How will the new water heater standard impact your business?

Two contractors weigh in

By Carolyn Greene and Jeff Enloe

In little over a month, on April 16, NAECA 3 will go into effect. This is the next phase of the National Appliance Energy Conservation Act (NAECA), which pertains to residential water heaters. The U.S. Department of Energy has estimated this new regulation could save over $60 billion in energy costs through 2044.

The energy savings is the result of boosting the minimum energy factor of a gas tank type water heater by at least two points, and electric heaters as much as five points. Gas tank heaters over 55 gallons could have their energy factors raised as much as 20 points, and electric tanks as much as 111 points. This change will affect all standard tank type water heaters in ways that will have an impact on your business.

As fellow contractors and business owners, we would like to present what we consider to be the major implications to our trade due to the NAECA 3. Some of this is speculative, and we must await the roll-out of the new higher efficiency models from the water heater manufacturers to confirm the changes. The water heater manufacturers, their representatives, distributors, and contractors all agree that the new standard will definitely have some issues regarding the installation of the new more efficient water heaters.

NAECA 3 consequences: Bigger and more complex units

Water heater manufacturers can continue to manufacture current models up to April 15, and they can be distributed, sold, and installed for as long as inventories last. But as of April 16, manufacturers must produce only models meeting the upgraded standard. We believe that the inventories of older models will last into the summer, and then everyone will be dealing with the new NAECA 3-compliant models.

So, what will a two-point energy factor upgrade of tank models result in? There are several issues that come to mind regarding the new heaters. First is the size of the water heater. To get the high energy factor these heaters are going to have more insulation. The additional insulation can make the actual size of the new water heater 2 inches or larger in diameter, and 2 inches or more in height. Due to the increase in size, there are several things to keep in mind. How will you transport the larger heaters? Will they fit on your existing trucks? Also, what might have only needed one technician to install could now possibly take two, especially if your guys have to haul them up or down a flight of stairs.

The increase in size can also cause other issues. The heater might not fit where it had been located before and now the new heater might have to be moved to a new location. For example, in homes where the water heater is located in a closet or an alcove or in the case of some multifamily homes the new heaters might not fit. You will also need to consider the doorway the new heater might need to go through. What if the heater is wider than the door? Depending on the exact circumstances you encounter, fitting a new water heater unit in one of these areas may be quite a challenge, and might require re-piping the gas, venting, electric, and/or water lines. Re-piping will take more time, and the cost to the customer will increase.

Techs will also need to get up to speed on the new units, because some will now come with dampers and blowers. Techs used to installing natural gas tank units might have to consider how to connect to an electrical supply if the new heater has a blower. Some electric heat pump units will now need a drain for condensate. This will be something new that techs will have to think about when installing one of these units. Where will they run the drain line? Heat pump water heaters in general will require a duct, or 10 feet by 10 feet of space around them to breathe; that’s like bringing the air conditioner condenser unit inside a house! Techs will also have to have refrigerant recovery licenses to work on the heat pump type heaters.

Dealing with customers

It would be wise to start informing your customers now about the new regulation. We believe that these new heaters are going to cost more, so it would be better for your customer to replace that old heater now before they have to possibly pay more or worry if the new heater will fit in the current water heater location. Once current inventories are exhausted and you have to install a NAECA 3-complaint water heater, proceed with caution in terms of pricing and making assurances that new units will fit in tight spaces.

You will certainly need to personally examine and inspect new units from your preferred manufacturers so you know what you’ve have to offer. Also, compare across manufacturers to determine, for your specific business and customer types, who has delivered the more innovative solutions in response to the new standard. Talk with your supply house or manufacturer’s representative to learn more about what they are doing to make their heaters compliant to the new regulation. As always, please read the manufacturer’s installation instructions, as they will be more important than ever. This simple act will help eliminate making installation errors and suffering complaints and callbacks.

Tankless units and the new standard

Speaking of upgrades, most tankless water heaters on the market today are not affected by the change in the energy factor; they already meet or exceed the standard. The changes in sight for tanks, such as the physical size increase, coupled with connection issues and higher costs, will create a more level playing field in terms of financing an upgrade to a tankless unit. Tankless water heaters also bring additional benefits over tank types, such as a small footprint to fit in a lot of places the new tanks won’t; plus higher efficiency and a better warranty. Tankless units aren’t the best fit for all applications, of course, especially in homes that use a lot of water, especially at the same time. But, in light of the new standard they are an option your customers can consider. 

Carolyn Greene is president of K.E. Greene Mechanical of Holly Springs Ga. Jeff Enloe, owner of Blackhorse Plumbing, Lilburn, Ga., also contributed to this article. Both are Accredited Bosch Contractors.

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