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Rinnai R75LSi Tankless Water Heater: First Year Costs

One of the reasons we bought a tankless ("on demand") water heater was for the luxury of never running out of hot water. However, another big driver was saving money. After a almost year of having the Rinnai, we're still very impressed with both the functionality and cost savings over the original oil burner setup.
Rinnai R75LSi Tankless Water Heater: First Year Costs

Rinnai R75LSi (from www.rinnai.us)

Original Setup

Our house, which was built in 1992 when oil was $1 a gallon, originally used an oil burner to run both the radiant floor heat, and the domestic hot water tank. As best I can tell, the same "hot loop" went through both the three zones of the floor heating system and the holding tank.

As a result, we had to set the oil burner to a very high temperature (160° - 180°) in the winter in order to have enough domestic hot water and run the floor heat at the same time. This temperature is most likely higher than the floor heat should have been set, and it still was only good for one and a half showers in the morning!

Tankless Water Heater

After living with this for a few years, we did some research and decided to have a tankless water heater installed. Leon Clayberger came to our house, gave us a presentation, and did some water testing to ensure that our water supply was pure enough to not clog the internals of the unit.

Leon did a great job installing the Rinnai R75LSi, and the total cost of the labor and install was $2,375. In addition, we received a $200 rebate from Pennsylvania, and a federal tax credit of 30% (up to $1500) which came to $712.50.  If I recall correctly, the full tank of propane and the "set fee" was around $400.

When you turn on the hot water, the tankless ("on demand") heater pulls cold water in and heats it to the temperature that we set on a thermostat in our living room. The downside is that it takes awhile (up to a minute at the far end of the house) to really come up to temperature. We don't often experience the "cold water sandwich" effect because we have his and hers showers, and we let the hot water run in some cases where we'd turn it off and on.

On the positive side, once it gets there, it stays there for as long as you need it. Last fall, we had a houseful of guests, and ran showers for nine people all morning long without any issues! And, we can set it low for Eddie's bath, medium for Kristen's shower, and high for mine.

Oil Costs

It's tough to determine the exact cost of the oil used to heat the domestic hot water (as opposed to the radiant floor heat) because the same oil burner powers both. However, my best approximation is to take the periods where we filled the tank at the end of the winter (February/March) and topped off again in the fall.

During the summer months, when the floor heat is turned off, we usually used around 1.1 - 1.2 gallons of oil per day, which at $3+ a gallon came to $100 a month to heat the domestic hot water. Ouch!

Propane Costs

Fortunately, the propane costs are much more clear cut! The tank was installed on 7/23/2010, and we just received a bill from our supplier for our most recent fill-up. The breakdown is as follows:

Date Gallons Total Price Gallons Per Day Days Dollars/Gallon Dollars/Day Dollars Per Month
09/22/2010 23.0 $67.60 0.38 61 $2.94 $1.11 $33.80
12/06/2010 42.3 $127.74 0.56 75 $3.02 $1.70 $51.95
03/01/2011 49.6 $163.72 0.58 85 $3.30 $1.93 $58.75
06/30/2011 43.9 $150.93 0.36 121 $3.44 $1.25 $38.04
10/26/2011 61.7 $202.99 0.52 118 $3.29 $1.72 $52.47
02/24/2012 68.2 $230.88 0.56 121 $3.39 $1.91 $58.20
06/20/2012 39.2 $132.89 0.34 117 $3.39 $1.14 $34.64
09/26/2012 43.6 $155.30 0.44 98 $3.56 $1.58 $48.33
01/24/2013 61.4 $203.37 0.51 120 $3.31 $1.69 $51.69
04/30/2013 40.3 $132.03 0.42 96 $3.28 $1.38 $41.95
08/01/2013 42.8 $139.75 0.46 93 $3.27 $1.50 $45.83
11/27/2013 63.3 $215.76 0.54 118 $3.41 $1.83 $55.77

So, we're averaging around $48 a month for propane to run the tankless water heater, which is a huge improvement over the $100 a month that our inefficient oil system was using!

Cost Savings Payback

If we assume a savings of $52 per month, that's around 44 months, or just shy of four years, for the savings to pay for the cost of the new water heater.

If we factor in the state rebate and federal tax credit (although tax credit math may not be that simple) it may be as low as 27 months, or 2.3 years.

Versus A Gas/Electric Hot Water Tank

The numbers I can find for the costs of an gas or electric hot water tank ($30 - $40 a month) are fairly comparable to the monthly costs that we're seeing for our tankless.

Had we started with a standard hot water tank, we might not have taken the jump to a tankless. A Consumer Reports article from 2008 titled "Are tankless water heaters a worthwhile investment?" supports this conclusion. The potential for increases in electricity prices may change this balance in the future!

However, given our initial situation with the inefficient oil heating system, and the luxury of always having enough hot water, it was a no-brainer to go with the tankless!