The Layperson’s Guide to Residential Water Heaters
By Hannah Rogers, Utah Clean Energy
Water heating is one of the largest utility expenses for American families, but who has time to think about water heater efficiency? We do.
I was tired of my water heater; it took up a fifth of my gas bill every month.[1] As it turns out, I am not the only American who has experienced not being able to pay for the gas bill when it came due. Around 27% of Americans[2] and 25% of Utahns[3] are behind on their utility bills.
Tips like ‘shorter showers’ or ‘wash your clothes with cold water’ only go so far. If you’re already conserving hot water but still facing high gas bills, the problem might lie with your water heater. Many homes have ancient, gas-powered water heaters, but upgrading isn’t always easy, especially with tight budgets or limited time to sort through options.
That’s whyUtah Clean Energy did the research for you! In this article, we break down the costs, lifespan, energy efficiency, and carbon footprint of several types of residential water heaters. From our analysis, there emerges a clear favorite: the hybrid heat pump water heater.
Water Heater Cost Comparison:
| Water Heater Type | Estimated Annualized Energy-Related Costs[4] | Estimated Unit Cost[5],[6],[7] | Estimated Installation Cost[8],[9] | Estimated Annual Maintenance Cost[10], | Estimated 5-Year Total Cost |
| Natural Gas Storage Tank | $199 – $405 | $500 – $3,600 | $1,000–$3,900 | $75 – $150 | $2,870-$10,275 |
| Natural Gas Tankless | $200 – $600[11] | $1,500 – $2,600 | $800–$3,000 | $150 – $650 | $6,550-$11,850 |
| Electric Storage Tank | $266 –$755 | $300 – $1,500 | $1,000–$3,900 | $75 – $150 | $3,005-$9,925 |
| Tankless Electric | $75 – $300[12] | $500 – $2,000 | $800 -$3,000 | $150 – $600 | $2,425-$9,500 |
| Hybrid Heat Pump Water Heater | $298 – $637 | $1,399 – $2,403 | $523 – $1,115 | $75 – $150 | $3,787-$7,453 |
| Solar Thermal[13] (Active Indirect Circulation System) | $90 – $175 | $2,300 – $6,000 | $1,000 – $6,000 | $200 – $700 | $4,750 -$16,375 |
| Condensing Gas | $386 – $551 | $800 – $2,000 | $200–$300 | $100 – $200 | $3,430-$6,055 |
Note: The cost range for water heaters is dependent on the size of the water heater tank, the regular service of the water heater, whether maintenance is performed by a professional or by oneself, and whether the residence needs to be updated to accommodate the water heater. The estimated five-year total cost is calculated by summing the costs for each column over five years. The annualized energy-related costs are a measure of total lifetime costs and include operating costs, replacement costs, and the time value of money as per the NREL study cited in footnote 4.
Linked here is a great tool to find the energy efficiency level and estimated energy costs of different types of water heaters.: Home – National Residential Efficiency Measures Database | NRL
Water Heater Upgrade Incentives
| Water Heater Type | Utility Rebates |
| Natural Gas Storage Tank | Enbridge Gas: $100 |
| Natural Gas Tankless | Enbridge Gas: $300 |
| Electric Storage Tank | Not Applicable |
| Tankless Electric | Not Applicable |
| Hybrid Heat Pump Water Heater | Rocky Mountain Power: $350 |
| Solar Thermal (Active Indirect Circulation System) | Enbridge Gas: $750 (with gas backup) |
| Condensing Gas | Enbridge Gas: $350 |
Note: Utility rebates are dependent on the model and energy efficiency rating of the water heater. You can find more out about what water heaters are eligible for rebates from the Enbridge Gas ThermWise and Rocky Mountain Power Wattsmart program websites.
Water Heater Emissions Comparison
| Water Heater Type | Embodied Carbon (kg CO₂e)[14] | Energy Efficiency (Range & Median Uniform Energy Factor by Water Heater Type)[15] | Upstream Methane Emissions from Natural Gas Extraction (kg/year)[16] | Operational CO₂ Emissions (kg/year)[17] |
| Electric Storage Tank | ~300–500 kg CO₂e | Range: 0.91-4.5 Median: 0.94 | 0 kg | ~2,900 kg 0 (if powered by renewables) |
| Natural Gas Storage Tank | ~350–550 kg CO₂e[18] | Range: 0.54 – 0.9 Median: 0.65 | ~ 1.4 kg | ~3,400 kg |
| Tankless Natural Gas | ~450–700 kg CO₂e²⁰ | Range: 0.80 – 0.84 Median: 0.82 | ~2.4 kg | ~2,600 kg |
| Tankless Electric | ~300–500 kg CO₂e | Range: 0.91 – 0.98 Median: 0.95 | 0 kg | ~2,800 kg 0 (if powered by renewables) |
| Hybrid Heat Pump Water Heater | ~600–1000 kg CO₂e | Range: 2.8 – 4.5 Median: 3.65 | 0 kg | ~1,100 kg 0 (if powered by renewables) |
| Solar Thermal (Active Indirect Circulation System) | ~1000–1600 kg CO₂e | Not Applicable | 0 kg | 0 (if powered by renewables)[19] |
| Condensing Gas | ~500 – 800 kg CO₂e | Range: 0.84 – 0.98 Median: 0.91 | Not Available | ~2,300 kg |
Note: CO₂e stands for carbon dioxide equivalent, which is used to measure the global warming potential of different greenhouse gases in terms of the amount of carbon dioxide that would have the same warming effect. Embodied carbon is the sum of greenhouse gas emissions released during a product’s life-cycle stages: raw material extraction, transportation, manufacturing, construction, maintenance, renovation, and end-of-life for a product or system.
Clearing the Air on HCFs
It’s great news that there are water heaters that produce zero pollution. You may have heard that heat pumps are bad for the ozone layer and produce hydrofluorocarbons (HFCs), but that is a common misconception. While some heat pump models do use HFCs as refrigerants, these HFCs do not end up in the atmosphere unless there are leaks in your heat pump or the heat pump is improperly disposed of. Newer heat pump models increasingly use lower global warming potential (GWP) refrigerants like CO₂, propane, or R-32, offering more environmentally responsible options. Choosing such models can significantly reduce climate impact.
Heat Pumps and HFCs Break Down[20]
| Do heat pumps produce HFCs? | No, they do not produce HFCs during operation, but with improper disposal of old heat pumps, the refrigerants in some models can leak HFCs. |
| Do heat pumps contain HFCs? | Yes, many old models still use HFCs as refrigerants (e.g., R-410A, R-134a), but they only leak if the model is improperly disposed of. |
| Is there a climate impact of HFCs? | HFCs have high global warming potential and may leak. |
| When do HFCs leak? | During manufacturing, maintenance, or disposal of the unit. |
| Do newer models use alternative refrigerants that are not HFCs? | Yes, newer models use alternative refrigerants like R-32, CO₂ (R-744), propane (R-290) – which have a lower impact on the climate and are also only a concern if the heat pump is improperly disposed of. Current regulations require that producers remove the HFCs from heat pumps. |
| What is the safest way to dispose of old heat pump water heaters? | You can find more information on the EPA’s website here Phaseout of Class II Ozone-Depleting Substances | US EPA |
The Winner: Hybrid Heat Pump Water Heaters
Heat pump water heaters have the complete package – combining energy efficiency with cost efficiency, while also qualifying for rebates.Heat pumps use electricity to move heat rather than generate it, making them 2–3 times more efficient[21] than standard electric models or natural gas models. They can also be operationally carbon neutral when paired with renewable energy.
If you are seriously considering upgrading to a heat pump water heater, remember that they have space and venting requirements. Depending on the size of your water heater you may need between 450 and 700 cubic feet of space[22]. If you plan to install your water heater in conditioned space, ensure that the water heater has sufficient space and ventilation, or if you plan to keep it in an unconditioned space you may also need to support your water heater with insulation to prevent energy loss. While some models produce more noise than others, heat pump water heaters produce noise levels comparable to a refrigerator when they operate[23]. You can learn more about the installation and maintenance of heat pump water heaters with this comprehensive guide. [24]
Upgrading your water heater to a heat pump water heater may not feel like the most glamorous home project, but it is one of the smartest. Switching to a heat pump water heater can save thousands of dollars over its lifetime while reducing harmful emissions. With incentives and the low-carbon technology of heat pump water heaters becoming more widely available, there has never been a better time to make the switch. By taking this step, you’re not only lowering your utility bills, but you’re also helping to create cleaner air and a healthier climate for the future.
[1] U.S. Department of Energy. (n.d.). Water heating. Energy Saver. Retrieved October 6, 2025, from https://www.energy.gov/energysaver/water-heating
[2] U.S. Energy Information Administration. (2022, April 11). In 2020, 27% of U.S. households had difficulty meeting their energy needs. Today in Energy. https://www.eia.gov/todayinenergy/detail.php?id=51979
[3] Farguheson, I. (2025, January 2). Nearly 1 in 4 Utahns struggle to pay electric bill in full, census survey shows. KSL.com. https://www.ksl.com/article/51219861/nearly-1-in-4-utahns-struggle-to-pay-electric-bill-in-full-census-survey-shows
[4]National Renewable Energy Laboratory (NREL). (2016). Field performance of heat pump water heaters in the Northeast. NREL Report No. 64904. [Table 21] Retrieved from https://www.nrel.gov/docs/fy16osti/64904.pdf
[5] The Home Depot. (n.d.). The Home Depot. Retrieved September 26, 2025, from https://www.homedepot.com
[6]Modernize. (2025, February 12). Water heater costs based on type, size, energy efficiency: Cost guide. Modernize. https://modernize.com/plumbing/water-heaters/cost-guide These numbers have been verified by online cost estimates.
[7] Schipper, R. (2024). Average water heater installation and replacement cost. Forbes Home. https://www.forbes.com/home-improvement/plumbing/water-heater-installation-replacement-cost/#water_heater_installation_and_replacement_cost_breakdown_section
[8] A.O. Smith. (n.d.). How much does it cost to install a water heater? HotWater. Retrieved , from https://www.hotwater.com/info-center/water-heater-installation-cost.html
[9] Hazen, T. (2024, September 10). How much does a tankless water heater cost? HomeGuide. https://homeguide.com/costs/tankless-water-heater-installation-cost
[10] HomeGuide. (n.d.). Tankless water heater maintenance cost https://homeguide.com/costs/tankless-water-heater-maintenance-cost, How much does it cost to flush a water heater https://homeguide.com/costs/water-heater-flush-cost
[11] PICKHVAC. (2025, June 3). Tankless water heater cost guide 2025 – installation, replacement and operating cost. PICKHVAC. https://www.pickhvac.com/tankless-water-heater/cost-with-installation/
[12] PICKHVAC. (2025, June 3). Tankless water heater cost guide 2025 – installation, replacement and operating cost. PICKHVAC. https://www.pickhvac.com/tankless-water-heater/cost-with-installation/
[13] Cramer, K. (2024, January 11). 2025 Solar water heater cost & installation prices. HomeGuide. https://homeguide.com/costs/solar-water-heater-cost This table does not account for the costs of a backup gas boiler.
[14] Elsarrag E. Driving net zero: Comprehensive evaluation of whole life carbon in domestic hot water systems. Building Services Engineering Research & Technology. 2024;46(1):119-132. doi:10.1177/01436244241284837
[15] California Energy Commission. (n.d.). Appliance Search – MAEDbS. Retrieved December 17, 2025, from https://cacertappliances.energy.ca.gov/Pages/ApplianceSearch.aspx Median and Range values calculated by analyzing the database by water heater type.
[16] Lebel, E. D., Lu, H. S., Speizer, S. A., Finnegan, C. J., & Jackson, R. B. (2020). Quantifying methane emissions from natural gas water heaters. Environmental Science & Technology, 54(9), 5737–5745. https://doi.org/10.1021/acs.est.9b07189
[17] Hepbasli, A., & Kalinci, Y. (2009). Greenhouse gas emissions from domestic hot water heat pumps compared to most commonly used systems. ResearchGate. Retrieved from https://www.researchgate.net/publication/291951427_Greenhouse_gas_emissions_from_domestic_hot_water_Heat_pumps_compared_to_most_commonly_used_systems
[18] Lawrence Berkeley National Laboratory. (2008). Our environment in hot water: Comparing water heaters — a life-cycle approach (LBNL-4602E). https://eta-publications.lbl.gov/sites/default/files/our_environment_in_hot_water_lbnl-4602e.pdf
[19] This does not account for a possible gas back up boiler system which would release emissions.
[20] U.S. Environmental Protection Agency. (n.d.). Frequent questions on the phasedown of hydrofluorocarbons. U.S. Environmental Protection Agency. https://www.epa.gov/climate-hfcs-reduction/frequent-questions-phasedown-hydrofluorocarbons#:~:text=Starting%20as%20soon%20as%20January%201%2C%202025%2C%20restrictions,3%29%20refrigeration%2C%20air%20conditioning%2C%20and%20heat%20pump%20equipment
[21] Energy.gov. (n.d.). Heat pump water heaters. U.S. Department of Energy. Retrieved from https://www.energy.gov/energysaver/heat-pump-water-heaters
[22] Rheem Manufacturing Company. (2025, September 17). Heat pump water heater space requirements: Complete Rheem® planning guide. Rheem. https://www.rheem.com/water-heating/articles/heat-pump-water-heater-space-requirements-complete-rheem-planning-guide/
[23] Rheem Manufacturing Company. (2025, September 17). Heat pump water heater space requirements: Complete Rheem® planning guide. Rheem. https://www.rheem.com/water-heating/articles/heat-pump-water-heater-space-requirements-complete-rheem-planning-guide/
[24] ENERGY STAR. (2024, June). ENERGY STAR heat pump water heater technical guide (508C). U.S. Environmental Protection Agency & U.S. Department of Energy. https://www.energystar.gov/sites/default/files/2024-07/ENERGY%20STAR%20Heat%20Pump%20Water%20Heater%20Technical%20Guide%20508C.pdf
We would like to clarify that Utah Clean Energy is not a solar company. We are a nonprofit organization that advocates for solar and other clean energy technologies, but we do not install or sell solar in any way.