Choosing a Water Heater for Your Business

Peter Biermayer
Water heaters

Investing in the right commercial water heater or hot water boiler can help businesses reduce operational expense and energy consumption. However, there are numerous aspects businesses must assess to decide when is the right time to upgrade their water management system.


Assessing repair or replacement needs
Such factors as the age of a water heater or inconsistent temperatures can serve as warning signals that a commercial water heater upgrade is necessary. A good way to determine where a commercial water heater is at in its life expectancy is by a manufacturer's warranty period, which can range from 6 to 12 years. More efficient models can have a life expectancy of 20 years or longer, depending on commercial water heater type. Water buildup around the system can be a sign that either a pipe or connection to the system is loose or there may be a larger issue at hand. Visible cracks on the system or sediment from water flow can also signal the need for a necessary repair or replacement. System noises during operation may be evident of increased pressure in the system. Clanking or banging in a commercial gas water heater can also be a result of water hammer or sediment in the tank. If noise continues after implementing a solution such as a pressure-reducing valve (PRV), businesses may want to contact a professional to determine if a repair or upgrade is necessary. If a water heater no longer provides the same quality or consistency of temperature as it had in the past, facilities may need to assess this further to determine if it is also a factor for a commercial water heater upgrade.


Take the next step to a water heater upgrade
Once a decision to repair or upgrade commercial water heaters or hot water boilers is reached, taking the next step may be contingent on additional considerations. Water heater type, installation costs, peak demand and technology integration are 4 items that businesses can pinpoint to gain the most benefit out of their water heater upgrade.


  1. Type: Businesses must identify which type of energy-efficient water heater is most suitable for their applications.
    • Commercial gas water heaters now use a condensing technology, where more heat is extracted from combustion of gas than before. Natural gas or propane can be utilized in storage, tankless and indirect water heaters.
    • Electric heat pump water heaters extract heat from the air and use it to heat water, instead of heating with electricity.
    • Solar water heater systems can help California businesses utilize natural resources to save on utility costs. Businesses can choose from active or passive solar water heating systems, depending on how much efficiency they are looking to achieve. A contractor can help them measure the solar energy factor (SEF) and solar fraction (SF) to determine the type of energy efficiency they require. Businesses can utilize the ENERGY STAR program from the U.S. Environmental Protection Agency (EPA) to further understand the defining factors of SF and SEF.1
    • Recirculating systems pump cold water back to the hot water tank instead of down the drain, preventing cold water from being wasted. This ensures that only hot water is delivered to the end use. The recirculation pumps should only operate during business hours or as needed.
    • Point of use (POS) water heaters heat cold water in the location where it's being used, instead of transporting it from a storage tank where it loses heat during operation.
  2. Installation costs: Differing installation costs for gas storage, tankless and electric or heat pump water heaters should be compared to the operational costs of each type of heater.
  3. Peak demand: Energy-efficient water heater replacement can lower peak demand.2 Demand response programs can help businesses further gain energy savings.
  4. Integration: Businesses can mix and match commercial water heaters and hot water boilers to gain the most operational savings and energy efficiency. For example, a facility can use a condensing water heater to heat cold water and use a conventional water heater to keep the water warm in a recirculating loop. A business can also use a storage water heater for large uses in a kitchen but use a POS electric water heater for a remote restroom sink.

Financing a water heater upgrade
Businesses can utilize available financing options for qualifying equipment in an energy-efficiency project. To better assess the financial investment of their water heater or hot water boilers, facilities can utilize a checklist of questions that includes:


  • What is the initial cost of the equipment and installation? Do I benefit more from installing a commercial water heater or water management system myself or with the help of a technician?
  • Do I have funds available from previous equipment upgrades that I can use to offset the cost of a water system retrofit or upgrade?
  • At what time period do water and energy savings repay the initial cost of the upgrade? And how does Energy Efficiency Financing (EEF) factor into my savings?
  • What can I expect of my ongoing maintenance costs? Do water heaters that require higher maintenance costs provide more energy efficiency long-term?

In addition to financing, incentive and rebate options are also available from PG&E to help businesses make the right investment when choosing a water heater. For example, a business that installs a new commercial boiler or direct contact water heater may be eligible for rebates from PG&E.3 In another case, a standard office using a small water heater could qualify for different rebates. Additionally, mid-sized commercial enterprises may qualify for rebates to insulate large pipes running from a gas water heater to the point of use.


With the right information and partner to guide them on cost-effective and efficient water heater investments, businesses can reduce their current water usage and save on energy costs. To find out how else you can reduce energy consumption and decrease operational expenses, download the "How to Get the Best Results from a Lighting or HVAC Project" eBook from PG&E. Businesses can learn how they can gain the most energy efficiency with their water heater project.


Referenced in article:


  1. ENERGY STAR
  2. ENERGY STAR
  3. Pacific Gas and Electric Company
HVAC and lighting contractor