As buildings age, so do pipes. And like most parts of your building’s infrastructure, your pipes will eventually need to be replaced. When this time comes—typically after 30 years—it’s important to consider not only your piping, but other system components connected to those pipes. For many communities, replacing your domestic water heaters in addition to your repipe can lead to significant savings down the line.

Replacing Aging Domestic Water Heaters: The Financial Benefits

Whether you have a centralized boiler, individual in-unit hot water heaters, or something in between, the reality is that if your pipes are 30 years old, your water heating equipment may be as well. Adding a water heater replacement to your pipe replacement project can be a financial no-brainer with serious ROI.

The first reason to consider replacing your water heating system at the same time you replace your pipes is simply economies of scale. The workers are already there hooking up the pipes, and you’ll need to replace your water heater at some point. Bundling multiple projects together creates efficiency and is typically less expensive than paying for two separate mobilizations.
But the real financial benefit goes beyond these initial cost savings. When you upgrade outdated water heating equipment, you’re switching to modern machines that have become significantly more efficient in recent decades. Today’s equipment runs cleaner, performs better, and costs far less to operate than water heating equipment manufactured decades ago.

A few different factors have spurred these improvements in efficiency. Government regulation from the U.S. Department of Energy now requires new equipment to be more energy efficient than in the past. Other leaps in technology have come from manufacturers continually innovating their products to gain an edge over competitors.

Meanwhile, consumers reap the benefits: significant energy savings, reduced operating costs, and improved resident satisfaction.

Evaluating Your Options: Like-in-Kind Replacements vs. System Upgrades

If you decide to replace your domestic water heating system, you have two main options: you can proceed with a like-in-kind replacement, or you can upgrade the system’s design.

A like-in-kind replacement means you’ll replace what you have with a newer version of the same. If you are running a centralized boiler, you can simply buy a new, more efficient model. If you have individual hot water heaters in every unit, you replace them with more modern equipment. In either case, the overall system design fundamentally stays the same.

System upgrades, on the other hand, typically involve communities with centralized systems looking to switch to a decentralized option. Communities that take this route decommission part of their centralized plant and deploy a different water heating solution closer to the end user. This can lead to significant energy savings as well as better alignment with modern residents’ expectations. This is because, in addition to its efficiency benefits, decentralization simplifies maintenance—with only a small portion of the building’s hot water offline in case of any service needs.

There are a few different options for these “boiler conversions,” including putting in zoned hot water heating for a smaller block of units or installing individual hot water heaters in every unit. Either of these system upgrades creates efficiency by reducing the distance the hot water needs to travel and reducing or eliminating the need for a recirculation system. This, in turn, reduces energy loss and, ultimately, reduces the cost associated with heating your water. In addition, lower recirculation—or the elimination of a recirculation system altogether—also has the benefit of lessening wear and tear on your pipes.

Whichever Path You Take: Significant Energy Savings

Whether your community opts for a like-in-kind replacement or a system upgrade, advances in technology mean you’re likely to see aggressive ROI. Electric and gas-powered tank hot water heaters, the gold standard for decades, have quickly been overtaken by gas-powered tankless solutions and—more recently—with the heat pump water heater (HPWH). HPWHs can lead to efficiency improvements (referred to as a Uniform Energy Factor or UEF) in the 300–400% range.

This table[1] from the government’s ENERGY STAR program helps explain the differences between these old-style and new-style systems:

• Initial cost: The cost of the heater and installation.
• Annual fuel cost: The estimated cost (electricity or gas) to use the heater for a year.
• First hour recovery: The amount of hot water you get in the first hour of use.
• Max temperature: The hottest temperature your water heater can reach.
• Gallon size: The gallons of hot water your water heater can hold.
• Uniform energy factor: A measurement of a water heater’s energy efficiency. The higher the UEF, the better, because it correlates to dollars of hot water gained per dollar spent.

While the specific numbers will look different for each community, the cost benefits are profound. System replacements typically lead to annual energy cost savings of ~$300–500 per door, meaning that an average 200-unit garden style apartment community can save $60K–$100K per year in utility bills.

When you pair these savings with local rebates that offset equipment purchase costs by up to 50%, the payback time can be very short. Some communities see ROI in as few as 2–3 years. And that doesn’t include other benefits like improved resident satisfaction due to a better quality of life.

So if you are looking at replacing your domestic water system, don’t forget your water heating equipment. Replacing it alongside your pipes can help you turn a sunk cost maintenance issue into a real ROI opportunity—one that’s good for your residents, good for the environment, and a good investment.

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Interested in learning more about pipe replacement, water heater upgrades, or other infrastructure improvements for your community? Don’t hesitate to reach out for a free consultation.

[1] https://www.energystar.gov/products/ask-the-experts/heat-pump-water-heater-right-your-home