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Covered Product Category: Commercial Gas Water Heaters

The Federal Energy Management Program (FEMP) provides acquisition guidance and Federal efficiency requirements for commercial gas water heaters, which are covered by the ENERGY STAR program. Federal laws and requirements mandate that agencies meet these efficiency requirements in all procurement and acquisition actions that are not specifically exempted by law.

Manufacturers display the ENERGY STAR label on complying models. For a model not displaying the label, check the commercial water heater qualified products list maintained on the ENERGY STAR website.

Meeting Energy Efficiency Requirements for Commercial Water Heaters

For the most up-to-date efficiency requirements, visit the ENERGY STAR Product Specifications website. As of March 2013, efficiency requirements for commercial water heaters are set by ENERGY STAR, not FEMP.

Defining the Product Category

This product category overview applies to commercial gas-fired instantaneous and storage (up to 140-gallon) water heaters. In the government sector, these products are commonly used in the commercial food service facilities found in large office buildings, medical centers and convalescent hospitals, and on military bases.

Commercial water heater types excluded from this product overview include oil-fired systems, combination (space and water heating) systems, and storage water heaters over 140 gallons in capacity.

The ENERGY STAR specification also includes commercial air source heat pump units, but no performance requirement has been set. Until ENERGY STAR sets a performance requirement, Federal buyers may purchase any commercial air source heat pump unit that meets their needs.

Residential water heaters are covered by separate ENERGY STAR and FEMP efficiency requirements. See the following for more information on residential systems:

Reducing Energy Costs: Save More Than $2,400 When You Buy ENERGY STAR–Qualified Products

FEMP calculated1 that the required ENERGY STAR-qualified product is cost-effective if priced no more than $2,425 above the less efficient model. The best available model saves the user more money: $3,115. In facilities that serve three meals per day and operate 365 days per year, such as VA medical centers or dining halls on military bases, the savings will be greater. The complete cost-effectiveness example and associated assumptions are provided in table 1.

Table 1. Lifetime Savings for Efficient Commercial Water Heatersa
  ENERGY STAR Best Availableb ENERGY STAR Efficiency Levelc Less Efficient
Thermal Efficiency 99% 94% 80%
Annual Energy Use (therms/year) 1,684 1,774 2,084
Annual Energy Cost $1,515 $1,595 $1,875
Lifetime Energy Cost $13,105 $13,795 $16,220
Lifetime Energy Cost Savings $3,115 $2,425 ======

a More-efficient products may have been introduced to the market since this table was published.
b The thermal efficiency of the Best Available models was obtained from the California Energy Commission Appliance Efficiency Database.
c Federal purchases must be of ENERGY STAR–qualified products that meet or exceed ENERGY STAR efficiency requirements.


Determining When ENERGY STAR Is Cost-Effective

An efficient product is cost-effective when the energy cost savings over its functional lifetime exceed any initial incremental cost above a base model (i.e., energy cost savings are greater than additional costs at time of purchase). Federal purchasers may assume that products meeting ENERGY STAR and FEMP-designated efficiency requirements are cost-effective.


Products meeting FEMP-designated efficiency requirements or ENERGY STAR performance specifications may not be cost-effective when energy rates are below the Federal average or in certain low-use applications. For most applications, purchasers will find that energy-efficient products have the lowest overall cost. In high-use applications or when energy rates are above the Federal average, purchasers may save more if they specify products that exceed the ENERGY STAR or FEMP-designated efficiency requirements.

Complying with Contracting Requirements

These requirements apply to all forms of procurement, including construction guide specifications and project specifications; renovation, repair, maintenance, and energy service contracts; lease agreements; acquisitions made using purchase cards; and solicitations for offers. Energy efficiency requirements should be included in both the evaluation criteria of solicitations and the evaluations of solicitation responses.

FAR Part 23.206 requires Federal agencies to insert the clause at FAR section 52.223-15 in solicitations and contracts that deliver, acquire, furnish, or specify energy-consuming products. FEMP recommends that agencies incorporate efficiency requirements into both the technical specification and evaluation sections of solicitations. Agencies may claim an exception to these requirements through a written finding that no ENERGY STAR–qualified or FEMP-designated product is available to meet the functional requirements, or that no such product is life cycle cost-effective for the specific application. Additional information on Federal requirements is available.

Buyer Tips: Choosing Efficient Products

All ENERGY STAR–qualified gas water heaters are condensing models. When installing a condensing gas water heater in an existing facility, special consideration should be given to condensate drainage, piping, and ventilation systems.

Because ENERGY STAR–qualified gas water heaters are condensing, they need a drain line to dispose of condensate. Some combustion byproducts cause this condensate to be acidic, which can be corrosive to certain materials. This acidic condensate does not affect the plastic piping typically used in new construction. However, acidic condensate can damage cast iron piping, which may be present in some existing facilities. In these facilities, you must either replace the drain lines with plastic or some other material immune to the effects of the acid, or install a neutralizer. A neutralizer is a device containing a base material (e.g., limestone chips) that counters the acid and eliminates the corrosive effects of the condensate. In commercial kitchens, cleaning agents used during the dishwashing process neutralize the condensate. A neutralizer is not necessary in this situation as long the condensate line from the water heater is connected downstream from the dishwasher.

Condensing water heaters are not compatible with natural draft vent systems. Condensing water heaters are typically power-vented and include a fan that can exhaust combustion gases up to 60 feet horizontally through plastic pipes. When a standard efficiency gas water heater is replaced with a condensing model, the existing vent system will not work properly for the new water heater.

In new construction, condensing water heaters can be vented horizontally through an exterior wall. The end cap of this exhaust must be above the snow line or other obstructions. The vent also must be sloped toward the water heater so that any condensate formed is directed back toward the drain and does not freeze on the end cap, which could block the exhaust.

When planning the layout of a new commercial kitchen or other facility that requires a lot of hot water, locate the end uses (e.g., dishwashers, sinks) as close to the water heater as possible. Minimizing pipe runs can substantially reduce heat losses through the distribution system. If possible, insulate hot water pipes to further reduce heat losses.

User Tips: Using Products More Efficiently

To save additional energy, install water-efficient appliances and low-flow plumbing fittings (e.g., faucets and pre-rinse spray valves). In addition to reducing energy use, these devices reduce water consumption and its associated costs (e.g., water and sewer charges).

Lawrence Berkeley National Laboratory provided supporting analysis for this acquisition guidance.

Updated March 2013

1Based on the following assumptions: Annual energy use is based on the ANSI Z21.10.3 test procedure for a 75-gallon storage water heater using 1,000 gallons of hot water per day, 250 days per year, with a temperature rise of 80° F. The assumed price for natural gas is $0.90 per therm, which is the average at Federal facilities in the United States. Lifetime energy cost is the sum of the discounted value of the annual energy cost based on average usage and an assumed water heater life of 10 years. Future natural gas price trends and a 3% discount rate are based on Federal guidelines (NISTIR 85-3273-27) and are from the "Energy Price Indices and Discount Factors for Life-Cycle Cost Analysis - 2015." (NISTIR 85-3273-27).