Electricity in Hot Water!

Electric Storage Tank Hot Water System - should you replace it with a Gas Instant or On Demand tank-less hot water system? I know it's a dry subject, but well worth thinking about if you're looking to replace your existing electric system.

I was reading an article the other day about how to save on electricity over winter. And as much as I appreciate the sentiment I think we all have to be realistic about this inevitable increase in electricity use but it started me thinking.

I will use me and my husband as a perfect example of the average home owner, apologies to you renters but you have no say about the construction of the home you are living in or the heat sources you have at your disposal.

In 2009 my husband and I bought a house on the NSW Central Coast, it was a 4 Bed, 1 Bath (with a separate toilet, thank god) brick veneer house built in 1985. As this is our second marriage and in total we have 4 kids from our previous marriages we needed to accommodate at least 3 kids 50% of the time.

We move in in late October and always planned to renovate the house to reflect our needs and lifestyle, and we didn't waste time getting stuck in.

As this house can only be described as the smallest 4 bedroom house on the planet, we knew that layout and function needed to be at the very top of our wish list. We wanted an open plan living space to at least create an illusion of a bright and spacious home.

To achieve this we needed to take out the wall dividing the living and dining room, and take out the walls of the internal laundry room and incorporate that space into the very tiny, 1 person kitchen.

Issue 1 was trying to figure out what to do with the very old electric water tank that took up most of the space in the laundry room. Since we needed to move it somewhere else to fee up valuable space we had an opportunity to rethink our hot water needs and ways to meet them.

Probably just as well as the electric water tank was an old unit on Off Peak Electricity supply and only heated water at night. You may ask 'And what's wrong with that'? When you have 5 people wanting to shower in the morning I can tell you there is plenty wrong with that. The first person in the shower gets a nice hot shower for as long as they want, the second person will start off with a nice hot shower but this will get a bit cool by the end. The third person will have a one minute cold shower and the remaining 2 people will have to go without or brave an icy washing experience. So first in best dressed?

As we have Natural Gas in the street this fact opened up a number of options to us when it came to looking at hot water heating solutions. We could go for the Gas heated Hot Water Tank outside, 360 Liter tank would set us around $1,500 plus cost of installation. Or we could go with "Instant" or "On Demand"hot water system for $1,600 plus cost of installation.

Then you have Solar Hot Water and Heat Pumps, starting from around $4,000 this is an amount that we weren't prepared to spend as we just moved into our house and pretty much our savings were going to go on all the structural work we needed to do.

Like most people, we are not fans of cold showers so we decided to go with the "Instant" or "On Demand" Gas Hot Water System. Yes it was a little bit more expensive but it came with several advantages which are as follows;

1. Never run out of hot water again!, if you've ever had to take a cold shower you will understand why I think this is probably the most important one for me.

2. Control the temperature in the Bathroom and Kitchen with a Touch Pad, so you always get the right temperature water when and where you want it.

3. Never get third degree burns every time someone flushes the toilet while you're having a shower.

4. Don't need to store 360 Liters of hot water, constantly trying to keeping it hot in case someone needs it.

5. Only pay for gas and electricity when you are actually using the hot water service.

And for those that still have a 400 Liter electric water tank inside their house and I do hope its not many of you, imagine the damage and cost of repairs when that hot water tank gets old and decides to empty its contents on your floor. Murphy's Law dictates that this will happen during the day, when there is no one home. Take my word for it 400 Liters of hot water will ruin your floors, carpets and possibly furniture. Leaving you to wade through ankle deep devastation in a house full of steam and the smell of wet carpet. Oh and don't forget the thousands of dollars worth of repairs which will need to be either covered by insurance or any available savings.

If you have a new or new 'ish' hot water tank, even if its an electric one, the cost of replacing it will probably be around $2,000 installed. You need to ask yourself, how much is making hot water actually costing you per year and how long would it take for the new $2,000 hot water system to pay for itself. The answer is pretty straight forward.

As per the above image, for an average Electric Hot Water Tank the annual running costs are just over $1,000 where as the average annual costs for running a Gas Instant Hot Water system are closer to $600. Therefore replacing your current electric hot water unit with a gas Instant hot water unit, the new unit will pay for itself in 3.3 years. Not to mention the C02 reduction per year which is significant for those trying to reduce carbon emissions.

Below is my quick and simple calculation for money saved since we installed out Gas Instant Hot Water Units.

$2,000 cost of unit and installation, less running costs of $600 per year over 9 Years

= $3,600 saving on electricity so far. I know that in the grand scheme of things it's not a huge amount but in conjunction with all the other benefits I think its a Win Win for us.

However if you are not planing on staying in your home for longer then 3.3 years, I would recommend you stick with the system you currently have as you will never reap financial rewards of the original financial outlay.

I'm sure that we ended up spending that $3,600 on something to do with renovations so it's not really a saving but it gave us a little bit of extra money to spend on something other then our electricity bill.

My final word and the Honest Truth is:

Always do your own research based on your actual costs, as your usage will be different to ours or other people. Make the right choice for you based on your budget, information and options available to you. Ask yourself if making a change is worth the eventual cost saving in the first place and will you be the one to benefit from it. Is an eventual electricity cost saving of $7.70 per week really worth it for you? I'm sure it's something to at least think about.

Next Time: The Honest Truth about Home Heating.