your homework when the time comes to replace your old water heater or buy one for a new home. According to the U.S. Department of Energy, water-heating costs make up about 14 percent of a typical single-family home’s energy bill, compared with 29 percent for heating and 17 percent for cooling.

When choosing a water heater, the first decision to make is what size to buy. A 50-gallon unit is usually adequate for an average family. Next, look for the bright yellow EnergyGuide tag and check the unit’s energy factor (EF) rating. You should install an electric water heater with the highest EF rating possible – at least .90, which means that it’s 90 percent efficient. Although operating costs may be more or less than for an electric water heater, a natural gas water heater is an inherently less efficient energy user because a significant amount of energy escapes through the unit’s flue.

Two of the most efficient electric water heaters available today are the Marathon, produced by Rheem, and the General Electric GeoSpring Hybrid. Some electric co-ops have been offering the Marathon water heater to co-op members for many years. It comes with a lifetime warranty on the tank, which is made of a tough, lightweight polyethylene outer shell that’s guaranteed to never leak or rust. It is insulated with foam and has an energy factor rating of .91 to .95.

If you want an even more efficient unit, check out the G.E. GeoSpring Hybrid water heater. It’s Energy qualified and has an energy factor of 2.35 – that’s 235 percent efficiency. The GeoSpring uses heat pump technology to heat the water.

And, if you’re thinking about replacing your entire heating-and-cooling system, note that you can get virtually free hot water at least part of the year as a byproduct of a geothermal heating-and-cooling system. Instead of exhausting waste heat to the outdoor air like a standard heat pump does when the geothermal heat pump is cooling your home, this waste heat is diverted to your water heater. The device is called a desuperheater, and it’s offered as a standard or optional feature on most geothermal heat pumps.

Here are some ways to trim water-heating costs:

  • Make sure your water heater is set at 120 degrees. This level will provide adequate hot water for most families.
  • When possible, place your electric water heater on a 2-inch thick-rigid insulation board to insulate the bottom of the tank.
  • Insulate hot water pipes to reduce heat losses as the hot water flows to your faucet or showerhead – and help minimize standby losses when the tap is turned on more than once an hour.
  • Locate your water heater in a conditioned area, preferably close to the center of the house.
  • If you own an electric water heater with an energy factor of less than .90, consider adding an insulating blanket over the unit to further insulate it. Check with the water heater’s manufacturer to make sure this is OK. 

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