Simple Retrofit High-Efficiency Natural Gas Water Heater Field Test

The water heaters tested for this project were designed to improve the cost-effectiveness and increase market penetration of high-efficiency water heaters in the residential retrofit market. The retrofit high-efficiency water heaters achieved their goal of reducing costs, maintaining savings potential and installed efficiencies compared to other high-efficiency water heaters (Table 1 and Figure 1), and meeting the necessary capacity to improve cost-effectiveness. However, the improvements were not sufficient to achieve simple paybacks of less than 10 years for the incremental cost compared to a minimum-efficiency heater. In most cases the paybacks were as long as or longer than the expected lifetime of the water heater (12 to 20 years). Significant changes would be necessary to reduce the simple payback to 6 years or less.

• Incremental costs less than $400 would have paybacks of 6 years but would require a large reduction in the water heater equipment cost or a change in the baseline water heater installation. 
• Annual energy savings in the range of $200 would also reduce paybacks to less than 6 years, but these energy savings would require either significantly higher fuel costs (greater than $1.50 per therm) or very high usage (around 120 gal. per day [gpd]).
• For current incremental costs, the water heater would need an efficiency in excess of 200% to deliver a 6-year payback.