Figuring Water Heater Life-Cycle Costs In 2041

By Dave Yates Plumbing Contractor Water heater thermal efficiency represents the potential percentage of energy an appliance can move from itself into a given system while operating. Energy factor ratings tell a different tale regarding operating efficiencies because the EF includes associated energy losses including those that occur when the unit is not operating. Lifecycle costs incorporate expenses

By Dave Yates
Plumbing Contractor

Water heater thermal efficiency represents the potential percentage of energy an appliance can move from itself into a given system while operating. Energy factor ratings tell a different tale regarding operating efficiencies because the EF includes associated energy losses — including those that occur when the unit is not operating. Lifecycle costs incorporate expenses for equipment, labor, fuel, maintenance and replacement.

Often, the first question I get asked when talking about our recently installed solar system is, "How can you justify the expense for installing solar for domestic hot water systems?"

There's no question a solar hot water system is a relatively expensive investment, especially when compared to a number of alternative water heaters.

For the sake of argument, let's assign a $10,000 installed cost for our 30-vacuum-tube Viessmann solar system and we'll include an annual maintenance budget of $40. Electricity for the controller and pump will be generated by a small photovoltaic panel. Subtract $2,000 federal tax credit (maximum of 30% or $2,000) for a net installed cost of $8,000.

The major components are rated to last an average of 35 years. Standard tank-type water heaters are said to last 13 years while tankless manufacturers often claim a 20-year life span.

EF ratings are all over the map!

For our calculations, let's assume a 50-gal./day hot water draw with an average ∆T (temperature difference) of 80°F, which equals 33,320 Btu per day (8.33 lb. x 80-∆T x 50 gal. = 33,320 Btu). EF factors, used in calculations below, were collected from manufacturers' Websites and literature.

Pin the tail on the donkey: Fuel costs vary considerably and fluctuate wildly; labor costs and overhead will continue to rise; costs for goods will increase each year; and installed pricing used within this column is estimated. Let's assign a 5% annual increase for each category. No doubt the actual costs will vary, but one thing's for certain — the costs won't be going down! Given the changes we've seen over the past three decades, 5% seems to be a fairly conservative number to use. Overhead and labor costs, in businesses like ours, are spiraling upwards at rates greater than 5% annually.

The math isn't too complicated: Btu content of a given fuel multiplied by the EF renders the net energy input. Divide that into our 33,320 Btu-perday usage and multiply by 350 days to obtain a year's operating cost.

For example: 1 Watt = 3.414 Btu and 3.414 x .93 EF = 3.17502 net Btu per Watt; 33,32 ÷ 3.17502 = 10,494.42W. 10494.42 ÷ 1,000 = 10.494 kWh and if our fuel cost is 10 cents per kWh, the daily total will be $1.05 or $383.05 per year.

Here are the numbers for an electric tank-type water heater:

  • $850 installed cost in 2007;
  • .93 EF;
  • First-year operating cost = $383.05 if electricity is 10 cents per kWh;
  • Add $20 toward an ongoing maintenance budget.
  • Our first-year total comes to $1,253.05;
  • Our second-year operating cost and maintenance fee will increase from $403.05 to $423.20;
  • By the time year 2018 comes to a close, we'll have spent $7,265.40;
  • In the year 2019, we'll be installing a replacement for $1,526.48 and by the year 2032 that same model will be installed for $2,878.40; and
  • Our total life-cycle cost by the year 2041 will be up to $41,723.47.

Comparable numbers for an electric tankless style are:

  • Installed in 2007 for $1,600;
  • .98 EF;
  • Replacement cost in the year 2027 of $4,245.20; and
  • Total life-cycle cost by the year 2041 will be $40,544.96. And for an oil-fired heater:
  • $1,600 installed cost in 2007;
  • .58 EF and .85 TE;
  • First-year operating cost = $388.59 if No. 2 fuel oil is $2.25 per gal.;
  • Add $80 toward an ongoing maintenance budget for an annual clean and tune;
  • Our first-year total comes to $2,068.59;
  • Our second-year operating cost and maintenance fee will increase from $468.59 to $492.02;
  • By the time year 2018 comes to a close, we'll have spent $9,058.61;
  • In the year 2019, we'll be installing a replacement for $2,873.37 and by the year 2032 that same model will be installed for $6,915.11;
  • Our total life-cycle cost in the year 2041 will be $52,290.29; and
  • Upgrade the EF from .58 to .66 and our total life-cycle costs would be $48,428.37.

For a propane-fired tank-type unit the numbers are:

  • $950 installed cost in 2007;
  • .63 EF and .84 TE;
  • First-year operating cost = $431.09 if propane is $2.05 per gal.;
  • Add $20 toward an ongoing maintenance budget for an annual clean and tune;
  • Our first-year total comes to $1,401.09;
  • Our second-year operating cost and maintenance fee will increase from $451.09 to $473.65;
  • By the time year 2018 comes to a close, we'll have spent $8,130.07;
  • In the year 2019, we'll be installing a replacement for $1,706.06 and by the year 2032 that same model will be installed for $3,217.04; and
  • Our total life-cycle cost in the year 2041 will be $46,688.48.
  • We're just getting started. We'll continue this next month.

Dave Yates owns F.W. Behler, a contracting company in York, Pa. He can be reached by phone at 717/843-4920 or by e-mail at [email protected].