Back in June, I wrote about “A DIY Lesson Learned”, where I shared my experience of attempting to repair our hot water heater. After spending too much time and effort to fix it myself, I promised that I would just call a professional the next time a home repair was needed. It turns out, I didn’t have to wait long to see if that lesson had really sunk in.

It all started when someone flushed a toilet while I was taking my morning shower. The warm water became very cold, then scalding hot. In the previous 12 years we have lived in our home, this had never happened before. In my college days, a sudden change in shower temperatures was such a common occurrence in the communal dorm showers that it was expected that someone about to flush would announce their intent and wait for anyone in the shower to acknowledge they were aware of what was coming. “Crapper,” the flusher would yell! “Shoot it,” those in the shower would reply, when they were clear of the inevitable eruption of ice and fire.

For some reason, my family wasn’t very eager to implement a similar practice in our two-story home with four private baths. So, I called a plumber. He inspected our two 40-gallon propane hot water heaters that were originally installed when the home was built in 2006. He explained that time and the hard water in the Austin area had caused lime scale deposits to form inside the heaters and in the water lines. He could flush them out and replace some connections, but it would only offer a temporary reprieve. It was time to start shopping around for alternatives.

The first thought was to just replace what we had. (In case you are wondering, natural gas isn’t available in my neighborhood.) According to the Energy Guide labels still attached to our old water heaters, each burned about 250 gallons of propane every year. At the current price around $2.80 a gallon, that is about $1,400 a year that I was spending to have hot water. I could have replaced the water heaters with a similar model with about the same energy efficiency for $1,000 each.

A friend suggested that I should consider a “tankless” system, so I called a company that he had used to install his. The salesman said, “about $5,000 for limitless hot water”. That included plumbing and electrical upgrades as well as the new equipment (including a small tank to add capacity to the system). The system was estimated to use about 200 gallons of propane per year, or about $560 a year at current prices. The $840 per year I would save in propane costs would “pay” for the new system in a little under 6 years. That sounded pretty good, but I wanted to sleep on it.

The problem is that I don’t tend to sleep well when it comes spending money. So, instead of dozing, I spent a good portion of that evening surfing the web for more information about tankless hot water systems. It was during a typical attention deficit detour that I stumbled on an article about heat pump water heaters.

A heat pump water heater uses the same principals as a refrigerator, only in reverse. Instead of transferring heat from the inside of an insulated box to your home, it moves heat from air outside the tank into the water within. A hybrid heat pump water heater also has traditional electric heat elements for when the air temperature dips below the level needed to extract heat. In warm climates, like Austin’s, the heat from your garage or attic will likely be warmer than the minimum level needed (45 degrees Fahrenheit) most of year. In other words, the more efficient heat pump will do the heating most of the time.

I found an 80-gallon electric heat pump water heater at Lowe’s for about $1,900 that was rated to use about $225 per year in electricity. I called my plumber who said it would cost about $1,000 to wire and plumb the new heater. In just a little over 3 years, or about half the time of the tankless system, I would recoup the purchase and installation costs in energy savings.

But then, it got even better. As I was about the place the order, I noticed that under the listed price on the website there was a link that said, “PLUS, up to $800 in rebates”. It led me to Austin Energy’s “Rebates & Incentives” page, where I learned that Austin Energy would, in fact, rebate $800 of the purchase price of the heat pump water heater. That dropped my total out of pocket cost to $2,100 plus tax, which I would recoup in about 2 years!

Not only that, but I will be using substantially less energy while continuing to save more than $1,000 per year in fuel costs after that. It’s not often that a “green” choice offers so much green return. (For example, I recently got a quote on solar panels that would take about 16 years to pay off in energy savings, and that was with Federal tax credits and incentives from Austin Energy!)

How’s that for a hot (water) alternative investment tip?

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