You have probably noticed a large yellow label on new appliances, but never paid attention or thought about its importance. The Energy Guide will be a large yellow sticker that, by law, must appear on water heaters and other appliances. It is important because it compares the average yearly operating costs of water heaters.
You will also find the Energy Factor, which is commonly referred to as the EF rating, on any new water heater. The higher the EF number, the more efficient the water heater will be. The cost of operating a water heater is directly related to its energy efficiency. The energy efficiency relates how efficiently it heats water and to the heat losses during standby. Since tankless water heaters have no storage capacity, they have no standby heat losses.
– Tank (Storage) gas water heaters typically have EF ratings between 0.5 to around 0.7. Electric models range from 0.75 to 0.95.
The Energy Factor can be used to determine the Estimated Annual Cost of Operation (EACO). The higher the EF value, the lower the EACO.
In some cases, a water-heating bill can be reduced by 10% – 20% by the elimination of standby losses in a storage tank operation (this may equate to about 15 cents per day or ($30-75) annually). However, the purchase price and possible increased installation costs of a tankless unit may make the payback period as much as 20 years. In most of the US, the average homeowner will save less than $75 per year by having a 0.82EF tankless water heater over a 0.58 tank type water heater.