Real-world examples of energy-efficient water heaters: 3 practical examples for lower bills

3 practical examples of energy-efficient water heaters in real homes

Let’s skip the theory and start with the examples of energy-efficient water heaters: 3 practical examples you can actually buy and install today. These are real categories with real models on the U.S. market in 2024–2025, not futuristic prototypes.

We’ll focus on three core types:

• Heat pump (hybrid) electric water heaters
• High-efficiency condensing gas water heaters
• Solar-assisted water heating paired with a backup heater

Within each type, we’ll look at real examples—specific sizes, typical costs, and how they perform in different climates and households.

Example of an energy-efficient water heater #1: Heat pump (hybrid) electric

If I had to pick the single best example of an energy-efficient water heater for most American homes right now, it would be the heat pump water heater (HPWH), often sold as a “hybrid” electric.

How it works in plain English

Instead of burning gas or using electric resistance coils to create heat, a heat pump water heater works like a refrigerator in reverse. It pulls heat from the surrounding air and moves it into the water tank. That simple shift is why these systems can be 2–4 times more efficient than standard electric tanks.

According to the U.S. Department of Energy, ENERGY STAR–certified heat pump water heaters can reduce water heating energy use by about 70% compared with conventional electric resistance models.

Source: U.S. Department of Energy – Water Heating Technologies (energy.gov)

A real-world example: 50-gallon hybrid in a typical U.S. home

Take a common setup: a family of four in a detached house with a 50-gallon standard electric tank in the basement.

• Old unit: 50-gallon electric resistance, Energy Factor (EF) ~0.90
• New unit: 50-gallon heat pump water heater, Uniform Energy Factor (UEF) ~3.5
• Location: Mixed climate (think Tennessee, Missouri, or North Carolina)

The Department of Energy estimates that a typical U.S. household spends about 18% of its home energy use on water heating. Swapping a standard electric tank for a heat pump model can save \(300–\)450 per year in many regions, depending on electricity rates.

Source: DOE Energy Saver – Estimating Costs and Efficiency of Water Heaters (energy.gov)

Upfront cost vs. incentives in 2024–2025

In 2024–2025, a 50–80 gallon heat pump water heater typically runs:

• Equipment: about \(1,300–\)2,000
• Installed: about \(2,000–\)3,500, depending on electrical upgrades and labor

But that sticker price is misleading if you ignore incentives. In the U.S., many households can stack:

• Federal tax credits under the Inflation Reduction Act (up to 30% of cost, subject to caps)
• State or utility rebates (often \(300–\)1,000 or more)

That means your net cost can drop into the \(1,000–\)2,000 range, sometimes less—suddenly very competitive with replacing a standard electric tank.

For current federal incentives, see the ENERGY STAR rebate finder (energystar.gov).

Where heat pump water heaters shine

This first of our examples of energy-efficient water heaters: 3 practical examples works best when:

• You have a basement, garage, or utility room with enough space and at least 50°F air most of the year
• You’re currently using a standard electric tank (savings are biggest here)
• You don’t mind a bit of fan noise (like a window AC) in that space

They do double duty in warm climates by cooling and dehumidifying the room they’re in—handy in a hot garage or muggy basement.

Potential downsides to be honest about

Heat pump models are not perfect:

• They heat water more slowly in pure heat pump mode, so heavy-use households may want a larger tank or a model with a strong “hybrid” mode.
• In colder climates, they may pull some heat from the home in winter if installed indoors, which can slightly increase space-heating loads.

Still, as an example of an energy-efficient water heater that slashes electric use, they’re hard to beat. For many all-electric homes, they’re the default choice in 2024.

Example of an energy-efficient water heater #2: High-efficiency condensing gas

Not everyone is ready or able to go all-electric. If you have natural gas and you’re replacing an old atmospheric gas tank, a condensing gas water heater is one of the best examples of energy-efficient water heaters in the gas category.

What “condensing” really means

A standard gas water heater sends a lot of hot exhaust straight up the flue and out of your house. A condensing model captures more of that heat by running the hot exhaust through an additional heat exchanger, cooling it enough that water vapor in the exhaust condenses. That recovered heat goes into your water instead of the sky.

The result:

• Standard gas tank: UEF around 0.60–0.65
• Condensing gas tank or tankless: UEF 0.90–0.96

That’s roughly a 30–40% reduction in gas use for the same hot water.

Real example: Replacing a 40-gallon gas tank

Picture a 3-person household in the Midwest with a 40-gallon, 15-year-old atmospheric gas tank.

• Old unit: 40-gallon non-condensing gas, UEF ~0.60
• New unit: 40–50 gallon condensing gas tank, UEF ~0.90

If that home currently spends around \(250–\)350 per year on gas for water heating, a condensing replacement might trim \(80–\)120 per year off that bill, depending on gas prices.

Over a 10–15 year lifespan, that’s \(800–\)1,800 in avoided fuel costs, which can more than offset the higher upfront price.

Tank vs. tankless as real examples

When people ask for examples of energy-efficient water heaters: 3 practical examples, they often mean actual product types they’ve heard about. In the gas world, that usually comes down to:

• Condensing tank: Looks like a traditional tank but with higher efficiency. Good for households that prefer storage and simpler operation.
• Condensing tankless (on-demand): Heats water only when you open a tap. Saves space, can provide endless hot water if sized correctly, and often hits the highest efficiency ratings.

Both are strong examples of energy-efficient water heaters, and the better choice depends on your usage patterns and whether your home can handle the venting and gas line requirements of a tankless system.

Costs and installation realities

For 2024–2025, typical ranges:

• Condensing gas tank installed: about \(2,000–\)3,000
• Condensing gas tankless installed: about \(2,500–\)4,000

Extra costs can pop up for:

• Upgrading to PVC sidewall venting (condensing units often can’t use your old metal chimney flue)
• Increasing gas line size for high-BTU tankless models

Some gas utilities offer rebates for high-efficiency units, but incentives are often smaller than what’s available for heat pump water heaters.

Where high-efficiency gas still makes sense

This second of our examples of energy-efficient water heaters: 3 practical examples is a smart fit when:

• You already have natural gas and don’t plan to electrify soon
• You want fast recovery for heavy hot water use
• You’re in a cold climate where electric rates are high and gas is relatively cheap

From a climate perspective, condensing gas is a step up from old tanks, but it still burns fossil fuels. If your long-term goal is a low-carbon home, it can be a transitional choice while you plan for future electrification.

Example of an energy-efficient water heater #3: Solar-assisted with backup

The third of our examples of energy-efficient water heaters: 3 practical examples taps the original energy source: the sun.

A solar water heating system uses roof-mounted collectors to preheat water before it reaches a conventional heater. In many climates, solar can provide 40–80% of a home’s annual water heating energy.

The National Renewable Energy Laboratory (NREL) notes that solar water heating can significantly cut energy use and emissions, especially in sunny regions.

Source: NREL – Solar Water Heating Basics (nrel.gov)

A real hybrid example: Solar + heat pump backup

Consider a home in Arizona, Southern California, or Florida:

• Solar thermal collectors on the roof feed a well-insulated storage tank.
• A heat pump water heater acts as the backup, kicking in when solar can’t meet demand.

On a sunny day, the solar system may handle nearly all hot water needs. On cloudy days or during high-demand periods, the heat pump tops off the temperature.

This pairing creates one of the best examples of energy-efficient water heaters you can build today:

• Solar cuts the total energy needed.
• The heat pump makes the backup energy use as low as possible.

Another real example: Solar preheat + condensing gas

In some retrofit situations, it’s easier to keep gas as the backup. A second real-world setup:

• Solar collectors feed a preheat tank.
• A condensing gas tank or tankless unit boosts the water to the final temperature.

Here, solar might cover 50–60% of annual water heating energy, and the high-efficiency gas unit handles the rest.

Costs, savings, and when it pencils out

Solar thermal is not a budget option, but in the right setting it can be powerful:

• Typical residential solar water heating system installed: \(4,000–\)8,000+ in the U.S., depending on size and complexity
• Federal tax credits can offset up to 30% of eligible costs

Savings vary widely by climate and hot water use. Households in sunny regions with high electric or propane prices see the best payback. In cloudy, northern climates with cheap gas, the math is weaker.

For many homeowners, the best move is to treat solar water heating as part of a whole-house decarbonization plan: combine it with solar PV, a heat pump water heater, and efficiency upgrades.

Other real examples of energy-efficient water heaters worth knowing

The headline might be examples of energy-efficient water heaters: 3 practical examples, but in reality there are a few more categories that deserve honorable mention. These won’t fit every home, but they’re worth having on your radar.

Point-of-use electric tankless heaters

These tiny units live under a sink or near a single fixture and heat water on demand at that point. They don’t necessarily use less energy per gallon than other technologies, but they reduce distribution losses—the heat you waste as hot water cools in long pipe runs.

Real example:

• A small electric tankless under a distant bathroom sink in a long ranch house.
• It eliminates the need to run the tap for 30–60 seconds waiting for hot water.

In that niche, it’s an example of an energy-efficient water heater because it cuts both water waste and standby losses.

Smart-controlled standard electric tanks

Not ready to replace your tank? Some utilities and smart home systems let you turn a plain old electric tank into a smarter, more efficient setup by:

• Scheduling heating during off-peak hours
• Integrating with rooftop solar to heat water when your panels are producing

The tank itself isn’t a shining example of cutting-edge efficiency, but the control strategy can turn it into a kind of thermal battery, lowering costs and emissions. It’s a reminder that sometimes the best examples of energy-efficient water heaters are about how you operate them, not just the hardware.

How to choose among these examples of energy-efficient water heaters

So you’ve seen examples of energy-efficient water heaters: 3 practical examples plus a few bonus types. How do you pick the right one for your situation?

Start with your energy source and rates

• All-electric home, average or high electric rates: A heat pump water heater is usually the best example to copy. If you’re adding solar PV, even better.
• Natural gas available, low gas rates: A condensing gas tank or tankless is a strong option, especially if you’re not ready to electrify.
• Sunny climate, high energy costs: Consider solar-assisted systems, ideally paired with a heat pump or condensing backup.

Consider climate and space

• Heat pump units need enough air volume and moderate temperatures.
• Solar thermal needs good roof exposure and space for tanks and piping.
• Tankless gas needs proper venting and often upgraded gas lines.

Don’t ignore maintenance and lifespan

The best examples of energy-efficient water heaters on paper can disappoint if they’re neglected:

• Flush tanks to reduce sediment.
• Check anode rods in storage tanks.
• Service tankless units per manufacturer guidelines.

Energy-efficient models often have longer lifespans when maintained—another quiet way they save money over time.

For neutral, technical guidance on comparing options, the U.S. Department of Energy’s Energy Saver site is a solid resource: https://www.energy.gov/energysaver/water-heating

FAQ: Real examples of energy-efficient water heaters

What are the best examples of energy-efficient water heaters for a typical U.S. home?

For most households with electric service, the best examples of energy-efficient water heaters right now are heat pump (hybrid) electric water heaters. They use 2–4 times less electricity than standard electric tanks and qualify for strong rebates. If you have natural gas and want a high-efficiency option, condensing gas tanks or tankless units are also strong examples.

Can you give an example of an energy-efficient water heater upgrade from a standard electric tank?

Yes. A common example of an energy-efficient water heater upgrade is swapping a 50-gallon standard electric tank for a 50–80 gallon heat pump water heater. Many households cut their water heating electricity use by around 60–70%, often saving \(300–\)450 per year, depending on local rates and usage.

Are solar water heaters still worth it in 2024–2025?

They can be, but they’re very site-specific. In sunny regions with high electric or propane prices and good roof exposure, solar water heating paired with a heat pump or condensing gas backup can be one of the best long-term examples of energy-efficient water heaters. In cloudy, northern climates with cheap natural gas, a standalone heat pump or condensing gas unit may offer better value.

Do tankless water heaters always save energy?

Not always. High-efficiency condensing tankless units are good examples of energy-efficient water heaters when replacing old, low-efficiency gas tanks. But if a tankless unit is oversized, set to very high temperatures, or used heavily for long showers, actual savings can shrink. Tankless shines when combined with efficient fixtures, reasonable setpoints, and good installation.

How do I compare different examples of energy-efficient water heaters objectively?

Look at the Uniform Energy Factor (UEF) on the EnergyGuide label, and compare estimated annual energy use and operating cost. Higher UEF means higher efficiency. Also factor in:

• Local energy prices (electric vs. gas)
• Available rebates and tax credits
• Your household size and hot water habits

Authoritative sources like the U.S. Department of Energy’s Energy Saver pages and ENERGY STAR’s product listings provide unbiased data and are a good starting point for comparing real examples.