So, we are in possession of the firm quote from Bob of Sears Home Comfort for a Rinnai natural gas tankless water heater. Bob comes in at a few dollars under $3,000.
What’s the financial payback for us at that price?
Well, remember in Part 1 our energy audit report indicated that a total of $400 of Federal and Provincial grant money was available to us? Below is the portion of our energy audit report we received under the ecoENERGY Retrofit program (the third recommendation)
Well, in January of 2008 that number was increased to $500. We like that. However at $500, the grant is only ($500 / $3,000) about 17% of our cost. That is disappointing. If both levels of government were serious in combating climate change and making it easier for their home owners to play their part, would you not think that they would provide a stronger incentive, say around 25% to 30%?
Anyway, I digress.
It costs us $15 a month to rent our current hot water tank. So that would be eliminated, or savings to us.
Based on the natural gas bills in the summer (when we don’t use natural gas for anything except heating the water and the barbecue) we spend on average around $25 a month to heat the current hot water tank. What we don’t know is how much of that $25 we will save by going tankless. The Rinnai brochure says to expect $100 annual savings. But on what basis? I mean, is that for a family of 6 or 4 or two? See what I mean?
Let’s say that we ‘guess’ we will save 50% of our natural gas usage for heating out hot water, or $13 per month…. a little more than Rinnai’s brochure.
This is where the numbers get non-precise. Even more reason for the governments to provide more financial incentive for home owners to change to tankless water heaters.
So, where are we in the financial payback calculation:
Cost per Bob of Sears Home Comfort - $3,000
Less: Current Total ecoENERGY Grant - 500
Net Cost to Us = $2,500Monthly Savings:
Current Tank Rental - $15
Energy Savings - $13
Total ($15 + $13) = $28
Payback ($2,500 / $28) 89 months or 7.4 years. 
Let’s say that the price for natural gas rises significantly, as many market forecasters are predicting. Let’s say that the price doubles. That means our total monthly cost with our current hot water tank become ($15 rental + $26 energy savings) $41 per month. This would give us a payback of 61 months or 5.1 years.
Hmmmm. And, we still are not 100% confident on the tank’s capacity for our home. And, we are still not clear on how long it will take the hot water to reach the faucets in the different bathrooms and sinks with the recommended placement of the tankless hot water device 26 feet away from the current hot water tank.
We decide to wait for the second opinion. When we return to this series of articles we will examine the quote given by a second company, Enwise Power Solutions. And, what a coincidence; they also sell the same model from the same manufacturer, Rinnai.
This should be interesting. To continue with the next article in this series, simply select this link to Part 5.
3 responses so far ↓
1 David Seitz // Apr 29, 2008 at 3:46 pm
Anyone interested in tankless or high efficiency water heaters particularly gas tankless should go to this DOE Energy Star site
www.energystar.gov/index.cfm?c=new_specs.water_heaters
and read all the comments First, Second, and Third by
the EPA, Edison Electric Institute, TVA, California Energy Commisssion (CEC) Gary Klein, A.O. Smith, Lawrence Berkley National Labs, Jim Lutz and Microtherm, Inc. You will find that the gas tankless are definitely not as efficient as represented and are only meeting the efficiency requirement as a result of extremely flawed test protocol ,known to the DOE since 1998. Since the DOE does not intend to address these testing issues until after 2011 you should strongly consider new tankless electric, electric and gas storage tanks which are known to be very efficient under the existing energy guidelines. You can keep a lot of money as well.
David
2 Chris Albrecht // Mar 5, 2010 at 2:28 pm
Just wanted to make a few comments..
The current ecoEnergy grants are now even higher.. $315 (federally.. so $630 when matched by the province) for a tankless heater with an EF > 0.82, or $375 ($750 with provincial grant) for a tankless header with an EF > 0.90.
A (gas) tankless heater with an EF > 0.90 will be a condensing gas heater, which works to extract more heat out of the exhaust gases before expelling them. This also means that since the exhaust gases are cooler, they can be exhausted through PVC pipes rather than stainless steel. This of course is MUCH cheaper. However condensing tankless units carry a heftier price tag of course.
Most tankless water heaters are known as ‘flash’ water heaters whereby they fire up with a lot of power to heat the water quite high, and then bring cold water into the mix to cool the water to the desired temperature. This is a relatively inefficient method of achieving a desired temperature, and leads to liming of the internal components.
There are some newer units being made by manufacturers (Navien is one example I believe) that are modulating and only use as much gas as is needed to heat the water to the desired temperature and do not need to have cold water mixed in to the stream to cool the output down. Not only is this more efficient, but it is said to reduce the amount of liming that will occur within the unit’s components.
To reduce the delay of ‘on-demand’ hot water, newer models often have a buffer tank, whereby a small amount of hot water is kept on hand so that it can provide hot water immediately, or provide hot water when demand/flow is minimal.
Many of these new units (at least Navien’s) are also set up for passive recirculation, so that they can ensure hot water is ready and waiting at your faucet, eliminating the need to waste water waiting for hot water. (This requires additional plumbing so is not always possible in a retrofit situation. also requires insulating hot water pipes to reduce unnecessary heat loss).
I’m not an expert, so if anyone knows of any incorrect information I’ve provided please do comment.
Cheers,
Chris
3 Dan // Mar 5, 2010 at 2:48 pm
Hi Chris,
Thanks for the comments and, yes, updated grant amounts.
I will be the first to admit that tankless heaters are not my forte.
I will also say, however, that I remain not a fan of tankless water heaters.
When I investigated for our potential purchase back when I wrote this article, I found that all of the various models from various manufacturers had no more than a 5 year warranty. My personal approach is that with any investment we make in something as relatively complex as a tankless water heater (compared to, for example exterior solar shades or solar air heater), we must be very confident that our financial payback will be acheived prior to the end of the manufacturer’s warranty.
With the above updated grant numbers, at least for us, this is not the case; it would still be in the 6 to 7 year range.
However, every household is unique relative to financial payback as well as whether they are comfortable spending money on a ‘device’ which may or may not ‘pay for itself’ befor the end of the manufacturer’s warranty.
Dan
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