The Federal Energy Management Program (FEMP) provides acquisition guidance for commercial gas water heaters, a product category covered by ENERGY STAR efficiency requirements. Federal laws and requirements mandate that agencies purchase ENERGY STAR Certified products or FEMP-designated products in all product categories covered by these programs and in any acquisition actions that are not specifically exempted by law.

The ENERGY STAR specification also includes commercial heat pump water heater units (air-source, water-source, and direct geo-exchange units). ENERGY STAR has set a performance requirement for commercial electric heat pump water heaters as well.

This acquisition guidance was updated in June 2020.

Find Product Efficiency Requirements

The U.S. Environmental Protection Agency (EPA) provides commercial water heater efficiency levels and product specification information on its ENERGY STAR website. Manufacturers meeting these requirements are allowed to display the ENERGY STAR label on complying models. Federal buyers can use ENERGY STAR's list of certified commercial water heaters to identify or verify complying models.

Make a Cost-Effective Purchase: Save $383 or More by Buying ENERGY STAR

FEMP has calculated that the required ENERGY STAR-Certified commercial gas water heater saves money if priced no more than $383 (in 2020 dollars) above the less efficient model. The best available model saves up to $740. Table 1 compares three types of equipment purchases and calculates the lifetime cost savings of purchasing efficient models. Federal purchasers can assume products that meet ENERGY STAR efficiency requirements are life cycle cost-effective.

Table 1. Lifetime Savings for Efficient Gas Storage Water Heater Models
PerformanceBest AvailableENERGY STARLess Efficient
Thermal Efficiency96%94%80%
Standby Loss (British thermal units [Btu]/hr)6211,1751,399
Annual Energy Use (therms)262315372
Annual Energy Cost$167$200$237
Lifetime Energy Cost$1,768$2,125$2,508
Lifetime Cost Savings$740$383======

View the Performance and Model Assumptions for Table 1


Thermal Efficiency: The ratio of a heater's energy output to energy input, shown as a percentage.

Standby Loss: Show in Btu per hour.

Annual Energy Use: Based on the test method referenced in 10 Code of Federal Regulations (CFR) 431, Subpart G, Appendix E, for a 155,000 Btu/hr unit with 120 gallons storage tank producing 20,075 gallons of hot water per year.

Annual Energy Cost: Calculated based on an assumed natural gas price of $0.63/therm, which is the average price at federal facilities.

Lifetime Energy Cost: The sum of the discounted values of annual energy cost with an assumed product life of 13 years. Future natural gas price trends and a 3% discount rate are from Energy Price Indices and Discount Factors for Life-Cycle Cost Analysis – 2020: Annual Supplement to NIST Handbook 135 and NBS Special Publication 709 (NISTIR 85-3273-35).

Lifetime Cost Savings: The difference between the lifetime energy cost of the less efficient model and the lifetime energy cost of the ENERGY STAR model or best available model.


Calculated based on the June 2020 ENERGY STAR Certified Products List. More efficient models may be introduced to the market after FEMP's acquisition guidance is posted.


Calculated based on June 2020 ENERGY STAR efficiency levels. Federal agencies must purchase products that meet or exceed ENERGY STAR efficiency levels.


Calculated based on typical products used in non-federal applications.

Determine When ENERGY STAR Products Are Cost-Effective

An efficient product is cost-effective when the lifetime energy savings (from avoided energy costs over the life of the product, discounted to present value) exceed the additional up-front cost (if any) compared to a less efficient option. ENERGY STAR considers up-front costs and lifetime energy savings when setting required efficiency levels. Federal purchasers can assume ENERGY STAR Certified products and products that meet FEMP-designated efficiency requirements are life cycle cost-effective. In high-use applications or when energy rates are above the federal average, purchasers may save more if they specify products that exceed federal efficiency requirements (e.g., the best available model).

Claim an Exception to Federal Purchasing Requirements

Products meeting ENERGY STAR or FEMP-designated efficiency requirements may not be life cycle cost-effective in certain low-use applications or in locations with very low rates for electricity or natural gas. However, for most applications, purchasers will find that energy-efficient products have the lowest life cycle cost.

Agencies may claim an exception to federal purchasing requirements through a written finding that no FEMP-designated or ENERGY STAR Certified product is available to meet functional requirements, or that no such product is life cycle cost-effective for the specific application. Learn more about federal product purchasing requirements.

Incorporate Federal Acquisition Regulation Language in Contracts

These mandatory requirements apply to all forms of procurement, including construction guide and project specifications; renovation, repair, energy service, and operation and maintenance (O&M) contracts; lease agreements; acquisitions made using purchase cards; and solicitations for offers. Federal Acquisition Regulation (FAR) Part 23.206 requires agencies to insert the clause at FAR section 52.223-15 into contracts and solicitations that deliver, acquire, furnish, or specify energy-consuming products for use in federal government facilities. To comply with FAR requirements, FEMP recommends that agencies incorporate efficiency requirements into technical specifications, the evaluation criteria of solicitations, and the evaluations of solicitation responses.

Find Federal Supply Sources

The federal supply sources for energy-efficient products are the General Services Administration (GSA) and the Defense Logistics Agency (DLA). GSA sells products through its Multiple Awards Schedules program and online shopping network, GSA Advantage!. DLA offers products through the Defense Supply Center Philadelphia and online through FedMall (formerly the U.S. Department of Defense eMALL). Products sold through DLA are codified with a 13-digit National Stock Number (NSN) and, in some cases, a two-letter Environmental Attribute Code (ENAC). The ENAC identifies items that have positive environmental characteristics and meet standards set by an approved third party, such as FEMP and ENERGY STAR.

The United Nations Standard Products and Services Code (UNSPSC) is a worldwide classification system for e-commerce. It contains more than 50,000 commodities, including many used in the federal sector, each with a unique eight-digit, four-level identification code. Manufacturers and vendors are beginning to adopt the UNSPSC classification convention and electronic procurement systems are beginning to include UNSPSC tracking in their software packages. UNSPSCs can help the federal acquisition community identify product categories covered by sustainable acquisition requirements, track purchases of products within those categories, and report on progress toward meeting sustainable acquisition goals. FEMP has developed a table of ENERGY STAR and FEMP-designated covered product categories and related UNSPSC numbers.

Commercial Gas Water Heater Schedules and Product Codes

GSA offers commercial gas water heaters through Schedule 51 V, Category 639 001 and Schedule 56, Category 563 28.

The DLA ENAC for commercial gas water heaters is DJ.

The UNSPSC for CWH is 40101826.

Buyer Tips: Make Informed Product Purchases

All ENERGY STAR Certified 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 Certified 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.

Many states and electric utilities offer rebates or other incentives for the purchase of ENERGY STAR Certified products. Use the ENERGY STAR Rebate Finder to see if your local utility offers these incentives. FEMP's Energy Incentive Program helps federal agencies take advantage of these incentives by providing information about the funding-program opportunities available in each state.

Many new energy consuming commercial gas water heater come equipped with Internet of Things (IoT) sensing components and network connectivity. Making a new purchase or replacement represents a prime opportunity to evaluate the vulnerabilities of your network. All IoT-enabled devices introduce novel exposures to potential data breaches. Building controls and heating, ventilating, and air conditioning systems are no exception. Security can almost never be networked in after the fact, and so it is important to ensure that your networked devices are secure. Also, regularly testing for network vulnerabilities is key. For more information on how to build cybersecure networks of building technologies, consult existing FEMP guidance and case studies.

User Tips: Use Products More Efficiently

To save additional energy, install water-efficient appliances and low-flow plumbing fittings (e.g., faucets, 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.