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if you’re tired of high utility bills, you’re not alone. A recent survey by CNET found that 78% of Americans stressed their energy bills. If you’re looking to reduce your energy consumption, you might rightly consider looking at yours heating and cooling system first, but you can also save some money on your boiler.
According to US Department of Energywater heating is one of the largest uses of energy in residential buildings and accounts for almost one fifth of total electricity costs. It costs the average American $400 to $600 a year.
So how can you save money on your water heating? Well, you could run less hot water. You can also try setting the temperature of your water heater a little lower for some relief. However, you will need to find a balance between comfort and conservation. If you have an old water heater, you can upgrade it to a more energy efficient option. Upgrade to a new water heater that meets the latest DOE standards can save households more than $100 a year. Some models will even generate enough savings to pay for themselves just a few years.
However, upgrading your water heater can be quite expensive. A a recent discussion on reddit they’ve had users note that new water heaters cost them anywhere from close to $1,000 to over $3,000, with some users saying they’re being quoted even higher amounts for larger capacity water heaters and tankless water heaters. However, there are ways to save money when upgrading.
If you’re considering an upgrade, you’ll be glad to know that upfront savings are offered thanks to federal, state and local tax credits and incentives. Not only is it good for the planet, but it’s also good for your wallet. We’ll guide you through everything you need to know to get the best savings on your new, energy-efficient water heater.
Types of boilers
There are various types of boilers which you will encounter when choosing an option for your home. It’s best to understand the potential benefits and challenges each type presents to discover which option is best for your household’s needs.
Traditional water heating tanks
There are two basic types of standards tank boilerswhich differ depending on the type of energy source available. Gas tank water heaters use fossil fuels such as natural gas or propane to heat water, which is stored in a large tank.
Electric boilers for tanks can heat water using electrical resistance coils. These models are generally easier to install and maintain, but may have higher operating costs compared to gas.
Tankless boilers
Tankless boilersalso known as on-demand water heaters, they can heat water directly without a storage tank. They provide a continuous supply of hot water, which can be more energy efficient because they heat the water only when needed.
Matt Kunz, President Mr. Rooter Plumbing, said choosing between a tank and tankless heater is the most common decision homeowners have to make.
“A tank water heater stores and heats large quantities of water and is suitable for homes that have a high demand for hot water.” Tankless heaters are more energy efficient because they heat water on demand. They’re also more space-efficient, but tend to be more expensive up front,” he said.
Water heaters with a heat pump
A heat pump boiler uses electricity to move heat from the air or ground to heat water. You can imagine them as it works like a refrigerator in reverse. While a refrigerator removes heat from the inside and releases it into the air, a heat pump water heater draws heat from either the air (air source heat pumps) or the ground (geothermal heat pumps) and uses it to heat water. This method makes them highly efficient, and can significantly reduce energy costs, especially in temperate climates.
Solar water heaters
There are other water heaters that can be even more energy efficient, such as solar water heaters. These heaters use solar panels to capture sunlight and convert it into energy for heat, which is then transferred to water. These systems can provide significant savings on energy bills, especially in sunny regions, but they tend to have higher purchase prices and have unique maintenance needs.
Water heaters at the point of use
Boiler at the point of use systems are small units that are usually installed close to the point of use, such as sinks or showers. They provide hot water directly where it is used, heating the water quickly. Most of the time, these systems are used to supplement larger systems.
Federal Water Heater Tax Credit
As you search for the right water heater for your home, keep in mind the incentive programs available for purchase. “There are federal and local incentives and credits available to homeowners when purchasing a new water heater,” Kunz said. “Each program and loan is based on the different needs of homeowners, so it’s important to do your homework to find the incentive that best fits your needs to see if you qualify.”
There are two primary federal tax credits available to help cover the cost of your upgrades: the Energy Efficient Home Improvement Credit and the Residential Clean Energy Credit.
Energy efficient home improvement loan
The Energy efficient home improvement loan is a part Inflation Reduction Act of 2022 and encourages homeowners to invest in energy-efficient upgrades, including certain water heaters.
Eligible systems may include electric heat pump water heaters, energy efficient gas water heaters, and more. Homeowners can claim a tax credit of up to 30% of the cost, with a maximum credit limit of $1,200 per year and up to $2,000 per year for qualified heat pumps. Qualified heat pumps must meet or exceed Consortium for Energy Efficiency, the highest level of efficiency.
This credit helps offset the initial cost of purchasing and installing qualifying energy-efficient water heaters, making it an attractive option for those looking to improve their home’s efficiency. Credits can be claimed for home improvements through 2032.
Residential Clean Energy Credit
The Residential Clean Energy Credit specifically targets renewable energy technologies, including geothermal heat pumps and solar water heaters.
Homeowners can receive a tax credit of 30% of installation costs for qualified geothermal systems through 2032, with declining credit rates still available in subsequent years. Unlike the Energy Efficient Home Improvement Loan, this loan has no maximum limit, allowing homeowners to potentially benefit significantly based on the total cost of the installation.
Other rebates and incentives for water heaters
In addition to federal tax credits, other incentives may be available to you depending on where you live. To find information about state, municipal, or utility companies that offer incentives for energy-efficient water heaters, homeowners can start by visiting government websites, especially those of state energy offices or energy departments, which typically provide information about available incentives and programs. . Also check your utility company’s website for discounts and incentives for energy efficient appliances.
Other rebates approved and funded by the IRA are implemented by individual states. To see if your state has opened applications for rebates, take a look this database from DOE.
You can also browse online incentive databases such as Database of government incentives for renewable energy sources and efficiencywhich aggregates state and local incentives and lets you search by location and technology. Note that the database may not be comprehensive and that the programs listed may have changed, but it is a great starting point.
