The perfect water heater keeps your energy usage low while still delivering hot water when you need it and for as long as you want. But can energy-efficient water heaters do that? Thanks to technological advances, yes, they can.

If you’re looking for a new water heater, you’ve come to the right place. We’ll go over some variables you should know about water heaters and which factors make for the most energy-efficient models. 

First, we’ll go over five common types of heaters and evaluate what type of water heater is the most energy-efficient.

The 5 Primary Types of Water Heaters

Before we can talk about which type of water heater is most efficient, we should first understand the different water heaters. There are five common types of water heaters you’ll likely run into.

1) Conventional Water Heater with Storage Tank

Conventional water heaters with storage tanks are the most common type. These water heaters hold a maximum water capacity, meaning there is only a certain amount of hot water available until the tank refills and reheats. As such, it is not an ideal option for large families or people who expect to go through a lot of hot water quickly.

Pro: Large volume of hot water ready for use

Con: Long wait time to refill and reheat

Energy efficiency rating: Low (on average)

2) Heat Pump (Hybrid) Water Heater

Heat pump water heaters, also known as hybrid water heaters, do not directly generate heat, but rather use the heat from the surrounding air and ground to heat the water in the tank. Therefore, only electricity is used to move water from the heater to its destination. 

While this is a highly efficient water heater, it requires a decent amount of vertical clearance because the pump is positioned at the top of the tank.

Pro: Efficient heating with ample room for hot water storage

Con: Large space commitment

Energy efficiency rating: High

3) Tankless Water Heater

Tankless water heaters, as you probably guessed, have no tank. Instead, the device houses coils that superheat the water as it passes through the mechanism to its destination. The result is on-demand hot water that rarely runs out, making it one of the most energy-efficient ways to heat water in your home.

Pro: On-demand hot water at a moment’s notice

Con: You may have trouble supporting multiple demands for hot water (like running the dishwasher while you shower).

Energy efficiency rating: High

4) Solar Water Heater

Solar water heaters use the power of the sun to heat your water. But rather than absorbing heat, solar panels are mounted on your roof to power a heating mechanism that warms your water to optimal temperatures. 

Because it’s not using any power from the electric grid, this is considered one of the most energy-efficient water heaters available today. But because not every day will be sunny, these water heaters usually need to rely on a secondary power source so you can have hot water on stormy days.

Pro: Can completely negate reliance on non-sustainable energy

Con: Requires a backup for long spans of cloudy days

Energy efficiency rating: High (given the right conditions)

5) Condensing Water Heater

Using the heat exhaust from natural gas fumes, a condensing water heater is ideal for homes that primarily use natural gas as a power source. This tank has a similar setup to a conventional water tank heater but uses excess natural gas instead of electricity or its own gas power. This tank requires very little excess energy to get hot water where it needs to be.

Pro: Reserves all exhaust heat and converts it into new energy

Con: Exclusive to gas-powered water heaters

Energy efficiency rating: High

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Selection Criteria

When selecting a water heater replacement, several factors should be considered to ensure you choose the right one for your needs:

Fuel type and availability: Water heaters can be powered by electricity, natural gas, propane, or solar energy. Choose a fuel source that is readily available and cost-effective in your area.

Size: Determine the appropriate size and capacity of the water heater for your needs. A larger family will require a heater with a higher capacity to ensure an adequate hot water supply.

Operating costs: Consider the upfront cost of the water heater, as well as installation expenses and potential long-term savings on energy bills. Choose a water heater that fits within your budget while still meeting your needs.

Warranty: Check the warranty coverage offered by the manufacturer and consider any maintenance requirements.

What Causes a Water Heater to Use So Much Energy?

The average water heater runs for about three hours a day, consuming approximately 4000 Watts every hour. The exact amount on your energy bill depends on your local utility company.

But why does it consume so much energy? The reason is a mixture of the design of your water heater, maintenance requirements, and your lifestyle:

  • Water tanks: It takes a lot of energy to heat a tank full of water. If you have a large tank to accommodate a large home, it will consume a lot of energy.
  • Insulation: If your water heater and the surrounding pipes are not properly insulated, the heat will get sucked out of the water. Then your water heater will have to use even more energy reheating water it already spent energy on.
  • Excessive hot water usage: If you’re taking 30 minute-long showers that are scorching hot, you’re quickly draining all of that hot water your tank stored for you. And if you live with a family who also likes to take long, hot showers, that tank will have to refill and reheat over and over again.
  • Sediment build-up: Many areas in the United States have hard water, meaning there are a lot of solids and sediments dissolved into the water. When hard water is heated in a water heater, that sediment becomes crystallized and falls to the bottom of your tank. This sediment build-up will decrease the efficiency of your water heater over time, so it must be cleaned out regularly.

What’s the Most Efficient Water Heater?

What makes a water heater more efficient? Here are a few energy-efficient features you should consider.

Tankless Water Heaters

Tankless water heaters are considered the most efficient water heaters. Why? Because tankless water heaters create hot water on demand; the moment you need hot water, your tankless water heater rapidly heats water instead of like conventional tank heaters, which may cause you to spend a ton of energy on heating dozens of gallons of water that you may or may not use.

What Features Should You Look for in a Water Heater?

Electric Ignition

Many conventional water heaters that are gas-powered use a pilot light to ignite the tank. This pilot light stays on throughout the entire lifespan of the water heater, meaning a little bit of gas is constantly being used. While it’s not a significant source of energy consumption, it does add up in the long run.

Newer models use electric ignition, which automatically detects your water temperature and ignites the tank when the water needs to be heated. This minimizes your water tank’s total energy consumption, since it doesn’t use energy when you aren’t using hot water (unlike a pilot light).

Gas Condensers

If your water heater uses gas power, it likely loses some heat when it vents out hot gas. This is now an unnecessary waste of energy thanks to new gas-condensing features. Gas condensers trap all of that exhaust and convert it back into heat, meaning you have virtually zero heat loss in your water heater. 

3 Energy-Efficient Brands for Water Heaters

Now that we know some of the tenets of an energy-efficient water heater, where can you find one that works for your home? The following are brands that are known for their energy-efficient water heating systems.


A staple in the world of water heaters, Rheem specializes in making state-of-the-art water heaters that offer high volumes of hot water and decrease your energy consumption.

Rheem has a tank for any home type, offering tankless, hybrid, and conventional water heaters. They’re also driven to reduce the carbon footprint created by their heaters—they’ve avoided 8.62 million tons of CO2 emissions since 2019.

A.O. Smith (Ferguson)

A.O. Smith deals with tank and hybrid water heaters, offering some of the best budget water heaters that still reduce energy use and carbon emissions. Some of their more advanced water heaters have an Energy Smart mode that can tell when you’re not using hot water, so it can reduce standby heat loss.


Bosch specializes in high-efficiency, tankless, electric water heaters. This is the perfect option for homes that don’t have a lot of space for a water heater or for individuals who wish to downsize their water heater’s space commitment.

Make Your Water Heater a Part of Your Energy-Saving Plan

Now that you know what water heater is most energy-efficient, we hope you can make your purchase with more confidence. When you invest in an energy-efficient water heater and other high-efficiency appliances, you’re contributing toward a life that’s less reliant on non-renewable energy sources. 

If you’re interested in learning about different types of energy-saving habits, check out our energy-saving tips. These tips will teach you how to be more sustainable in nearly every facet of your life.

And if you have more questions about what you can do to save energy and reduce your carbon footprint, give Spring Power & Gas a call.