An on-demand hot water heater saves energy associated with stand-by losses from a conventional
water heater tank. You need to replace your water heater and have a choice between stand-by natural
gas heater (EF=0.75 (efficiency)) for $1000 and a conventional natural gas water heater (EF=0.65) for
$750. Annual heated water usage amount is 60,000 gallons. The heaters would be located in the
basement with average air temperature of 65℉ and the hot water setting is 125℉.
a) What is natural gas energy required to keep the conventional heater tank at desired temperature?
b) What is the annual energy savings of the on-demand heater over the conventional heater based on stand-by losses?
c) If natural gas costs $1.10/therm, what are the annual monetary savings of the ondemand heater and the simple payback time of its incremental cost?