With the price of oil going through the roof, I thought it would be appropriate to revive this thread from last year.
When I built my house 40 years ago, oil was the most economic solution for both heat and domestic hot water. I installed an oil fired boiler with a tankless coil for providing hot water, that has functioned very well over that time. Now, with the cost of home heating oil approaching $5 / gal, I was forced to rethink the economics of this system.
Although I like the tankless coil since it provides an unlimited supply of hot water, it requires running the oil burner year round. The boiler isn't very well insulated and the heat loss just makes the A/C work harder during the summer months. Since I live in a state that allows me to shop for the best electricity rates, an electric hot water heater appeared to be a more economic choice.
Last month, I bought a 65 gal heat pump hot water heater on sale at Home Depot for around $1700 which I installed myself. I applied for and received a $400 Energy Star rebate from my local power company which brought the investment down to $1300. The heater has a published estimated annual operating cost of $155 @ .08/kwh which is the rate I'm currently paying.
I estimate the oil burner uses around 75 gal of fuel oil to produce hot water during the 6 month summer season, which equates to $375 @ $5/gal. In that same 6 months, the cost to operate the heat pump hot water heater will be around $78 ($155/2). The unit has a 10 year warranty and my rough calculations indicate it will pay for itself in less than 5.
Obviously, the economics will vary as the costs of oil and electricity fluctuate. It remains to be seen whether it will be more economical to use the heat pump hot water heater year round. In any case, I can easily switch back to the oil burner by turning a couple of valves should the economics change.