A.O. Smith Hot Water Heaters: Where Being in Hot Water is a Good Thing

Last month, I had the pleasure of interviewing David Chisholm of A.O. Smith about their line of efficient water heaters.  What makes A.O. Smith’s water heater product line so unique is the variety they offer:  ultra-efficient (gas or electric), tankless, solar or a hybrid water heater.   As David explained, A.O. Smith is committed to finding the right solution for your desired application.

So, why worry about your old water heater?  According to the American Council for Energy Efficiency, “after heating and cooling, water heating is typically the largest energy user in the home because it is necessary for so many domestic activities.”

[podcast]http://www.green-talk.com/podcasts/AOSmithwithEdB.mp3[/podcast]

I urge you to listen to the above  20 minute podcast as David thoroughly explains each of one of the A.O. Smith water heater products.  Then, I have a treat for you.  Ed Beagley, Jr. sat down with me (well, stood up with me) and gave me his thoughts about his own A.O. Smith’s ultra-efficient water heater!  However, if listening to the podcast is not your thing, I had the podcast transcribed. I edited the transcription to make it easier to read.  It is lengthy, but chalk full of amazing material.

The Interview

Anna Hackman: Hi. This is Anna Hackman and I’m here at the Green Expo with David Chisholm of A. O. Smith. He’s going to walk us through his high efficiency water heaters. David, tell me a little bit about the five products here. Briefly go through what A. O. Smith has to offer.

David Chisholm: Sure. A. O. Smith has been involved with home portfolio high efficiency water heating. So, we recently launched, about a year ago, a number of products. Regardless of whether you’re interested in natural gas, electric or even solar water heating, we have a whole host of products available for various applications now.

AH: Now, let’s go through each one individually and what makes it so much more efficient.

Vertex High Efficiency Water Heater.  Ed Owns this One.

DC: Okay. The first product, we’ll talk about is the Vertex. It’s a high efficiency water heater. We actually developed this one in conjunction with US Department of Energy. They approached us and said, “Can we bring to market a new, more efficient, gas water heater?” We took the technology that was already existing with our Cyclone Technology, a commercial product, and brought that to a residential product.

So, that’s the Vertex. It’s got an internal coil that allows us to get to 96% efficiency. So, it’s more efficient than tankless, it’s more efficient than any other gas product on the market and the benefit to the homeowner is obviously, they’re going to save money on the utility bills. But on top of that, because it’s more efficient, you can get a continuous flow of hot water. So, people are after more hot water, more efficient hot water, the Vertex answers that solution.

AH: And can you use one of those on-demand systems like, you know, those pipes that goes on-demand so that it’s not running all the time?

DC: Absolutely. You can do the re-circulating systems on-demand, this is what we recommend so it’s not running all the time and wasting energy. So, we’re circulating hot water through the home the whole time but when you need it, you push a button or there’s a motion sensor that kicks the pump on and re-circulates the water. And now you have hot water instantaneously at your tap but you’re creating the hot water very efficiently with the 96% efficient appliance.

AH: One thing that… Before we went into this interview, we’re talking about venting and I have a house that’s all electric. So, explain to me what… How this is different to vent?  When we think of venting, we think all the way up to the chimney. That’s going to be a hassle. But that’s not the case with this particular product.

DC: Right. The Vertex is a natural gas product. So, you will need natural gas in your home. But if you’re predominantly electric, the only thing with special consideration is venting. But the nice thing with the Vertex is that it’s PVC vented. So, you can either go vertical or horizontal venting with this. So, for example, you’re in a garage next to an exterior wall, you literally can take that vent and go out that sidewall to vent the products in very, very easy installation, especially on replacement applications where you might have had a standard gas model. All you have to do is put this in, vent it with PVC and you’re good to go with a more efficient water heater now.

What Make A.O. Smith’s Products Different than the Competition?

AH: Now, I know you can’t talk about specific competitors. But, tell us a little bit how your product is different than what you’re seeing out in the market.

DC: One of the advantages that A. O. Smith has is that we are hot water solution providers. So, regardless of whether you’re gas, electric, solar, hybrid, whatever your needs are we have a whole portfolio. Nobody else in the industry can say that they have a more complete, high efficiency portfolio than A. O Smith. This is predominantly our advantage is that we’ve got a host of products.

Nobody has a product like the Vertex. Nobody has a hybrid gas product like our NEXT Hybrid. Our heat-pump product has the advantage in the market place because of the additional storage. It can provide better savings and better performance for homeowners. So, it really is a fact that we’ve got a broader product line, a more complete product line and that we can provide solutions regardless of what the homeowner’s needs are.

AH: I’m still a little confused because I do know there’re other products in the market that are being offered. What for instance makes your newest model, so much more desirable.  Is it more efficient? I’m a little lost here.

DC: This product launch was an entire portfolio. So, it entailed a tankless product, condensing like tankless product line, a hybrid electric product line, a hybrid gas product line and a solar thermal product line. So, when I say that nobody has a more complete line, you might find certain manufacturers with solar and you might find certain manufacturers with a hybrid electric or heat-pump water heater. But it would be a different manufacturer. So, you could go out and piecemeal a portfolio like what A. O. Smith has but not with one manufacturer. So, the advantage that we have as a manufacturer is that no matter what you need, no matter what your particular requirements are, we’ve got a product for you.

AH: Now, let’s talk about payback on the condensing boiler.

DC: Sure. On the Vertex product, what we’ve seen in the ballpark of 30% – 40% energy savings. So obviously, the more hot water you use, the more you’re going to save when you go to a higher efficient water heater. So, for example, if you’re at home and you’ve got two or three kids and you’ve got teenagers that like to take long showers and you’re already paying a lot for hot water.  You really will benefit by going to a high-efficiency technology like the Vertex. Or, if you’re electric only, going to our Voltex which is an electric, hybrid-electric heat pump product, very, very efficient, great payback stories particularly when the people were using a lot of hot water before. Additional advantage for both of those products is that there’s a federal tax credit available for both of those, helps bring that price down.

DC: And then, on top of that many markets, there’s also local utility or state rebates in addition to the federal tax credit that helps bring that price point down again. So again, it is more expensive up front, but the payback typically for the entire efficiency products, we’re saying just a handful, few short years and then you’re 2, 3, 4, 5, 6, 7 you’re putting significant money in your pocket. For example, the hybrid electric product, you can expect to save roughly $350 a year. I mean, that’s significant money, year in and year out over a standard electric water heater based off of the efficiency.

What About Price?

AH: Now, let’s talk about price. I know the price that you’re going to give me is different in each region and plumbers cost “X.”   Just kind of give me a range for each one of the units. And then I just want to go back and have you give me a little bit more detail on the other ones that we haven’t touched upon. So let’s do that first. Let’s talk about price a little bit.

DC: Sure. The Vertex product, the homeowner can probably expect somewhere in the ballpark of $2000, $1800-$2000 is probably a good expectation. And then, the annual cost of operation savings is going to be somewhere in the several hundred dollars’ savings, the annual cost of operation. So, by the time you take that off and you take the federal tax credit, local utility rebates like I said, two or three your payback, somewhere is that ballpark.

The hybrid electric product is going to be a similar price point on the electric side. But it’s again, $350-$400 annual cost of operation. So, the payback is specifically quicker with the hybrid electric if you have a standard electric just because it’s so expensive, the heat with electricity, natural gas is a cheaper way to heat hot water typically and most markets, now that varies across the country.

The EFFEX Product-High Efficiency Gas Product

DC: This one we didn’t talk about too much. This is the EFFEX product. It’s a high efficiency gas product. It’s not as efficient as the Vertex but the benefit is that it installs with the same water connections, the same gas connections and the same venting connections as a standard gas water heater does today. The only additional consideration is that it needs power. We’ve got a pressurized system. It’s essentially a turbo-charged gas water heater. We get better combustion, better transfer of heat. So, it’s 25% more efficient than a standard gas model but installs in the same way.

So, people that say, “Oh, well, I’ve got a standard gas. I don’t want to have issues with venting a different vent with PVC.”  This is a great product for them because it literally goes in the same spot as a standard gas model; just have to bring power to the unit.

AH: So, compare that efficiency towards the…

DC: Vertex model?

AH: Yeah.

DC: The Vertex model is 96% thermally efficient. The EFFEX model is about 83% thermally efficient. So, the Vertex is a condensing technology, so similar to HVAC systems, high-efficiency furnaces that condense and you’ve got the PVC pipe to just pick out. Same thing with Vertex, you have to take out the condensation line somewhere to a suitable drain or a condensate pump and pump to the condensate out. The EFFEX is as efficient as you can get with the gas water heater without being condensing. So, we got it right to the threshold of where it’s still a non-condensing appliance, but it installs like a standard product. So, that’s the real benefit for this product. It’s as sufficient as you can get without being condensing.

AH: Let’s talk about the pricing on this.

DC: Okay. This  EFFEX model, it’s going to be significantly less than the Vertex. Vertex we said was going to be in the $2000 range. The EFFEX is going to be in the $1000 range, give or take. So, it’s a significant drop in price point but you still get your energy efficiency savings but you’re going to save on installation too because it’s a standard install for that contractor coming and doing the installation in your home.

How Efficient is Your Run of the Mill Water Heater?

AH: Okay, for my listeners because, you know, they’re not going to hear the price and gasp. What kind of efficiency is their heaters generally are getting right now? Your basic, you know, plumber put in pretty decent, water heater.

DC: A standard gas water heater, run of the mill gas water heater is 75% efficient. So, 25% of that energy is going out that vent. Right, it’s waste. A tankless unit has about 80%-82% efficiency. So, people think tankless is the most efficient technology out there. It’s really not. There’s still 20% waste with tankless. So, that’s why when you go with the 96% Vertex, a significant savings over tankless and over a standard product. And on the electric side of the equation, this product is over twice as efficient as a standard electric product is today. So, that’s where the significant savings come in.

AH: I’m not sure I heard this correctly. But, if the electric and the gas model

DC: Vertex.

AH: Are they the same price?

DC: Yes, roughly the same price.

AH: So, that’s where you differ with your competitors because they’re more expensive for electric than they offer the gas units.

DC: Oh, okay. I wasn’t aware of that.

AH: Let’s talk about, we hit the…

DC: The EFFEX? It’s the high efficiency gas model, the non condensing high efficiency gas is EFFEX . We also have a full line of tankless products, condensing and non-condensing tankless. So, a full line of product available for that.

Condensing and Non-Condensing Tankless Hot Water Heaters

AH: What’s the difference between those, condensing and non-condensing?

DC: A condensing tankless model has essentially, a secondary heat exchanger inside. So, all tankless models have a copper heat exchanger with a flame and that water is heated as it passes through the unit. So, those as I said earlier about 80% to 82% efficient. So, 20% of that energy is still going out of the chimney as waste. So, what we’ve done with the condensing tankless is added a secondary heat exchanger. So, you’ve got your standard copper heat exchanger and then as the water’s going through and the high gasses are passing out, we have a secondary heat exchanger to capture a little additional energy from those hot gasses as they go out. As a result, it becomes a condensing product and you get an efficiency level in the 90s now versus in the low 80s.

AH: Now, is there a point of entry problem with these tankless? Is something too far to use for tankless?

DC: We make all products, sell all products, and endorse all products for technology agnostics, if you want to say, technology unbiased. So, we want to sell the right product for the right application. So, there are certain applications where tankless is perfect. There are many applications where we would say, “You probably need to put a Vertex in for your application.”

If you’re after high-efficiency, Vertex is probably the way to go. Tankless, what we’re finding out is great in applications where space constraint is an issue. Footprint that might have not as much space to put a water heater in. So, tankless on the wall and takes up a little less space, that’s a great application for tankless. Or, if you’re in an application where it’s intermittent hot water use like a vacation home or a cabin or something, that sort where you’re only using hot water two weeks of the year, perfect application for tankless.

But if you’re a whole-home water heating and you’re after energy efficiency, I will probably say there’s going to be a more efficient and a better solution for you beyond tankless.

AH: Sometimes with tankless, the issue is how far the run is. That was kind of the question I was trying to get at.

DC: I’m sorry. I’m sorry. How far the run is from the unit itself to the water. So if a homeowner wanted to put in the re-circulating system that’s very difficult to do with tankless products. So that’s one issue. Another issue is tankless products take 10 to 15 seconds to actually provide hot water. So there’s no stored hot water. So when somebody turns on a faucet, you’re going to have to generate that hot water and heat that heat exchanger up. So it takes about 10 to 12 seconds typically for that heat exchanger to get up to temperature to start providing hot water. So for example, if your water heater is 50 feet away from your shower and you had to wait 20 seconds before for hot water, now you’ll have to wait 30 to 40 seconds for hot water with the tankless product because of that run. So typically, we have same problems or challenges with people on selling tankless and trying to do re-circulating loops or other applications like that. You would have to, in a lot of cases, install a secondary tank to accommodate for those applications. And to my point, that wouldn’t be a situation where we would take tankless would be the ideal product. We’ve got other products that would probably serve that need better than tankless.

AH: So tell me the difference in price between condensing and non-condensing?

DC: That’s a good point. Condensing is a bit more expensive than a standard tankless product. And I’m less familiar with those price points but it’s going to be in a $1500 ballpark range for condensing or $1500-$2000 for condensing and probably in the $1000 range for a standard tankless product.

Solar Hot Water Products

AH: Now, let’s go to the last one we which I think is your solar.

DC: We actually have two more. Now let me talk about solar. The solar first. This is one of the products where when people hear solar, they think photo-voltaic solar. That’s where I have a panel on the roof and I’m creating electricity. This is completely different. Photo-voltaic panels are more expensive than what we have and less efficient than what we have. This is a solar thermal technology. So, you actually have a panel on the roof and there’s a fluid that runs through the panel and the sun heats that fluid. That fluid is then pumped down to a tank and there’s a heat exchanger in the tank and we capture the energy from the sun by transferring it through that fluid. It literally is simply plumbing on the roof.

DC: And we have a thermostat on the roof, a thermostat in the tank and it encounters more energy on the roof than there is in the tank. The pump kicks on and recirculates that fluid and transfers that energy to the tank. So it’s very simple, very clever, very easy design for plumbing contractors to install solar. And the homeowner then benefit is they get 70% of their water heating needs that energy is received from the sun and not from natural gas or electric. Now, there are back up electric elements in the event the sun’s not shining enough or it’s a stormy day or the sun’s not giving enough radiant heat, there’s backup electric elements that will turn on to provide hot water. So, the homeowner will not be without hot water in the event there’s not enough sun but the majority of the time they’re getting all the energy they need from the sun.

AH: Listeners cannot see this. This is a flat panel solar.

DC: Right.  A flat plate heat exchanger solar. And it’s, again, another point I want to make about that is that it’s not a regional solution. It’s not just for Arizona and for Florida. These systems, because there’s solar radiation throughout the US, we’ve got panels installed in Minnesota, we’ve got panels installed in Milwaukee. It simply is a matter of sizing the application for that home. So in Milwaukee, we might need three panels in a 120 gallon tank and Florida, we might need one panel with an 80 gallon tank. But it’s a nationwide solution, very efficient.

AH: What I find so cool is that you’re providing the tank along with the panels which is a very unique product.

DC: Right. And the benefit for this and what makes us unique is it literally is an all-in-one, pardon the expression, everything under the sun that you need for solar you can get in this package. So you’ve got your tank, you’ve got your solar panels, integrated pumping control station. We’d provide everything that you need all the way down to the propylene glycol and the system that you would need to install it is all in our systems.

AH: So what’s this going to set me back for?

DC: A solar price point is significantly greater. It’s going to be in a $5000-$7000 range. And we realize it’s not for everybody but it is for people that are building their dream home, that are going to be in that home for 15-20 years and they want the most efficient technology and they want to reduce their monthly operating cost. Put a solar product in your home and it’s going to be there for many, many years.

Typical lifespan of a standard water heater is in the 10 to 12-year range. So, people are accustomed to replacing them every 10 to 12 years. The benefit of these solar panels is that once they’re on the roof, they’re there. Barring a tornado or hurricane or a major hailstorm, those panels are going to be on the roof. There’re no moving pieces and parts so they can be out there 20-30 years and you get the benefit of that initial investment.

AH: Now Green Talk listeners, there’s actually an article on the website about solar hot water. I’ve talked about it before. I’m in favor of it. If you want some more information on solar hot water, I’ll put it in the article so you can link to it and read it. Any other things coming down the pike?

Hybrid Gas Product

DC: Well, the last product I wanted to talk about was our hybrid gas product. We’ve got a lot of people such as yourself asking about tankless and saying, “Is it the best thing? Is it the be all and end all?” Well, as a manufacturer, we realized there were certain challenges for tankless especially from a replacement application where homeowners have a standard gas product and they want something more efficient. Tankless products require larger gas lines so you need more BTUs to get to the tankless product. And they require special stainless steel venting so that’s a big hurdle. Both of that is a big hurdle to address in replacement application.

So, what we did with the hybrid gas product was incorporate a tankless product into the tank and in doing that, we can get more energy efficiency because the high gas is now from the tankless. We incorporate that stainless steel into the product and route those gases back down and through a secondary heat exchanger making it a condensing product but is run by a tankless product. So the homeowner gets the continuous hot water they need, but from an installation stand point, we can install it with half inch gas line with PVC venting. So it’s a lot easy to install compared to a standard tankless installation. So this is a great product for people looking for tankless or looking for continuous hot water but want more energy efficiency but it’s a lot easier to install than a standard tankless product.

AH: Is it the same problem with the circulating pump?

DC: No because there’s a tank incorporated into the product. We’re actually pulling hot water from the tank not from the tankless, so you can do that a lot easier than what you would be able to do with the tankless system.

What’s David’s Wish List A.O. Smith Product?

AH: You have so many products here. I am totally confused as to which one you want to use. I guess the high efficiency one would be…

DC: If I’m putting one in my home, I’m putting up Vertex because I’ve got natural gas. And that’s why I say, there are a lot of products but it really comes down to what your fuel source is. What is your water heater today. The majority of our sales or the majority of the market is replacement application, so what is your water heater today? Is it natural gas or is it electric? That narrows your decision down in half. And then once you have that, if your electric and you want high efficiency, you go with the Voltex Hybrid electric products. If you’re gas and you want high efficiency then you got your Vertex or your NEXT hybrid is the most efficient.

What are Ed Begley, Jr.’s Thoughts about His A.O. Smith Vertex?

AH: Now I see that Ed Begley, Jr is here who is a spokesman for your company.

DC: That’s right. He’s been involved with us for about 4 years now and because he has A. O. Smith in his home, he’s got a Vertex in his home, solar primary with the Vertex backup. He loves this product. He’s seeing huge benefit in his home so we partnered with him and say, “Well, hey, let’s get this story out about high efficiency water heating.”

We know that water heaters are the number two or number three energy consuming appliance in the home but it’s almost an afterthought. People don’t think about high efficiency water heating. We want to get the message out that there’s huge opportunities, so we really reduce your monthly operating cost, save money, reduce your carbon footprint. Whatever your primary motivator is, really good opportunity to do that with high efficiency water heating.

AH: We need to go find Ed and find out how much he’s saving. Hold on one second.

AH: I’m here with Ed Begley, Jr. And he’s going to talk about his A. O. Smith newest baby in his house. Tell us a little bit about you have.

Ed Begley: You know, I had a very energy efficient home that I didn’t think I could make any better until A. O. Smith came along. They have a 96% thermal efficiency water heater. So I put one in to see if it would make any impact to my already efficient home. My natural gas bill went to half of what it was. Why? Because this is 96% thermal efficiency and it works so well with my solar water heating system that it just compliments it. I used to have two flames in my basement. One for the water heater the other for the heating and air unit. One of those flames went away because all I need was the A. O. Smith Vertex, now hot water comes out of this very convenient side tap they have in the unit, very clever, goes out for radiant heating and several other purposes. And I put it right into my forced air heating. I didn’t have to put new pipe into the floorboards. I just took it out, put in what used to be a forced air heating system, and now still is but works with this A. O. Smith unit. My natural gas fell, with very little installation, went to half of what it was. So I can promise you it works.

AH: How was your regular hot water heater before you replaced it?

EB: I can’t remember the brand of it. It could have been one of the older A. O. Smith, they last a long time. It could have been Day or Night or some other brand, I don’t remember. But it was an old water heater from, I mean, 30 years ago. So it needed to be replaced with state of the art and A. O. Smith has state of the art.

AH: And how long have you had this new one?

EB: It’s three and a half, almost four years now. There’s no maintenance to it. I mean you should have somebody look at it from time to time and I do but he kind of like, “No, you’re good again for another year. I’ll see you a year from now, Ed.” Nothing has gone wrong with it. It’s a wonderful unit. They’re a very old American company, been around hundred some odd years ago. They started and they used to make bicycles and car chassis and now they make the most energy efficient water heaters out there.

AH: And how’s your wife like it?

EB: She likes it because she never runs out of hot water now. It’s good for me because the bill went to half of what it was. It’s good for her because she’d never runs out of hot water.

AH: Did you make her turn the water off?

EB: I used to… Well one time, I timed her shower. I’ve never heard the end of it. It was for the TV show, Living with Ed. They had a stopwatch on set. So I said, “Give me that stopwatch.” She said she doesn’t take 15 to 20 minute shower, I’m going to prove she does and sure enough she did. But I won the battle but I lost the war. I’ll never hear the end of that one.

AH: [laughter] That’s pretty funny. Well thank you so much for your time.

EB: Thanks for being here.

Join the Conversation:

• Are you need of a new water heater?
• If so, which one of the A.O. Smith water heaters would you choose?
• Have you just replaced your water heater and if so, to which product?
• Do you own any of the above models, and if so, what has your experience been?

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