Can I save money with an electric water heater?
Many homes in Fairbanks use oil-fired boilers to provide not just space heat but also domestic hot water. But in the summer, when you don’t have a demand for space heating, does it make more sense to install an electric water heater? That depends on several variables, including the size of the tanks, the efficiency of your boiler, your water use and, of course, the cost of fuel oil.
Let’s compare how much it costs to heat water with electricity versus oil. The average household requires about 40 gallons per day in the summer. Over 122 days, that equals 4,880 gallons.
Using electricity that costs 22 cents a kilowatt-hour, with a 90-percent efficient water heater, it would cost about $235 to provide hot water for the summer.
If a conventional Weil-McClain boiler burns about 140 gallons of fuel oil during the four months of summer, at $2.50 per gallon of fuel oil, that adds up to about $350 per summer. (Note that this boiler heats the house using baseboard hot water and heats domestic hot water in a storage tank using a coil in the boiler. It uses a total of about 1,200 gallons of fuel oil a year if not using a wood stove as a supplemental heat source.)
However, the boiler is also providing some heat on cooler days and nights even in the summer. To account for the difference, assume that one cord of wood, at a cost of about $250, would provide enough heat for the summer. Then the net savings would be about $89. A 50-gallon electric water heater would cost about $600 to install, so it would be paid back in 6.5 years at the current price of fuel.
So if you use a conventional oil-fired boiler and a modest amount of hot water, it may pay to install an electric water heater and allow the boiler to be shut down for the summer. The best possible scenario is a smaller, self-installed tank plus a wood stove to provide space heating. However, if you already have an efficient boiler and you only use minimal water, the system would yield marginal returns. Many homes are already using an electric water heater as a storage tank for boiler heat, so they would face no installation costs. Overall, each house requires individual and careful evaluation.
Another option is an on-demand propane heater. These start at about $300, but add-ons that make life more comfortable (like a mini buffer tank and a pump to boost water pressure) will drive the price up to more than $1,000.
Insulation
No matter how much water is used in the summer, or the size of the house, insulating the tank is one of the simplest and cheapest ways to save energy. Insulating a tank involves wrapping it with some form of covering. Typical hardware stores sell blankets for the average 50-gallon tank. When insulating, make sure the covering does not interfere with the pressure or temperature valves, and leave an opening for electric heating outlets.
A straightforward calculation comparing the cost to heat water with electricity versus oil shows that it is more expensive to use electricity on a cost-per-BTU basis. However, because the boiler is sized to be able to provide a lot of heat during the winter, it is not very efficient at heating a small quantity of water in the summer.