water heater efficiency

According to the U.S. Department of Energy, water heating accounts for the second-largest utility expense for the average American home. Several years ago it was ranked third on the household energy consumption list. That shows how crucial energy conservation is, especially when it comes to plumbing systems.

On April 16, 2015, the U.S. DOE made effective its new energy efficiency mandates, as part of the National Appliance and Energy Conservation Act. The main goal of that Act was to increase energy efficiency in water heating across the country.

The National Appliance Energy Conservation Act, or NAECA, updated requirements and standards for virtually all types of water heaters: residential gas, electric, oil, and tankless gas water heaters, both storage and tankless models.

NAECA update requires higher Energy Factor Ratings on the above-mentioned heaters.


Energy Factor (EF) is defined as a ratio of useful energy output from the water heating unit to the total amount of energy delivered to the water heater.

In other words, the EF rating comes from a water heater’s ability to maximize the amount of hot water produced per unit of energy consumed during an average day. The higher the EF is the better (which means the water heater is more efficient).

The new regulations translate to a mandatory increase of 3% – 30% greater efficiency vs. previous levels. In order to comply with these federally-imposed standards, water heater manufacturers must change their equipment designs to improve the insulation.

This change translates in one of two things – either the diameter of the water heater will increase, or the capacity will decrease significantly – up to 10%.

If a water heater will have a higher EF rating if it can produce and store more hot water while using less energy.

After 2015, a company cannot sell or install water heaters that do not meet the new EF rating minimum requirements.


Water heaters with a capacity of fewer than 55 gallons do not have as many requirements under the NAECA as their larger counterparts (see below). However, they will need more space than previously because they now must be two inches taller in height and two inches wider in diameter. That design change will improve the EF rating of those units.



Water heaters with a capacity of 55 gallons or higher will have to change in the following way:

  • Electric water heaters with tanks larger than 55 gallons will have to be changed to hybrid electric heat pump models.
  • Gas water heaters with tanks larger than 55 gallons will now be based on high-efficiency condensing technology.
  • Both electric and gas water heaters will now require more space for improved airflow and temperature.

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