How the benefits of propane water heaters can help grow your residential gallons

Having abundant hot water in our homes is something we all take for granted. From washing dishes to enjoying a long, hot, luxurious shower, water heaters make our lives much easier and far more pleasant.

However, we do pay a significant price for having hot water on demand. According to the U.S. Department of Energy, water heaters account for 14 to 25 percent of a home’s total annual energy consumption, making these appliances the third-largest energy users in a typical household.

Eight to 10 million residential-grade water heaters are sold in the United States each year. Because water heaters are typically only replaced every 12 to 25 years, a water heater purchase can have a tremendous impact on a home’s energy use, costs and carbon emissions over time.

“Unfortunately, few homeowners are aware of these implications when selecting a new water heater for new construction or an existing home,” says Bridget Kidd, director of residential and commercial programs for the Propane Education & Research Council (PERC). “Furthermore, many purchases are emergencies that take place when an old water heater fails unexpectedly. That makes it even more likely that homeowners will quickly install whatever their plumber has in stock – a snap decision that can inadvertently increase their utility bills for many years to come.”

There are more innovative technologies now available for water heating than ever before: traditional condensing and non-condensing storage tank units, condensing and non-condensing tankless systems, solar-powered systems, heat pump water heaters and even micro-combined heat and power units (m-CHPs) that provide both space and water heating. These systems vary greatly in first cost, annual energy costs, carbon footprint and performance.

When it comes to residential propane customers, the vast majority own a traditional storage tank unit or a tankless water heater, both of which are typically powered by LP gas or electricity.

That said, which is a better deal for these customers over the long run – a propane water heater or an electric one? A 2010 study by Newport Partners and commissioned by PERC found that propane-powered water heaters are overwhelmingly the best choice as compared with electric units for a variety of reasons. The study’s results also indicate that propane marketers who effectively promote propane-powered water heaters to local homeowners, plumbers, builders and contractors can significantly increase their residential propane sales.

The truth about the Energy Factor (EF)
According to the study, an optimal water heater choice depends on several primary factors: energy use, economics, and emissions, as well as installation feasibility.

Researchers examined 10 residential water heating systems in 10 regions of the country spanning a variety of climate types – hot/humid, mixed/humid, cold: Northeast, cold/very cold: Midwest, and hot-dry/mixed dry.

Among the study’s key findings was a fact that’s well known to some housing industry professionals but unknown to most homeowners – a system’s Energy Factor (EF) rating alone cannot accurately predict the energy costs of two water heaters running on two different energy types. In other words, although one water heater has a higher EF rating than another, it may cost more to run.

“The EF rating only takes into consideration how much energy a particular water heater will use,” Kidd says. “It does not consider the cost of that energy. So, for example, an electric storage water heater with an EF rating of 0.90 could easily have a higher energy cost than a propane storage water heater with an EF rating of 0.67. While the electric water heater may be more energy efficient, it will still cost more to run as long as electricity is more expensive than propane.”

In fact, the study actually compared two water heaters in this exact scenario, and the propane water heater cost $72 less to operate each year. In the Northeast, higher regional electric rates drove the cost of running an electric storage water heater above $600 per year. In that same region, the cost of operating a propane-powered tankless water heater was just $363, and the cost of operating a propane-powered high-efficiency storage unit was $438.

Annual cost of ownership
Another key finding of the study was the fact that determining a water heater’s annual cost of ownership entails more than just its annual energy costs. The system’s cost and expected service life also factor into that figure.

Researchers examined each water heater’s purchase cost and its energy bills spread out across its estimated life. In all but one climate region represented in the study (hot/humid), the lowest annual cost of ownership was for a propane tankless water heater system.

“This is likely due to the system’s longer-than-normal service life of 20 years, as well as its low annual energy costs,” Kidd explains. “Propane tankless systems may cost more to initially install, but they pay off in the long run.”

Carbon emissions
Most homeowners are likely unaware of the effect their water heaters can have on their homes’ overall carbon footprints. While that may be true, it’s also true that today’s consumers are more concerned about the environment than previous generations, making carbon emissions a valid propane water heater selling point in many situations.

The carbon dioxide emissions analysis in the 2010 Newport Partners study was based upon emissions factors supplied by the Environmental Protection Agency’s Emission & Generation Resources Integrated Database (eGRID). Researchers used this database to derive the emissions that result from producing a unit of electricity. eGRID’s emissions factors are provided on a state level, and they include electricity produced by a variety of sources – coal, nuclear and hydro plants, for example.

Two factors greatly contributed to the amount of emissions that a water heating system generates: energy source and efficiency level. The study found that a standard-efficiency electric storage unit typically produces twice the carbon emissions as a high-efficiency, non-condensing propane storage unit. Interestingly, because of their high electricity consumption, even heat pump water heaters produced carbon emissions that were an average 33 percent greater than propane condensing tankless systems across all of the climate regions in the study.

Convincing your customers
Obviously, there are many valid reasons to choose a propane-powered water heater over an electric model. However, it can be challenging to communicate the benefits of propane storage and tankless units to builders, contractors and consumers.

Helpful tools exist for propane marketers to use in their local areas, Kidd says. These tools include consumer brochures and consumer ad templates that are available at propanemarc.com.

The full Newport Partners study can be viewed at buildwithpropane.com/waterheating, and a free online course, “Water Heaters: Retrofitting from Electric Standard to Propane Tankless,” is available at propanetrainingacademy.com. Also, the free Energy Cost and Carbon Calculator mobile app from Apple’s App Store or Google Play can calculate estimated annual energy costs and carbon emissions for water heating systems while on the go.

“Over the past few months, PERC has engaged with plumbers at a national level to make sure they’re aware of the benefits propane water heaters can offer their customers,” Kidd adds. “We encourage propane marketers to talk with local plumbers and follow up with their homeowner customers. By working together, we can ‘pull the plug’ on electric water heaters and help homeowners save money and energy while growing residential gallons.”

Von Minden is senior public relations counsel for marketing communications agency Swanson Russell. She can be reached at lynettep@swansonrussell.com.