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Considering Replacing A Hot Water Heater

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A little while ago I talked about how my hot water heater was old and I didn’t know when the bad boy was going to go out. Perhaps it would go this year, perhaps next year, or perhaps after I’ve sold the home. That’s when someone suggested that I preempt the water heater and replace it early so I wouldn’t have to deal with the headaches. While I’m not ready to replace it just yet, I did begin researching my options so in case it does go, say tomorrow, I’m prepared for it.


I called up BGE and they gave me a quote of $755 for installation of a Rheem 50-gallon electric water heater with a 12 year warranty. It’s only $655 for the same heater and a 8 year warranty, $605 for a 6 year warranty. Comparatively, the water heater itself sells retail for $249.99 for the 6 year warranty version ($349.99 for the 9 year warranty). $355 for installation on the six year warranty version? Seems a little pricey.

Why Should I Replace Early?

To answer those who would say replacing a hot water heater early would be somewhat of a waste, I think that in this case it’s not that bad of a decision because of the possible consequences. At best, we are without hot water for a couple days until someone can come out to repair or replace it. At worst, one of the metal fittings (or something else) bursts, flooding my basement with water. The worst is pretty bad because we just installed carpeting outside the undeveloped room that houses the heater, preempting a burst like that would be good if I could see the future.

Another case for replacing is that newer water heater models are more energy efficient than older models. I read off the Energy Star label that the unit takes about 6450 kWh of power a year, which costs $129 at 2 cents a kWh (I had to throw that in there because that’s what the label said!). We pay approximately 10 cents per kWh so our annual cost to keep that baby running is $645. The estimated annual operating cost of the 50 gallon Rheem electric water heater, according to the Rheem brochure, is a little lower at $402. I could drill down and get an estimated kWh figure (maybe I was too lazy) but based on the brochure and the EnergyStar label on my water heater, it appears the difference is approximately $243. That means that the replacement would pay for itself in under three years of use.

Tankless Water Heaters

A tankless water heater would’ve been a great option if it were available for us via BG&E (they only do gas tankless). Tankless water heaters are generally more expensive fixed/up-front but have lower operating costs since they have to keep a huge container of water hot for instant use. I didn’t do much research into this area, and I may in the future, because BG&E didn’t offer it. Electric tankless water heaters do exist though, so if you have experience with them or have done the analysis yourself, please do share because I’d be very interested to see it.

{ 20 comments, please add your thoughts now! }

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20 Responses to “Considering Replacing A Hot Water Heater”

  1. Hazzard says:

    When we built our family cabin a few years ago, we also did a bit of analysis and realized that buying a tankless electric water heater (there is no gas out there) would be much more cost efficient in the long run.

    With little knowledge about them, we purchased a tankless water heater at Home Depot. To say we are disappointed would be an understatement. Most likely the reason that we are disappointed is that apparently the model we bought is not very good. A plumber friend of ours later told us that you really need to spend about $900+ on a tankless electric in order to get a decent quality. Why don’t we like it? It’s impossible to get a constant stream of consistent hot water. The shower is obviously the worst. The temperature will swing wildly and you definitely don’t want ANYTHING else going in the house while you are in the shower.

    Now that we are finishing up our lake house across the street from that one, we are putting in a regular water heater. We plan on turning it off when we aren’t there to minimize on electricity usage.

  2. CK says:

    Have you looked into gas?

    Interesting comment on tankless,

  3. Clever Dude says:

    We are planning on getting a tankless gas heater to replace our 10-year-old tank which is sitting upstairs above our whole house (no basement). There’s 2 reasons why:
    1. Mostly it’s the safety of our possessions. I don’t want a catastrophic failure of the tank to happen and flood the entire house. I’m sure a tankless can also burst open, but it’s not an immediate 60 gallons rushing downstairs and it’s probably a low probability too

    2. The cost savings of heating the water.

    However, one nice thing in our house is that the last owners installed a separate 40 gallon electric tank for the second bathroom addition. With that tank, we installed a timer unit (about $50, installed ourselves) that turns on for only 3 hours of the day (1 hour before we wake up and for the hour after my wife showers). We also installed a thermal blanket around it so there’s still enough hot water 15-16 hours later when we go to bed and my wife needs to wash her face, etc.

    I’m hearing that electric tankless heaters aren’t up to snuff compared to gas tankless, but new developments are constantly coming out so I guess just keep researching yourself too.

  4. jim says:

    CK: We don’t have gas lines so gas isn’t an option at all. 🙁

    Clever Dude: The timer idea is really good, I’ll look into that!

  5. Traciatim says:

    We actually have a tankless heater, but for a different purpose. Our home used to have an oil furnace that would heat the hot water that goes to our radiators for home heating. Now, it’s a small tankless heater instead and it works wonders. The biggest complaint I hear about them is how long it takes for them to get hot water flowing, and how little water you can use at once.

    In an ideal setup you would have a large ‘whole home’ tankless heater on your incoming water line. Then you would have small booster heaters on your showers, and possibly your dishwasher. That way you don’t have to worry about running a little water in the kitchen when something else is going.

    I just find that setup far too expensive for the benefits. Remember, if you live somewhere that gets cold and your water heater is in the house it’s “losses” will be heating your home.

  6. Alan says:

    In california they are starting to build houses with tankless water heaters. Its these little units that you hook up to the pipes that only activates when you request hot water. It works under the same principle of a espresso machine where you get scalding hot water instantly.

    A normal water heater will constantly be heating up 50 gallons of water whether your using it or not…therefore wasting a lot of energy.

    The only reason houses arn’t getting built with these is because of the plumbing industry’s unions….if everyone had these units in the house, plumbers would go broke!

    These units can be hooked up to you existing water heaters as well and basically the tank is there to hold cold water and the unit pumps it out and heats it before delivering it to your faucet.

  7. Chris Arnold says:

    Dude, grow a pair and install it yourself. It’s easy and will save you $500.

  8. Alex says:

    I can only agree to the first comment. Maybe tankless has come a long way but my personal experience in Europe (where tankless is pretty common) is that most of the time I had a hard time filling up a tub with water before the unit would overheat and shut itself down for safety reasons. So again, unless they have become a lot better I can not recommend the tankless route.

    Cheers Alex

  9. CK says:

    Jimbo- How is your home heated?

    Could you install a propane tank outside?

    Just some thoughts.


  10. jim says:

    CK: electric heat pump, i’m in a townhouse so there’s no chance i could install a propane tank outside, the HOA would have conniptions… plus that’s a lot of effort just to get gas. 🙂

  11. Jose Anes says:

    Just posted an article explaining why you should go for the longer warranty heater.

  12. TTFK says:

    We installed a Renai gas tankless hot water heater to replace a 50g regular unit, and so far we love it. While it does take a few seconds for the hot water to get to the tap, it is a minor inconvenience at worse.

    For anyone considering gas, note this: When they installed our unit, they had to run a new 1″ gas line to the wall for the heater. The resulting installation cost brought a $900 heater up to almost $2500. On the plus side, between that and a high-efficiency washer/dryer we are saving over $80/month in water and electric costs.

  13. saladdin says:

    Oh my goodness. Paying installation of hundreds of dollars for the simplest thing ever. Pay someone for installation and they jack up the cost of the heater (that you can buy at Lowe’s) and then add a few hundred for installing. I am in the wrong business.

    It is easier to install an electric water heater then hook up a VCR.
    A blind, deaf, one armed monkey can install a electric water heater in a few hours. Save that money for yourself.

    You can also turn the temp down on the heating elements to save electricity.

    And buying a warranty for something that can easily last 10 years anyway?
    Anyone who says to buy the warranty must be being paid to do so. That is without a doubt the worst advice in this entire comment thread.


  14. Steve says:

    I looked into these when I finished my basement last year for fear of my old tank bursting. I found a few things. They can be very expensive to install depending on the age/style of your home. As you can imagine it takes massive current to instantly heat water, even on a 240V setup. As a result, very thick wire (expensive) is needed to wire the electrical and I think most need a 200 Amp circuit breaker. The proximity of the unit to the circuit breaker and the specs of the breaker box effects installation cost.

    Flow rate was also a concern with the electric unit. It seemed you needed the most expensive unit just to cover a 3 gallon per minute rate, which is about a shower and dishwasher at the same time.

  15. denon says:

    I’ve used Marathon water heaters in multiple houses for many years. IMHO, they’re the absolute best product on the market. ( ). They’re super-insulated, so the temp drops very little over several days, they’re very well designed for easy installation, and they’re made of entirely rust-proof materials (PVCs, etc). The bottom inside is bowl-shaped, so it tends to clean out sediment better if you drain it, etc. Check with your electric company if they happen to sell them, and also check if you can get a discounted rate on the electricity used by it. Many will sell meter it separately. I’ve been nothing but thrilled with these units.

  16. Matt says:

    Why the fixation on buying through the utility? You can almost certainly get a private contractor to do the install for less…and if you’re really unable to get a gas one, you can install an electric heater yourself.

    We’re replacing our old tankful heater with a tankless model this spring. We might add a second for laundry/dishwasher later on, but frankly even with the tankful heater we’ve kept in the habit of limiting ourselves to one heavy-water-use application at a time.

    My last two apartments before buying this house had tankless heaters, and they were amazing. Instant hot water…no more waiting 5 minutes with the water running before hot stuff starts coming out. And the cost savings are substantial.

  17. jim says:

    Matt: No fixation whatsoever, it was just a data point and I shouldn’t have implied that I wasn’t ever going tankless because they didn’t offer it. I just meant to indicate that they didn’t offer it so I hadn’t considered it (yet) for the basis of this analysis.

  18. Gilbey Scott says:

    I recently got a price for replacing my aging electric tank heater. The quote for a 65gal was $800-1000, installed, depending on the model. I also got a price to switch over to gas – we have a line into the house. That would have been $1000 more.

    We had just returned from Europe where tankless water heaters are very common, so I did a little research to see if it would work for me.

    With an unused 200amp breaker panel available, I chose to go with an electric Bosch tankless.
    My first choice was a 120amp model. My friend, who is a remodeling contractor recommended the 80amp. I live in northern Virginia – Bosch has a map on their site to help you choose.

    I did the measurements for heat rise and gallons per minute and it looked like 80amps would just work, and it did. Temperature rise in winter, from entry to shower is 70 F degrees. In summer 35 F degrees. In winter there is just enough hot water for a shower and one faucet, with a little variation in temperature. In summer, enough for at least two showers at a time.

    The electric company gives us detailed reports, each month, with our bill. The results show a 19 percent cost drop since the tankess heater went in. I might add that buying it online and installing it myself put the total cost at $650. And I hope to get some of that back with a tax credit.

    I’ve done more research since then and put it on a site called There are some ads on there, but the information is free.

  19. dintx says:

    3 things:
    1) unless your local gas company hands out money for installing efficient equipment like this AND you take advantage of the 30% of installed costs Tax Credit… youll never see a return less than the life expectancy of the equipment (unless you use hot water in the range of 500-1000+ gal/month, DOE uses 60-65gal/month when calculating the efficiency)
    2) if you dont care about 1 or the economics do work out… make sure you size it to your load. Most will advertise their highest output at the smallest delta T.. do your homework.
    3) MOST IMPORTANT IF BUYING A TANKLESS – make sure your gas line can handle the increase load. an average tank gas w/h is 40,000 btu while an average tankless ~200,000-250,000 btu. if your water heater is on the other side of the house from the meter, you might have to upgrade your plumbing.

    i am an engineer for a gas company and am pro-tankless. however, i cant overlook the facts and until the price of stainless steel comes down or another metal can replace it these machines will be a hefty capital investment.

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