Purchasing Energy-Efficient Residential Gas Storage Water Heaters

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The Federal Energy Management Program (FEMP) provides acquisition guidance for residential gas storage 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.

FEMP's acquisition guidance and associated ENERGY STAR efficiency requirements for residential gas storage water heaters are technology neutral, meaning that one technology is not favored over another.

This acquisition guidance was updated in July 2018.

Find Product Efficiency Requirements

The U.S. Environmental Protection Agency (EPA) provides residential gas storage 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 residential gas storage water heaters to identify or verify complying models.

Make a Cost-Effective Purchase: Save $221 or More by Buying ENERGY STAR

FEMP has calculated that the required ENERGY STAR Certified residential gas storage water heater saves money if priced no more than $221 above the less efficient model. The best available model saves up to $519. Table 1 compares three types of product 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 Residential Gas Storage Water Heater Models
PerformanceBest AvailableENERGY STARLess Efficient
Energy Factor0.900.670.56
Annual Energy Use (therm)123165197
Annual Energy Cost$70$93$111
Lifetime Energy Cost$869$1,167$1,388
Lifetime Cost Savings$519$221======
View the Performance and Model Assumptions for Table 1

Performance Column

Energy Factor: A metric used to compare the energy conversion efficiency of residential appliances and equipment.

Annual Energy Use: Based on the test method referenced in 10 CFR 430, Subpart B, Appendix E, for a unit producing 20,075 gallons of hot water per year.

Annual Energy Cost: Calculated based on an assumed natural gas price of $0.57/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 based on federal guidelines (NISTIR 85-3273-33) from the Annual Supplement to NIST Handbook 135 and NBS Special Publication 709, Energy Price Indices and Discount Factors for Life Cycle Cost Analysis – 2018.

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.

Best Available Model Column

Calculated based on the April 2018 ENERGY STAR Certified Products List. More efficient models may be introduced to the market after FEMP's acquisition guidance is posted.

ENERGY STAR Model Column

Calculated based on April 2018 ENERGY STAR efficiency levels. Federal agencies must purchase products that meet or exceed ENERGY STAR efficiency levels.

Less Efficient Model Column

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

There are additional cost savings associated with waste heat recovery systems. Drain-water, or greywater, heat recovery systems capture the energy from waste hot water—such as showers and dishwashers—to preheat cold water entering the water heater or going to other water fixtures. Energy savings vary depending on individual household usage.

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).

Residential Water Heaters Cost Calculator

Users who wish to determine a product's cost-effectiveness for their application may do so using the Energy Cost Savings Calculator for Electric and Gas Water Heaters.

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.

The FEMP publication, Contracting For Efficiency: A Best Practices Guide for Energy Efficient Product Procurement, may be of particular use to federal contract officers, technical specifiers, and other acquisition professionals in helping to write effective solicitations and other procurement documentation for these products.

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 DOD FedMall (formerly DOD 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.

Residential Gas Storage Water Heater Schedules and Product Codes

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

DLA's ENAC for residential gas storage water heaters is DL.

The UNSPSC for residential gas storage water heaters is 40101825.

Buyer Tips: Make Informed Product Purchases

Storage-type water heaters are common, but they are inefficient due to high standby losses. Other more efficient options that federal buyers may want to consider include:

  • Tankless Water Heaters: Also called demand or instantaneous water heaters, these products heat water as it is needed. Absence of a storage tank reduces standby losses and can therefore increase overall hot water system efficiency.

  • Indirect Water Heaters: A space heating system that also provides hot water. In this type of system, hot water is typically circulated from a home's boiler through a heat exchange coil in a separate insulated tank. Domestic hot water is drawn from this storage tank.

  • Integrated Water Heaters: A hot water heater that also provides space heating. In this type of system, the hot water heater is connected to a coil in the air handling unit. Hot water is circulated through this coil whenever space heating is needed.

  • Solar-Assisted Water Heaters: A water heater connected to a solar collector that, depending on sky conditions and location, can meet most, if not all, of the hot water requirements. An instantaneous or storage-type water heater is used to meet excess demand or demand during extended periods of cloudy weather.

Depending on climate and energy costs, these options can provide energy and cost savings. To work properly, however, they require additional analysis and design.

Storage-type water heaters must be sized properly. Oversized water heaters not only cost more to install but increase energy use due to excessive cycling and higher standby losses. The American Council for an Energy Efficient Economy (ACEEE) publishes the Consumer Guide to Home Energy Savings that contains a chapter on water heating and provides guidance on proper sizing. A water heater should be selected based on first-hour rating (FHR), not tank size. Some water heaters with small tanks and large burners have higher FHRs and are more efficient than models with larger tanks.

When comparing different types of residential gas storage water heaters, it is important to consider the household's anticipated water usage. As shown in Table 2, ENERGY STAR Certified products need substantially less power to heat water. Buyers can use this table as a guide when replacing standard residential gas storage water heaters with more efficient residential gas storage water heaters.

Table 2. Comparison of Lifetime Cost Savings for ENERGY STAR Residential Gas Storage Water Heater Models at Different Water Use Levels
Water UsageVery SmallLowMediumHigh
Daily Water Usage (gal/day)10385584
Annual Energy Savings (therms)6223148
Annual Energy Cost Savings$3$12$18$27
Lifetime Cost Savings*$36$135$195$298

*Compared to less efficient models with the same draw.

Many states and electric utilities offer rebates or other incentives for the purchase of ENERGY STAR-qualified 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.

User Tips: Use Products More Efficiently

When used and handled properly, energy-efficient residential gas storage water heater models provide years of safe and effective service. Federal users should be aware of the following user tips.

  • Install aerating, low-flow faucets and showerheads.

  • Repair leaky faucets promptly; a leaky faucet wastes gallons of water in a short period of time.

  • Set the thermostat on your water heater to 120°F to get comfortable hot water for most uses. Dishwashers require the hottest water of all household uses, typically 135°F to 140°F. However, they are usually equipped with booster heaters to raise the incoming water temperature by 15°F to 20°F. Setting the water heater between 120°F and 125°F and turning the dishwasher's booster on should provide sufficient hot water while saving energy and reducing the chances for scalding.

  • Insulate your natural gas or oil hot-water storage tank but be careful not to cover the water heater's top, bottom, thermostat, or burner compartment. Follow the manufacturer's recommendations; when in doubt, get professional help.

  • Insulate the first 6 feet of the hot and cold water pipes connected to the water heater.

  • Install heat traps on the hot and cold pipes at the water heater to prevent heat loss. Most new water heaters have built-in heat traps.

  • Drain a quart of water from your water tank every 3 months to remove sediment that impedes heat transfer and lowers the efficiency of your heater. Follow the manufacturer's directions.

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