Electric resistance. Most electric water heaters rely on electric-resistance heating elements. The conversion of electric current into usable heat is extremely efficient—100%—though the true efficiency drops by about two-thirds when one considers energy generation and transmission by the utility. Water heater efficiencies are generally listed as the energy factor (EF). This is the ratio of the useful energy output of the water heater to the total amount of energy delivered to the water heater and it accounts for heat loss from the tank. The higher the EF, the more efficient the water heater. U.S. law requires a minimum EF of 0.90 for new electric storage-type water heaters. The minimum EF for electric storage water heaters today is volume-dependent, and ranges from about 0.86 for an 80-gallon model to about 0.92 for a 40-gallon model. The highest EFs today are about 0.94.
Electric-resistance water heaters become more economically attractive when off-peak electric rates are offered or if special utility smart meters can turn them off when the utility is operating at or near peak generation capacity—allowing a utility to operate fewer power plants. Because no vent is required for electric water heaters, they can be insulated extremely well, reducing standby heat loss to well below that of the best gas-fired water heaters.
Heat pumps. To exceed an EF of 1.0 (100% efficient), heat-pump technology is required. Heat-pump water heaters are gaining popularity, and will get a boost from federal water heater standards that become effective on April 16, 2015. As of then, any electric water heater larger than 55 gallons has to be a heat-pump water heater. The federal standard for these larger water heaters is based on a formula that accounts for storage capacity, but an EF close to 2.0 will be required. For smaller water heaters, the EF requirement will increase somewhat, but will remain below 1.0—so can be achieved with electric-resistance models.
With heat pumps and heat-pump water heaters, the performance is often reported as the coefficient of performance (COP), which is similar to the EF, but not based on the same test standard. A COP of 2.4 means that for every kWh of electricity input, an average of 2.4 kWh of heat output in the hot water is attained—which is like being 240% efficient.
A heat pump uses electricity not to produce heat directly but rather to move heat from one place to another (using the same principle as a refrigerator). It extracts heat from the air and delivers that heat into the water tank—even though the water tank is at a higher temperature than the surrounding air. It does this by alternately condensing and evaporating a refrigerant; the electricity powers only the pumps and fans—though some models offer an option for more rapid recovery, in which case one or two electric-resistance elements may be included. The most efficient heat-pump water heaters have EF ratings as high as 2.5, and all exceed 2.0.
Because heat-pump water heaters cool the surrounding air as they extract heat from it, they can increase space-heating loads during the heating season. A recent utility-funded study of heat-pump water heaters in Massachusetts and Rhode Island found that a heat-pump water heater that delivers a COP of 2.35 with a room temperature of 68°F will drop to a COP of 1.8 at a 50°F room temperature. If the water heater is installed in an unheated or semi-conditioned space, such as a basement, garage, or attic, the impact on heating costs will be lower, but the heat pump performance may drop. Just as heat-pump water heaters rob heat from the house in winter, they provide free cooling and dehumidification in the summer.