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The Truth About a High Efficiency Water Heater

Thermal Efficiency vs Operational Efficiency

Are you considering a high efficiency water heater for your property? Then your head must be swarming with efficiency percentages. In reality, these “thermal efficiency” percentages do not matter as much as you think. What affects your gas bill more is operational efficiency.

In this article, we will use a simple example (a microwave and a coffee cup) to highlight the differences between thermal efficiency and operational efficiency. This will help you clearly understand how efficiency percentages affect your dollar savings. Alternatively, you can watch a video of this explanation.  

Looking for instant answers? Try our fuel savings calculator to see how much you can save (in dollars) with Intellihot’s high efficiency tankless products, in comparison to conventional water heaters.

What is Thermal Efficiency?

High Efficiency Water Heaters

Thermal efficiency is the effectiveness of converting input energy to hot water.

Water heaters consume energy – electricity or gas. Most of this energy is converted to heat for hot water. It is not scientifically possible to convert 100% of the input energy to heat as some of the energy gets lost naturally to the surroundings. Even high efficiency gas water heaters are unable to achieve a 100% thermal efficiency. A 100% efficiency is scientifically not possible. 

Thermal efficiency measures the percentage of input energy that the water heater is able to convert to heat the water. A 96% thermal efficiency indicates that 96% of the input energy that the unit consumes gets converted to heat for hot water.

Let’s look at an example.

Water Heater Thermal Efficiency Example

One microwave. One cup of coffee to heat.

Consuming energy – electricity or gas – costs money. Let’s say that the microwave consumes $1 worth of input energy.

The microwave loses some input energy naturally. It is only able to convert $0.96 worth of energy to heat for the coffee cup.

Hence, usable energy ÷ input energy = $0.96 ÷ $1. This is equivalent to 96% efficiency.

This is the thermal efficiency of the microwave.

Note: This example is for explanation purposes only. In reality, a microwave’s thermal efficiency would be much lower than 96%.

High Efficiency Water Heaters Thermal Efficiency Example

Similarly for water heaters:

The thermal efficiency measures the percentage of input energy that they can convert to heat for hot water.

So, for every dollar spent on input energy, if a boiler is able to transfer $0.96 worth of heat to water in its tank, its thermal efficiency would be 96%.

So, for every dollar that your boiler spends on consuming energy, will you get 96 cents worth of hot water? Not quite. This is where operational efficiency comes in.

What is Operational Efficiency

High Efficiency Water Heaters

Operational Efficiency is the effectiveness of converting input energy to hot water at the fixtures.

Water heaters consume energy to give you hot water out of your tap, shower, or other fixtures. However, hot water naturally loses heat to the surroundings. For example, if the hot water is stored in a tank, it will lose heat to surrounding air with time. Hence, the water will become cooler with time. As it becomes cooler, it will need to be heated again. To do so, the water heater will need to consume more energy.

Operational efficiency measures the percentage of input energy that the water heater is able to convert to heat the water when it is discharged from fixtures like taps and showers. An operational efficiency of 64% would indicate that 64% of the input energy that the unit consumes gets converted to hot water discharged at the fixtures. This 64% includes the energy that the unit would need to consume to reheat water after it loses heat.

Let’s continue our example:

Water Heater Operational Efficiency Example

One Microwave. One cup of coffee to heat. 96% thermal efficiency.

Continuing our previous example, for every dollar that the microwave spends on consuming energy, it transfers $0.96 worth of heat to the coffee.

Let’s say the microwave has already consumed $1 worth of input energy and transferred $0.96 worth of heat to the coffee cup. The coffee cup is now hot. Your drink is steaming.

However, you want to drink your coffee after a few minutes. You leave the heated coffee cup on the counter. With time, the coffee loses heat and becomes cooler.

When you are ready to drink the coffee, you realize it is not as hot. Let’s say it only has $0.64 worth of heat left. It has lost the rest to the surroundings.

Hence, usable energy/input energy = $0.64/$1. This is equivalent to 64% operational efficiency.

High Efficiency Water Heaters Operational Efficiency Example

Water Heater High Efficiency Working

Continuing the above example, below is what “high efficiency” would mean for a water heater that suffers from such losses:

Now, the microwave would need to re-heat the coffee cup and use more energy. It will need to reheat the coffee cup to make its heat increase from $0.64 worth of heat left in the cup to the original $0.96 worth of heat.

With its thermal efficiency at 96%, the microwave would need to consume $0.33 more input energy to deliver the additional $0.32 worth of heat.

Hence, you would actually be spending $1.33 to get a cup of coffee that has heat worth $0.96.

How does this matter for hot water? How is it related?

Remember: Traditional boilers and tank-style systems heat water and store it in a tank. This is like leaving the coffee cup on the counter before consumption from our example above.

Once heated, hot water will lose heat as it sits idle in the tank. These are called standby losses. Traditional boilers also suffer other forms of losses like purging losses. Based on our advanced models that use hot water usage data from hundreds of properties, traditional boilers can lose up to 36% in efficiency if these losses are considered.

Understanding High Efficiency Water Heaters | A Video Explanation

The Truth About High Efficiency Water Heaters

How to Increase Your Gas Savings?

Moreover, switching to a tankless high efficiency hot water heater will bring your overall efficiency much closer to the thermal efficiency of the unit. This is because tankless water heaters heat water on-demand. They do not need to store hot water.

From our microwave example, for a tankless system: you would consume the hot coffee directly and not let it sit on the counter. Hence, it wouldn’t lose heat. The microwave would not need to consume an additional $0.33 to reheat the coffee.

Similarly, tankless water heaters do not need to consume additional energy to re-heat water more than once. The hot water is delivered instantly on-demand and does not suffer from standby losses. 

High Efficiency Tankless Water Heater

Moreover, switching to a tankless high efficiency hot water heater will bring your overall efficiency much closer to the thermal efficiency of the unit. This is because tankless water heaters heat water on-demand. They do not need to store hot water.

From our microwave example, for a tankless system: you would consume the hot coffee directly and not let it sit on the counter. Hence, it wouldn’t lose heat. The microwave would not need to consume an additional $0.33 to reheat the coffee.

Similarly, tankless water heaters do not need to consume additional energy to re-heat water more than once. The hot water is delivered instantly on-demand and does not suffer from standby losses. 

Swiftly summarize tankless water heating choices for commercial properties with this free guide:

Download this ebook to:
  • Learn the difference between Gas and Electric Tankless Water Heaters
  • Understand the Four Factors that Affect Tankless Water Heater Sizing
  • Discover How Commercial Tankless Water Heaters Differ From Residential Units
  • See A Cost Savings Example of Tank vs Tankless Systems
Tankless Commercial Buyers Guide