Interview with GE on Energy Efficient Water Heaters - Education Needed

AlternativeEnergy.com interviewed experts from General Electric about their efficient water heating products. At first we were intrigued by their hybrid water heater. The name caught our attention. It won’t be ready till the end of next year, but it will be much more efficient than what’s available today. Then we learned about their tankless water heaters. They are also extremely efficient.
Then we asked about GE’s expectations of future market penetration of all of these efficient products. We were shocked to learn that it is only 10% in 5 years. One would think that it will be much greater. It just make so much economic sense. GE explained it is all about education.

So please read this and pass it on. Make your next water heater purchase an energy efficient one. It makes tremendous economic sense. Of course it will help the environment too.

---

Susan Gregory: Hi, my name is Susan Gregory and I'm the Product Manager for General Electric Water Heaters, New Advanced Technology. Jeff Kern: My name is Jeff Kern and I am the Program Manager for a Hybrid Electric Water Heater Program.

Doug Schiller: Thank you guys so much for participating in this call for alternativeenergy.com. It's really important that the audience understands everything that is available to save energy at this time. Also, learn about what's coming down the road.

So, please, guys explain what this product is all about and why people should be interested in this.

Susan: Sure. Absolutely. Our product is called the Hybrid, the GE Hybrid Electric Water Heater. It is currently under development. We have a current launch date of the end of 2009. What this product is about is designed to help save energy, along with helping to avoid carbon emissions.

GE feels like that is important at the day and age, as environmental issues have come about and the higher cost of energy. People are becoming a little bit more aware of energy's rising costs, as well as carbon emissions. So, this product is designed to help save energy, along with help reduce carbon emissions.

Full Press Release

Doug: How does that work exactly?

Jeff: The water heater is you second largest draw of power from your home, behind heating and air conditioning of your home.

The Hybrid product is designed to combine a very efficient heat pump system, which extracts heat from the surrounding area and moves it into the water more efficiently than a standard electric resistant heating element.

It is a hybrid because it does still have resistant elements in the tank of water. So if you have very high demands for water, this product will be able to produce the same quantity of hot water you are use to with the standard product. But in times of lower water demand, lower draws, it would use the heat pump system to reduce the amount of electricity it takes to heat the water.

Our first product is based on a 50 gallon unit. If the market bears, potentially in the future we could expand out to other sizes.
Susan: One of the big issues with this, as well, it is designed to help save carbon emissions as well as energy savings, but also it is convenient in the fact that the installation is similar to a standard 50 gallon water heater. So, it fits in the same footprint. It's just a little bit taller. We're really trying to capture retrofits , as well as new construction.

Jeff: It requires the same hot and cold water connections and the same electrical connection that a standard electric water heater does.

Doug: So, why is it going to take until 2009 until it's available? Is there a lot of additional technology that's needed at this point?

Jeff: It's not being manufactured at this point. It's being taken from concept to full production by GE with a partner company. We are following, what at GE we call NPI Process, our New Product Introduction Process, which is a very rigorous process to ensure that we deliver products that meet our quality, reliability, safety, and feature benefits and to ensure that the customer gets the product that GE intends to put out there.

While we have built handfuls of experimental units in our laboratories that come close to achieving the Energy Star criterion, we're just really at the beginning of large scale development of the manufacturing processes for this product, and testing of the product design made by those manufacturing processes. And that process is fairly lengthy. While we're pushing as quickly as we can to get there, it's unrealistic, at this point that we would be in the market any sooner than the end of next year.

Doug: But, the core technology exists because it works in the lab. But, you're saying that because of all the quality control issues, it's going to take another year or so before it's open to the consumer.

Jeff: What I'm saying is from an engineering, scientific standpoint, it is a feasible product. But, from a fully developed, manufacturable product that meets all the criterion, we're still in the development process.

Doug: Right.

Susan: And, it's not unusual for a new product development to take anywhere from a year to two years. This is not unusual at all because of the rigor that we have to go through to launch a new product.

Doug: OK, that makes a lot of sense. Now, what do you see down the road? Or, what other technologies or products could be deployed that use similar hybrid technologies?

Jeff: I hope Susan can help me answer this. But, GE looks at products like this in a multi generation, product plan standpoint. I mentioned earlier that for this first product launch, we are working on a 50 gallon, electric version of this hybrid product. It is possible that there maybe a market for larger or smaller scale units, but it would be very similar technology. But, there are other energy technologies that GE is also exploring to see: should we be in the business of solar water heating, should we be in the business of gas hybrids or others.

Jeff: We have a separate innovation department, which explores the landscape of all technologies for all of our products, including water heating. I'm hired to implement this one product, so I probably said more than I should. But, I'm just trying to point out that there are many other technologies that GE may want to explore.

Doug: OK.

Susan: I'm not sure if you're aware, but we have just recently launched our GE tankless gas water heater. Are you familiar with that?

Doug: I'm not familiar with your version of it, but certainly the idea of it. Please explain what it's all about, and why people should be interested in it.

Susan: Sure. Absolutely. Again, GE launched its first gas tankless water heater. They come in two sizes: 7.5 and 9.4 gallons per minute. They come in indoor and outdoor units. They come in natural gas and LP. The big thing about this is the energy savings, as well as a continuous stream and flow of hot water for the consumer. So again, with the energy savings, our units are designed to save between 25 35% on your energy bill, compared to a 40 75 gallon tank gas heater. It also helps avoid the carbon emissions by the same percentage, between 25 and 35%.

Doug: And, this product is available right now.

Susan: This product is available on the market today.

Doug: OK.

Doug: OK, that's great. Now, how are the two products going to share shelf space? Why would one person choose one product over the other?

Susan: Well, GE is going to market with those opportunities for gas and electric, water heating efficiencies and advanced technologies. So, if you have gas at your house currently, then we would suggest that you purchase a GE tankless gas water heater. And, if you don't have gas and you need electric, then we would be offering our hybrid electric water heater. So, we have the energy efficiency covered for both gas and electric.

Doug: OK. So, why should somebody who has... I'll take myself as an example. I have a water heater that's been there for at least seven years. What would make me upgrade at this point? What are the economics of that?

Susan: Well, as far as upgrading on economics alone, do you have gas or electric specifically?

Doug: I have gas.

Susan: You have a gas water heater? Normally, people have between a 40 and a 50 gallon water heater, gas specifically. If you just had an average gas water heater, your efficiency would be between 0.58 and maybe 0.61 or 0.62. Your energy factor, if you switched over to a tankless heater, would be 0.82. And, you would be saving roughly between 25 30% on your energy bill, as well as saving about 25 30% on avoidance of carbon emissions for the environment by switching over to a tankless gas water heater.

Not only that, a tankless water heater is a water heater that only works on demand, so it's not heating your water 24x7, like your current tank water heater is. It only heats up when you turn on the hot water faucet. When you turn off the faucet, it quits working. So again, you do receive that benefit. Where you do not run out of hot water, as long as you have water coming through your faucet and everything is working properly, then you will have a continuous stream flow of hot water in your home.

Doug: What happens if there are two showers going and somebody's cleaning the dishes? Is it realistic that everybody gets hot water?

Susan: Well, you have to size it properly. So, if you have more than, let's say, four or five bathrooms, and you're going to be running them at the same time, then multiple tankless units will need to be purchased. So, it all just depends on applications. But, it is possible to have two or three bathrooms, and run the laundry and dishwasher as long as you size it properly with a tankless gas water heater.

Now, in the past, tankless water heaters had a little bit of a negative effect because people were not sizing them properly. They were undersizing them, and so, one was not able to run a shower, use a dishwasher and run the laundry at the same time. GE is equipped with several engineers at our call center that if somebody had a question about sizing, then our salespeople can get a hold of our engineers. We do help with sizing and placement of the tankless gas water heaters.

Doug: So, we know that it saves electricity and helps the environment, and saves energy in general. Does it make good economic sense? There was some document on the web that said the payback would be in about 10 years for the hybrids. Would the same number apply to the tankless heater? And, do you still buy into that 10 year payback period?

Susan: We definitely don't buy into that payback period, especially for hybrid. With hybrid, we say approximately four years.

Woman: Well, I think, we're talking two different things here. In the press release, it says that you can save about $2500 over 10 years. It's not talking about payback. So, I think, if you're going to talk payback, you're talking one thing. What the press release says is based on $0.10 per kilowatt hour, the hybrid can save about $2500 over 10 years.

Susan: Right, that's not the payback.

Woman: Yeah, we're talking two different things.

Doug: OK. So, it saves $250 a year?

Susan: Correct.

Doug: And, if it costs a thousand dollars more than a non hybrid, it would be a four year payback?

Susan: Correct.

Doug: Well, that sounds great. And, how about the tankless?

Susan: Well, the tankless is a little bit different because the tankless is sold to contractors only . We don't specifically say what retail pricing is period, for hybrid or for tankless. But again, a normal payback for a tankless water heater can be anywhere between six and ten years . It just depends on where you live, if it's a retrofit vs. a new construction installation, as well as the current federal tax rebates, and local utility rebates.

Again, we talked about the hybrid having an approximate four year payback. Well, it can even get less than that depending on where you live, and if local utilities have a rebate on them currently. So, GE has actually been in contact with a lot of local utilities, and is working on those types of situations for possible rebates in the future.

Doug: Are there tax subsidies for these products?

Susan: There was one that expired at the end of 2007. I know that there's talk that they will be renewed again at the end of 2008 and these are federal rebates for both tankless and hybrid type water heaters.


Doug: Thank you guys so much. I really appreciate this.