This is an updated version of the product training course introduced by Supply House Times in 1979, authored by Don Arnold.

The total picture of water heater models offered today is rather large and complex. Before getting into all the variations, it is important to understand the basics, which is what this segment is all about. We won’t be getting into the anatomy of components and features this time, but rather, establish the primary points of distinction when it comes to specifying products in this category.

Storage Vs. Tankless

If the peak usage requirements of the installation exceed the rate at which the water can be heated, a quantity of heated water needs to be kept in reserve — in a storage tank. The size of this tank is also related to peak usage needs (small for light demand, large for heavy demand).

Since there is an expense to keeping 40 or more gallons constantly heated, there is an advantage to the demand type of heater that uses no storage tank (also called “instantaneous”). In this case, water is heated as required — not stored. The downside here is capacity — demand units generally cannot provide an adequate supply of hot water in installations with heavy demand (unless more than one is installed).

From the standpoint of economy, selection between these two basic options should include a comparison of the purchase cost of the unit, typical long-term servicing requirements, and an accurate estimate of energy savings of one type over the other.

Direct-Fired Vs. Indirect

A direct-fired water heater is one which is self-contained; that is, the means of heating is located in the same basic appliance where the transfer of that heat to the water takes place. An example of this would be a gas unit in which the burner is located in the base (sometimes called “underfired”), providing heat to the water in the chamber just above. Direct-fired designs can be a variety of other specific things, but they all have this self-contained characteristic.

Conversely, an indirect heating system is one in which the heat source is located apart from the place where that heat is transferred to the water. A common example is a steam or hydronic boiler used to provide both building heat and hot water for the plumbing fixtures. The system circulates some of that steam or water through a coil in an independent tank where its heat is transferred to the supply water.

Fuel Or Energy Options

The most widely used type today is gas, with both natural and propane types available. Oil is less common as a fuel source for water heaters, especially in direct-fired designs. Indirect systems sometimes utilize oil in the sense that it is used to fire the boiler from which a steam or hot water transfer line is run.

The second most common heat source in direct-fired designs is electricity (technically not a fuel, but an energy). Because this source does not use combustion in the heating process, it makes possible a comparatively simple construction in which one or more heating elements are immersed in the water. Another advantage of electric models is that they require no flue or venting.

There are two sub-options under the category of electric water heaters:

  • Resistance: The most common, this involves one or more heating elements immersed in the storage tank.

  • Heat Pump: Basically an air conditioner operating in reverse, this system absorbs heat from the ground, air, or nearby water into the evaporator side of its phase-change loop, making possible a very efficient operation. Its use is limited mainly to moderate climates, however.

The last energy source is the most recent on the scene — solar. This involves the gathering of radiant heat from a rooftop collector and circulating an absorbing fluid through a closed loop to an exchanger where it is transferred to the supply water.

Rating Factors Efficiency

All water heaters today are given efficiency ratings referred to as the Energy Factor (EF), which essentially tells you how efficient the energy source is transferred to the water and how well it prevents losses during storage. The higher the EF rating, the more efficient the water heater.

Efficiency is not the same thing as operating cost. While electric units are generally rated higher than gas in the efficient use of the energy source utilized, they are usually not less expensive to operate than gas models. In other words, electric heaters may be more efficient in their use of that energy source in heating water, but not necessarily less expensive to operate.

EF ratings are based on new operating conditions. Performance typically declines with time due to sediment build-up. Some manufacturers offer self-cleaning features to minimize this factor.


Simply put, this refers to restoring the heater’s volume of heated water (at the selected temperature), once it has been depleted. Translation: If you used up all the hot water taking a long, hot shower — how long will it take to get a supply of the hot stuff again? Industry definitions say it this way: “the amount of hot water the heater is capable of providing in a given period of time.”

There are two key factors in such an equation: degrees of temperature rise required, and gallons per hour (gph) that can be produced at that level. Therefore, if a heater is set to store water at 120 degrees F, and the incoming water supply is 40 degrees F, you need a temperature rise of 80 degrees F. Given this, your recovery rate is the number of gallons that can be heated to that level in one hour. Obviously, the higher the number, the better the rating.

First Hour

While it would seem that the basic capacity of a water heater should be the basis of sizing a heater for a particular installation, the peak hour demand capacity, referred to as the “first hour rating” (FHR), is actually more important.

The FHR is a measure of how much hot water the heater will deliver during the busiest hour of use each day (like morning shower time). In such calculations, the full capacity of the tank is not assumed, but rather 70 percent of it (because of the dilution of incoming cold water). Therefore, the capacity of a 40-gallon heater is based on 28 gallons, using this formula.

From there, the recovery capabilities of the heater come in to play (number of gallons that can be heated to a given temperature rise), and those two factors added together give you the FHR for that model.

Premium Models

At a pricing level a notch or two above the basic commodity gas models, most suppliers today offer types with one or more added features:

  • Maximum Fuel Efficiency: Following the lead of improvements made to furnaces and boilers, water heater manufacturers have developed models in recent years that provide maximum efficiency through added control of the combustion process. Another way to say this is that these units achieve a more complete burning of the fuel supplied. A side benefit of this is a reduction in air pollutants. You see such models sometimes referred to as “low NOx” models (meaning low in nitrogen oxides being delivered into the atmosphere).

  • Power Venting: These models utilize a fan for venting combustion gasses (unlike conventional gas heaters, they require an electrical supply). They also allow relatively long distances of vent piping (using plastic piping) from the heater to an outside wall, providing more flexibility of placement within the house or building. In contrast, conventional gas models use a simple convection type of venting with metal flue piping, and must be located a relatively short distance from a chimney.

  • Direct Venting: This type uses a closed combustion system (not open to room air) and a two-pipe venting arrangement in which one brings supply air in from outside and the other sends combustion gasses back out (usually through an outside wall).

Coming Soon — Flammable Vapor-Resistant Models

New standards for gas models set to go into effect beginning March 1, 2003, will require a sealed combustion chamber with safety shut-down to reduce the risk of external flammable vapors (from outside the heater) from being ignited by the gas pilot or burner. Full implementation will be required by the end of 2005.

The College of Product Knowledge ran in Supply House Times for three years and resulted in a reprint manual that sold for many years to follow, totaling thousands of copies. It became something of an industry classic. Much of the original training material is still applicable to the products sold today – but there is also much in the wholesalers’ product mix that is new since then. The purpose of this updated series is to look at what has come along since the first edition.