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I am thinking about replacing my 40g indoor gas water heater. Is there a particular one that you guys can recommend?
It will cost a little more but since you have gas I would consider a tankless water heater. Speak with a local tankless sales person, or a trusted plumber, and they can point you in the right direction for the best brand to fit your needs.
Tankless heaters are slightly more efficient but aren't as problem free or long lasting as a standard gas water heater. They're also more expensive, but that cost may be offset with tax credits. Forced air exhausts are noisy, so you need to be careful of that aspect. Stores will try to steer you toward the tankless units and show you how it can pay for itself, but their examples usually don't take into account the chance that you'll have to replace it twice as fast or pay for a lot more service calls than you'd have to with a regular tank heater.
It's hard to go wrong with a standard replacement unit. One thing to keep in mind is that you might need to add an electrical circuit for the igniter if you're replacing a water heater with a pilot light.
As you have stated, and been made aware of- tankless isn't all it's cracked up to be (look for the thread I started- Tankless water heater rehash).
As far as a conventional tank-type W/H, there are several features to look at/compare.
The more efficient the better- more $$$. Some actually recirculate the exhaust to maintain a high efficiency rating and can be vented with PVC pipe- just like some of the newer high efficiency furnaces.
Some have pilotless ignition. And another feature, some still use f/glass insulation- the better units use foam injected insulation.
Another option to think about- if you think your usage will increase within the next ten years (more people living in the house, or little ones becoming teenagers), you may want to go from 40gal. to at least 50gal.
10 years old. It seems it consumes too much gas. With just 2 of us and 1 quick shower a day, it uses 60 CCF a month!
What other appliances to you use that use gas? Furnace? Spa? (Sneaky neighbors plumbed to your gas line....?)
What is your break even date? Say you spend $500 to save $10/month on gas, that's 50 months. Is it worth it?
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