The Biden administration is out with a new proposed rule requiring more energy-efficient water heaters that the Department of Energy claims will collectively save consumers $11.4 billion a year. But media reports on the rule, which essentially just rewrite the Department of Energy press release, leave a whole lot out. In reality, the new rule would be a bad deal for many consumers.
Under the rule, by 2029, new electric water heaters would be required to use heat-pump technology, which is more efficient because instead of using electricity to generate heat for the water, it sucks in the surrounding heat from a room and repurposes it to heat household water. But, having recently purchased a new water heater for my home, I am well aware of the drawbacks that make it a less-than-optimal choice for many consumers.
Heat-pump water heaters are not only more expensive to purchase, but they are also significantly more expensive to install. When I looked into getting a new water heater, the heat-pump option was thousands of dollars more expensive. This checks out with national averages published on This Old House, which has heat-pump water heaters as up to $2,800 more expensive than standard electric models.
The savings are supposed to kick in over time as having a more efficient model reduces monthly electricity bills. But the time it takes to recoup the initial investment can vary greatly. The costs vary depending on how expensive labor is to install the water heater where the consumer lives, and also, how cold the winters get. For somebody living in a hot climate who puts the water heater in the part of the house that is always well heated, the savings can add up pretty quickly. But for somebody who lives in a colder climate with less heat for the unit to pull from the room, it can take a lot longer for those costs to be recouped. At the same time, if the water heater is located in a part of the house that gets heated in the winter, cost savings can be reduced because you’re just paying to heat up a room, and then the heater is sucking all the heat out of that room. Also, a larger household that uses a ton of hot water would recoup the cost a lot quicker than a household with one or two people.
In my case, the cost to install a heat-pump unit was so much higher relative to a standard electric unit that it was questionable whether I would recoup the cost over the predicted ten-to-15 year lifespan of the unit. The more optimistic projections from the Department of Energy analysis suggested that, depending on the size and type of unit, the recovery of the initial investment could take anywhere from a few months to eight years. Even if heat-pump technology does save money over the life of the unit, however, not everybody is in the same budget situation. Many consumers would prefer to save thousands of dollars upfront, even if it might mean, say, $20 a month of higher electricity bills.
Putting aside the cost, however, there are functional considerations. As noted above, the heat-pump water heaters are a compelling choice for those living in hot climates, but for those living in places that get colder, it isn’t as great of an option. The unit essentially functions as an air conditioner because after it sucks in hot air from the room, it then blows out cold air. YouTube is filled with videos of people having very cold rooms because of this. In my case, since we have the laundry in a room in the basement next to the water heater, this was a major drawback, because it can already get chilly in the winter, so I wasn’t interested in adding fan blowing additional cold air into a relatively small space.
Furthermore, the heat-pump water heaters require seven feet of clearance, which means they are not a good option for people who have water heaters in rooms with low ceilings, or underneath staircases.
In short, heat-pump water heaters could be a great option for some people, particularly those who live in warmer climates where the higher upfront costs can be recovered quickly. But they are not for everybody. In a free market, consumers should be able to weigh the pros and cons and decide what makes the most sense for them.
If ideologues want to argue that consumers should have to absorb the downsides because of the importance of reducing carbon emissions, at least that would be more honest. Instead, the Biden administration is presenting this as an unequivocal win for consumers, and the media are lapping it up uncritically.