How Indirect Water Heaters Save You Money

By HomeAdvisor

Updated June 15, 2017

Indirect Water Heaters

An indirect water heater is one of the most energy-efficient, low-cost water heaters on the market today. In fact, when paired up with a specially designed high-efficiency boiler or furnace, these water heaters steal the show. Whether you need a replacement for a broken heater or you’re just looking for a smart, water-heating alternative, an indirect model water heater should be at the top of your shopping list.

How an Indirect Water Heater Works

Not to be confused with a tankless coil water heater (though they are similar), an indirect heater uses a storage tank and the heat from your boiler or furnace to provide your home with all the hot water you and your family needs. In an indirect system, water is heated up by your main boiler or furnace through a heat exchanger attached to the space heating unit. That water is then moved by the water heater into a storage tank, much like a traditional water heater, where the hot water is kept until it’s needed.

How an Indirect Water Heater Saves you Money

Compared to other alternatives, an indirect model water heater saves you money in two distinct ways. The first and most important way is by utilizing your space heater to heat water. By using your furnace or boiler to heat water and air you are getting more bang for your buck compared to a traditional model, especially during cooler months when your furnace or boiler runs regularly anyway.

An Indirect Water Heater Pays Off in Summer, Too

If outdoor temperatures always remain cool, then a tankless coil water heater would be all a person needs to get energy-efficient water heating. In fact, if you do live in a cold climate it probably pays to compare the two types of heaters in order to find out which is going to be more effective for your situation. It’s for the rest of us living in warmer climates that the storage tank on an indirect unit becomes a nice addition. With both tankless coil and indirect systems, your main furnace or boiler will have to kick on to heat water, even when it’s 100 degrees outside. With a good storage tank, however, you can drastically reduce how often your heating system needs to fire up in order to provide hot water to your home.

Second to One

When it comes to smart decisions regarding energy-efficiency and cost-saving measures for heating water, there are few options better than indirect water heating. In fact, solar water heaters are the sole option that gets higher efficiency ratings, an advantage that barely holds up if you partner your indirect water heater up with a highly efficient boiler or furnace as the heat source. And since solar water heating still isn’t practical for many climates and homes, an indirect model is your best bet when it comes to installing a unit that combines optimal hot water output with energy-efficient performance.

Installing an Indirect Water Heater

While do-it-yourself installation isn’t impossible, many homeowners choose to hire this job out to professionals. Installing an indirect water heating system, much like installing a boiler, requires at least a basic knowledge of several different home improvement skills, including plumbing, HVAC, and electrical work, and is over the heads of many weekend handymen. Hiring a pro is the only way to ensure that your new water heater will perform at optimal efficiency, and save you money long into the future.

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  1. James, November 22:

    Having lived with an indirect-fired hot water heater for about 4 years, we are pulling ours out to replace it with a traditional direct-fired HWH. We find the indirect-fired HWH to be substantially inferior in 3 areas: 1) if hot water is exhausted, reheating the tank requires significantly longer than with a standard HWH. We basically never run out of water with a 40G direct-fired HWH. We regularly run out with our 40G indirect-fired HWH if we have guests or any unusually heavy load. 2) Hot water temperature fluctuates significantly more than with a standard HWH. Sometimes the water comes out way too hot, other times it seems not to be hot enough. 3) A valve problem during heating season creates a very dangerous condition for scalding, since the hot water can be heated continuously when the boiler is running for house heating (we experienced this problem, and had to be very careful until we found the issue and fixed the valve); 4) finally, heating water this way during the summer is very inefficient — especially if you don’t have a very high efficiency boiler. The boiler must turn on, heat up water in the loop, then heat up water in the tank.

    I do agree that the 4th issue would probably not be so much of an issue with a modern high-efficiency boiler.

  2. Patrick, September 17:

    We have had no problems with an indirect water heater for over 40 years. The tank is a 40gal stainless steel Ford [ $350 ] which has been used with the 1st and 2nd Weil-Mclain boilers in an upstate NY home. When away for any length of time I just turn off that zone valve.

  3. Shaun, January 15:

    James you clearly have an issue, recovery rate on an indirect should be MUCH higher than any direct fired water heater. I’d think there is a piping issue(sizing, run, etc) and/or a circulator issue(wrong pump/zone controller) or potentially the coil in your tank is fouled and is not efficiently transferring the boiler heat. If your zone is properly setup your 40 gal indirect should have 75k BTU’s at it’s disposal to heat water which is effectively 2x-3x what you’d get out of the same size gas water heater. The water in a perfect install doesn’t fluctuate much in temp(set the aquastat at around 20 degrees less than your boiler, in my case 165 deg boiler so 145 degrees on the aquastat) but it can and does happen sometimes which is why all installs should have a tempering valve(set the temp to a safe temp or even install multiple so you can deliver different temperatures to different rooms(Baths at 120F, Washer/dishwasher at a higher temp). In an install with a mod-con boiler is super efficient with it’s own zone, even with a standard boiler it can be efficient provided you tank matches your boiler size(if you tank calls for 100k btu’s and your burner is 200k non-modulating then it is inefficient in the summer. Pretty much any boiler marketed today(83%-98% efficient) is markedly more efficient than the burner on a hot water tank(outside of the fairly uncommon condensing models 65-70% efficiency is as good as it gets).

    The real cons are the cost, the tank itself is around $1500, the install is not simple or straightforward(zone controller, pump, plumbing for the loop, aquastat wiring) by the time you get done a proper install can cost 4-5K. Chances are if you don’t have one and haven’t found a need for one you are better off with the old fashioned tank units. If you home was setup with one you likely would need to extend you gas lines, figure out venting(a chimney or a direct vent setup) to go to a regular gas water heater. The other con is if the boiler breaks and those mod-con boilers do, you now do not have heat nor do you have hot water and it can take days to fix as the parts are not all that common or stocked on most plumbers trucks.

    If you have a large home you can get a big boiler 300-500k btu mod con unit and a 50-75gal indirect heater to provide unmatched volumes of hot water at the highest efficiency. A 50 gal unit delivers 225gal in the first hour, that compares to a 50 gal regular water heater providing 80gal or even 100 gal tank which does 140gal. It really only makes sense for people consuming lots of hot water which is why you tend to see them in high rise buildings.

  4. Jim, January 23:

    It would seem that the disadvantage of an indirect hot water heater is that in the Summer my oil burner would still be firing up and using up oil. Oil cost more than electricity. If instead I installed an electric hot water heater my oil burner would never go on in the Summer. Is this correct or am I missing something?

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