Weekday morning, alarm goes off. It’s time to get ready for work. Following my usual daily routine I step into the shower and well, it was time for a cold shower. I waited for a few minutes hoping eventually some hot water will start to flow thorough, it never did. I knew at this point my old water heater needed replacement. Many questions start coming to my head. How much will it cost to have one installed? Which water heater should I purchase? If this is happened to you, I’m sure you are asking about the same. Hopefully you also have an emergency fund to be able to cushion this financial hit.
I didn’t even bother having someone come and inspect my old water heater. That in the picture below is my old (very old) 50 gallon electric water heater. When I purchased my home in 2012, that’s the one it came with. It was working fine, out of sight out of thought and never really came to mind other than the occasional draining to remove the sediment when I started hearing a few popping noises.
Which Water Heater to Purchase
When I began looking at replacement options, I was looking for basically the same 50 gallon electric water heater as the one that broke. Little did I realize there where many other options. A friend of mine recommended a tank-less electric water heater. He showed me a site where one for my 3 bedroom house would be around $300 dollars and would save me ton of electricity he claimed. Not bad I thought, but was unconvinced. And as this there are many other options some more used than others depending on the area that you live in. My house is in Florida and mostly I have seen the tank electric water heaters. Some other options are:
- Electric Heat Pump
Why is this really important? Electricity turns out to be among the most important cost to consider when purchasing a new water heater. For the average home the water heater is the appliance that uses the most electricity second to Air Conditioning. Little did I know how important this would be in my purchasing decision until I read some more.
Energy Guide is your friend here. Make sure to look into this quite a bit. From my research Gas and Electric with Heat Pump came to be the most efficient water heaters. I didn’t go for the tank-less water heater because I couldn’t find any energy guide information on them so I couldn’t confirm if indeed they were more efficient. Aside from this I needed to do an upgrade on my breakers due to the additional electricity required.
At the end of the day, I was between the regular 50 gallon electric water heater which cost around $389 to purchase (but consumed $555 a year of electricity) and an hybrid model of GE that was on special for $999 (but consumed only $162 a year of electricity).
Electricity is a Very Important Cost to Consider
The reason why energy guide is your friend is because the long run cost of running your water heater is a very important cost to consider. Read those yellow energy guide labels! I was focusing more on the purchase cost when I started searching and was ignoring this very important piece of information. As I mentioned earlier, I was between:
- Option A: $999 efficient model
- Option B: $389 model but non-efficient
After doing my analysis I found I would be saving lots of money over the long run by purchasing the efficient model at the $999 price point. I was also able to get 18 months with no interest to save me some of the upfront cost burden.
Over 5 year period and 10% rate, my NPV of my costs for Option A is a significantly lower $1,990 compared to $3,010 for Option B. Even though the latter costs much less, you can see those electric bills adding up over the years. In the chart below you can clearly see that electricity is the highest cost in my NPV analysis.
This was my other pain point in deciding what to do but it turned out ok at the end. My best advice here is to get multiple quotes. I obtained quotes from different sources. Number one is from friends, I was able to get some phone numbers of some professionals in my area and called to get a quote. I also used applications and websites such as thumbtack.com where you put your project and will start getting quotes. Finally I called some companies such as Home Depot and Lowes in my area to get an estimated installation costs for a water heater.
The quotes ranged from $180 (the cheapest), middle range $400 and from Home Depot and Lowes where around $900 for me. At the end of the day I chose a professional recommended by a friend who quoted me $200 labor and had to purchase seperately $20 in some parts. Easy enough he got the job done in less than 3 hours.
Total Water Heater Replacement Cost
All in all it cost me $1220 to purchase and replace my water heater. This is broken down by $999 in my GE high efficient water heater model $200 of labor and $20 in parts. No more cold showers for me!