Jul 28, 2023
President Joe Biden is eyeing a crackdown on home water heaters — the second-largest energy guzzler in most households — as his newest green policy to save consumers money.
In a draft released July 21, the Department of Energy (DOE) said the proposed standards would slash energy usage from water heaters by 21% and save consumers $11.4 billion on their energy and water bills every year.
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“Today’s actions — together with our industry partners and stakeholders — improve outdated efficiency standards for common household appliances, which is essential to slashing utility bills for American families and cutting harmful carbon emissions,” Secretary of Energy Jennifer Granholm said in a news release.
Here’s what the DOE is proposing for new water heaters in the future, and what this means for American homeowners and renters.
The DOE wants to tighten standards for water heaters
With water heating comprising about 13% of annual residential energy use and utility costs, Americans may look forward to lower bills with Biden’s newest energy initiative.
The DOE recommends that new electric storage water heaters in the most common size use heat pump technology (instead of electric resistance), while some gas-fired instantaneous heaters switch to condensing technology.
The department says swapping out electric resistance storage water heaters for heat pump water heaters means Americans can save $1,868 on average over the life of the appliance. It projects savings will be even higher for renters and low-income households who spend a higher proportion of their income on utility bills.
“Many homeowners lack the time or information needed to select an efficient water heater, especially if they are doing an emergency replacement, but this standard would ensure all models are efficient,” Susan Weinstock, CEO of the Consumer Federation of America, said in a news release for the American Council for an Energy-Efficient Economy.
The last time residential water heater efficiency standards were updated was back in 2010, and, if finalized, these new requirements would take effect in 2029.
The DOE estimates the update will save Americans around $198 billion and shave off 501 million metric tons of harmful carbon dioxide emissions cumulatively over 30 years — which the department equates to “the combined annual emissions of 63 million homes, or approximately 50% of homes in the U.S.”
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Do heat pumps really save you money?
Biden’s water heating initiative is just the latest in a series of green policies and proposals targeting home appliances — but not everyone’s impressed.
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“Leave us alone,” Rep. Thomas Massie posted on Twitter (now rebranding to X) in response to the DOE announcement.
“Consumers should decide whether the upfront cost of a heat pump water heater is worth the possible long-term savings. In many cases, the monthly savings never make up for the upfront cost of the equipment,” the Kentucky Republican claimed.
While heat pump water heaters can be two to three times more energy efficient than conventional electric resistance water heaters, saving you money in the long run, buying and installing a head pump can be pricey.
That said, consumers can take advantage of heat pump tax credits and state rebates introduced last year by Biden’s Inflation Reduction Act in order to reduce those installation costs.
Massie also argues heat pumps don’t work as effectively in northern climates and take longer to make a tank of hot water, while on-demand (or tankless) water heaters produce hot water as needed and “might be more economical” depending on circumstance.
However, Consumer Reports says heat pumps can work well in cool climates if installed properly — and some models also perform better in the cold than others. Although the nonprofit hasn’t tested any equipment itself, it points to studies and testimonials indicating heat pumps can work in cold weather conditions.
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Serah Louis is a reporter with Moneywise.com. She enjoys tackling topical personal finance issues for young people and women and covering the latest in financial news.
