Published: January 13, 2014


Tank-type condensing gas water heaters work much like their standard counterparts except instead of venting the combustion gases directly to the outside, the gases are captured and used in heating the water. This enhancement increases their efficiency significantly. Condensing water heaters are a proven technology (they've been used in commercial applications for 20 years) and, with funding from the U.S. Department of Energy, have been re-engineered for the residential market.

Hot Water By Kevin Dooley [CC-BY-2.0 (], via Flickr

Condensing gas storage water heaters achieve thermal efficiencies between 90 to 96 percent, and energy factor ratings of 0.7 to 0.8. These water heaters extract more heat from the combustion process by forcing the exhaust gas through a long spiral coil. In the process, the exhaust gas cools, changes to liquid and is drained away. Any remaining exhaust gas is vented using an electrically powered fan.

Key components

Typical water heater storage tank

From the outside, this water heater does not look much different than a standard gas storage water heater. It has a large, insulated water tank that is heated by a gas burner.

Condensing technology

A draft-inducing fan is used to move air and fuel into a sealed combustion chamber inside the water tank. As the fuel burns, the combustion gas is exhausted through a coiled steel tube that is submerged inside the tank (a secondary heat exchanger). Both the combustion chamber and the secondary heat exchanger have a lot of surface area which maximizes transferring the heat to the water. Through this process, the combustion gases cool enough so that the water vapor in the exhaust stream condenses and releases latent heat. This latent heat is also transferred to the water. Ultimately the exhaust gas is cool enough to be vented through plastic plumbing pipe.



Implementation costs


Market barrier(s)


Condensing gas storage water heaters are high efficiency choices when replacing a standard gas storage water heater. For some homeowners looking at on-demand or tankless water heaters, a condensing storage water heater may be a better option. While a condensing storage water heater may be more expensive, installation costs are frequently less expensive than for tankless water heaters, especially if replacing a conventional storage water heater.


Reduces energy used for heating water:
Doesn't require lifestyle changes: because it is a storage water heater it doesn't impose some of the limitations associated with tankless water heaters (waiting for hot water and unable to get hot water at low flow rates).
Good replacement option: it has the same footprint as a conventional storage water heater so works well in replacement situations.

Challenges and market barriers

Cost: this technology is new to the residential market and a condensing storage water heater is still considerably more expensive than conventional water heaters.

Statewide energy savings

We took a high-level look at the potential energy savings in Wisconsin from residential condensing water heaters. The estimate is meant to provide a sense of scale showing the impact this technology might have on Wisconsin energy customers.

This technology will likely penetrate the market primarily as a replace-on-burnout technology. However, for purposes of estimating statewide impacts, we assume that all homes that currently have gas water heaters replace them with condensing water heaters. We applied a technical savings rate of 30% to the residential natural gas load attributed to water heating.

All data used for these estimates are from the Wisconsin Energy Statistics (2012) and Department of Energy's Residential Energy Consumption Survey data (2010).

Financial incentives

There are not currently financial incentives available through the Wisconsin Focus on Energy program for residential condensing water heaters.

Condensing Storage Water Heaters
The Lunt Marymor Company from the San Francisco Bay area has seen an increasing interest in condensing gas storage water heaters from their residential customers. They recommend condensing storage water heaters to customers replacing a standard storage water heater since it doesn't require lifestyle changes that may come with switching to a tankless water heater.

Condensing Natural Gas Water Heaters
The U.S. Department of Energy evaluated several energy-saving technologies, including condensing storage water heaters. They concluded that a condensing water heater with an energy factor of 0.86 would consume roughly 30 percent less energy than a conventional storage water heater.

Energy Efficiency Programs that Promote Condensing Water Heaters
MassSaves, the Massachusetts statewide energy efficiency program, offers a $500 rebates on condensing residential water heaters, with a 95% Thermal Efficiency or greater. Programs like these encourage residents to purchase higher efficient equipment

Condensing Storage Water Heaters
This article appeared in the June 2009 issue of The Journal of Light Construction. The author asserts that condensing storage water heaters are 96 percent efficient and generally easier to retrofit than tankless models.
citation. "Condensing Storage Water Heaters," by Jim Lunt, accessed April 14, 2014.

Development of a Market Optimized Condensing Gas Water Heater
Final technical progress report to the U.S. Department of Energy on the development of a natural gas condensing water heater suitable for the residential market.
citation. "Development of a Market Optimized Condensing Gas Water Heater," by Peter Pescatore, accessed April 22, 2014.

Condensing Natural Gas Water Heaters
Short article in ASHRAE Journal reporting on the energy saving potential of this technology.
citation. "Condensing Natural Gas Water Heaters," by Peter Pescatore et al, accessed April 22, 2014.