Natural Resources Canada
Symbol of the Government of Canada

Office of Energy Efficiency Links


Personal: Residential


Water Heaters: Energy Considerations

Selecting an energy source
Increased efficiency water heaters
Oil-fired domestic water heaters
Electric domestic water heaters
Reducing energy losses
Reducing standby losses

Selecting an Energy Source

Depending on where you live, your fuel options may be limited – natural gas, for example, may not be available. Still, knowing the pros and cons of different fuels can help you make an informed decision. Here are some of the main options:

  • Electricity: Electric water heaters are easy to install, can be located in many areas of the home, and are available in various sizes and models. They need no venting. It takes a little longer to heat water using electricity than with other energy sources, but, to compensate, electric water heaters tend to have larger storage volumes.
  • Natural gas: These units produce hot water quickly, can be vented through a chimney or wall, and are available in various sizes and models. Some models are sealed combustion units, which means they do not require household air for combustion. Of course, the home must have access to natural gas. As well, the location of the heater in the home may be restricted by access to the gas line and chimney.
  • Liquid propane: Propane water heaters are quite similar to natural gas water heaters in both their performance and venting requirements. To use such a system, your home will need a liquid propane storage tank and regular fuel delivery.
  • Heating oil: These heaters produce hot water faster than any of the others, which means that a smaller tank can be used. Some models can be sidewall-vented, and some are sealed combustion units that do not require household air for combustion. However, there are fewer models to choose from, and you'll need a heating oil storage tank and regular fuel delivery.

Most Canadian households use the same energy source to heat water as to heat the home itself, but it's not a requirement. Any of these energy sources can be used to power your water heater regardless of what fuel you use for space heating, provided you have access to the energy and can meet any venting requirements.

Before you make a final decision, consult a heating professional or your local gas and electric utilities about your particular needs and circumstances.

Decisions: Buy, rent or lease a storage tank water heater?

Increased Efficiency Water Heaters

If you are in the market to buy or rent a new electric water heater, increased tank insulation and heat traps are available to help you save energy. The hot water can also come from a heat pump electric water heater. Electric water heaters are regulated by existing efficiency standards.

Oil-fired Domestic Water Heaters

An increasing number of Canadian homes that are heated with oil also use oil for their domestic hot water supply. Except for space heating system itself, domestic water heaters use more energy than anything else in most Canadian houses. Depending upon the house type and the number and lifestyles of inhabitants, hot water consumption may account for more than 20 percent of total annual energy consumption. Higher combustion temperatures make the quick recovery of an oil-fired water heater one of its principal advantages – it is twice as fast as natural gas and five times as fast as electricity, based on the heat output of typical residential water heaters.

Oil-fired water heater

Figure 1: Oil-fired water heater

Free-standing oil-fired water heaters now use burners with flame-retention heads and other modifications that improve efficiency. They can be connected to an existing chimney; when approved, they can be side-wall vented.

There are two basic types of oil-fired tap-water heating systems:

  • conventional water heaters that heat the water directly in a tank
  • systems that heat the water in conjunction with another energy use, usually space heating

For the latter, the water heater can be in the form of a “tankless coil” inside the boiler or a storage tank tied to the boiler through an efficient water-to-water heat exchanger.

Electric Domestic Water Heaters

Electric Water Heater

Figure 2: Electric water heater

Electric water heaters supply hot water for household use in many Canadian homes. An electric water heater usually consists of a tank, thermostats, two electric resistance elements (which are submerged inside the tank), and inlet and outlet pipes for cold and hot water. Internal thermostats regulate the temperature of the water.

Tanks are typically covered with foam insulation and lined on the inside with a ceramic glass layer. When cold water replaces the water withdrawn from the tank and the temperature of the water falls below a certain level, the elements are activated, reheating the water to the correct temperature. Essentially, electric hot water heaters are large closed electric kettles.

The submerged electric resistance heating elements in water heaters are very efficient, providing about 99 per cent of the available heat to the surrounding water. Even so, older water heaters lose heat as a result of standby losses.

Reducing Energy Losses

Most direct heat loss from water heaters is made up of:

  • losses by heat conducted through the tank walls and base
  • losses by hot water convection through the hot and cold water feed pipes

The operating efficiency of a domestic hot water system can be improved significantly by designing the system carefully and selecting equipment that generates hot water more efficiently and reduces stack and standby losses. For starters, you might want to lower the temperature of the water in the tank.

Note: In the past, tap water was usually set to 60°C (140°F), and homeowners were told to lower the set temperature to prevent scalding. However, a set temperature of 60°C (140°F) is required for the reduction of legionella bacteria. If you wish to protect children and others in your home from high water temperatures, use a mixing valve or add some other sort of scald protection downstream of the water heater.

Reducing Standby Losses

Standby loss is heat lost to the surrounding air from the water in a domestic water heater and connecting pipes. It is a function of:

  • the temperature difference between the water and the surrounding air
  • the surface area of the tank
  • the amount of insulation encasing the tank
To reduce standby losses, consider the following options:
  • Cover the tank with an insulating blanket. Caution: It is extremely important not to insulate over any controls or obstruct the vent connections or combustion air openings. The insulation should not come in contact with the vent connector.
  • Install a heat trap above the water heater. This is a simple piping arrangement that prevents hot water from rising up in the pipes, thereby minimizing the potential for this loss.
  • Insulate hot water pipes to reduce heat loss from the pipes themselves. Pipe insulation is available in a variety of materials and thicknesses, with easy application to most hot water pipes. Use insulation with an RSI (insulation value) of at least 0.35 (R-4) over as much of the pipe as you can easily access.
  • Place the water heater over a layer of rigid thermal insulation to reduce heat loss through the bottom of the tank. This is particularly applicable to electric water heaters and external storage tanks for integrated space and water-heating systems.
  • Buy a tank with bottom inlet of cold water

Before carrying out any of these steps, check with your local installer or electricity utility representative to ensure that you will not compromise the safety or operation of the appliance.