Tag Archives: Concerns

tank vs tankless?

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Posted on May 25, 2014 by

(rough thoughts for now, will polish later)

There are many articles on the subject of on demand hot water heaters vs. the more common (in the USA) hot water tank, but this one is tailored to new construction of an earth sheltered home.  I personally plan to install some on demand electric hot water heaters because they suit my situation.  Your situation may require a different choice.

Check your sources.  Most of the sites that talk about how great on demand hot water heaters are are selling them.  Most of the sites that talk about how bad on-demand hot water heaters are, especially electric ones, are “electric cooperatives” who would rather sell you more electricity over a longer period of time.  If you focus on articles written by consumers groups, they tend to be more neutral and articles written by end users tend to be very pro tank-less.

Also check the logic behind the complaints.  Often they may say something general like, “On demand hot water heating costs so much that it will fall apart due to old age before it pays its self off.”  If you check the actual numbers you may find that they spent thousands on a very expensive gas unit which had to be professionally installed in existing construction.  In your situation, you may pay off your investment much more rapidly.

 

Retrofit vs New Construction?

If you are in an existing home with fixed wiring and you are happy with the performance of your perfectly good hot water tank (gas or electric), just keep it.  Energy is energy and the heat capacity of water is the same in both cases.  While there are probably some inefficiencies with the way the energy is imparted to the water, the biggest efficiency difference between a tank or tankless water heater is how much of that energy is lost thru the walls of the tank into the home.  Modern methods of insulation make the tanks pretty good at holding on to their heat.

If your hot water heater simply lacks capacity, think about how old it is.  Hot water heaters only last 10 or 15 years so you probably don’t need to feel too guilty about replacing it with a larger capacity hot water heater.

However, if you are building a new home and can design your electrical service and plumbing with tank-less in mind, I really think it is the way to go.

Gas vs Electric

For well-sealed underground homes (or well sealed above ground homes), you should probably try to avoid combustion.  Electric is much cleaner inside your home even if it is generated with natural gas some where else, and you won’t need a chimney.  Of course, electricity can also be generated with clean technologies and you can even create it yourself.  It is a lot harder to make your own natural gas.

Many argue that natural gas heat is cheaper than electric.  This is only because the cost of natural gas is cheaper per btu than the cost of electricity, at the moment.  Electricity is actually much more efficient at putting its energy into heating the water.  Natural gas is a non-renewable resource and the cost is expected to rise (in the United States) while the technology for generating electricity is getting cleaner and cheaper every year so the cost for electricity is expected to fall.

The cost of a natural gas on demand hot water heater is many times higher than for an electrical hot water heater, both in terms of installation and the equipment its self.  This initial cost leads to long or infinite pay back times.  Electrical equipment is much cheaper, and if your electrical service has watts to spare, the install is also relatively cheap and easy and within the realm of “do-it-yourself.”

Some people claim that natural gas has the capacity advantage, in that it can heat more gallons per minute.  But in reality, it is just that they have a larger natural gas capacity.  If you have a lower gas pressure or if you have the capacity (120 amps) for a larger electric on-demand hot water heater, things could be reversed.

Electric on demand hot water heaters win hands down in terms of temperature control and low flow rates.  People who are complaining about a lack of control or needing flow rates of 1/2 to 1 gpm are probably using natural gas on demand hot water heaters.

The Big Catch

I checked many electric on demand hot water heater sites and none of them mentioned the big catch… Powering the thing.

An electrical water heater tank uses electricity much slower, so you only need about 30 or 40 amps.  It just runs for much longer.  This means you can get by with a pretty typical electrical service and certainly save money in the short term.

Most on-demand hot water heater companies have a high end model that can produce hot water for 2 or 3 showers (in the northern states), but it takes about 120 amps.  Adding this to your your home will usually require stepping up to a larger electric service, unless you like your lights flickering when you run your hot water.

Of course, upgrading an electrical service is very expensive.   But building with a larger electrical service in mind can be done more affordably…  The equipment for a 400 amp service is a few hundred dollars more than for a 200 amp service, but the hook up (where most of the money is) is only 15% more.  You will also pay more for wire, etc.  It is expensive, about $1500 more in my case, but considering the heater its self costs less than $500, the total is not bad.  Certainly, it is cheaper than running a new construction or retrofit natural gas line.

 

If you have a home with 3 showers plus a kitchen and laundry and maybe even radiant floor heat, you may actually want to install two of these.  You could possibly locate them close to the points of use, which is great, but you would need 240 amps to run them all.  If your house has an electric stove (50 amps) and an electric dryer (20 amps) and a single lighting circuit (15 or 20 amps), you are already past the 320 amp capacity (80%) of a 400 amp service.  Now you are talking 600 AMP service.  The jump from 400 amps to 600 amps is significant costs thousands of additional dollars.

The solution is pretty simple…  You just need to talk to your electricity provider about adding a separate 200 amp service for your hotwater/hvac needs.  This will cost far less than going with a larger service and you will be able to separately track your hot water costs.  In some areas, you can actually get special low rates for a dedicated meter.

 

Solar Hot water?

I discuss solar hot water more over here.   Here I will just say that you need a tank to store the solar hot water, but you definitely don’t want to use the heating element in the tank.  Get a tank without the heating element and save some money if you can.  If you heat the water in the tank, it will be less able to collect heat from the sun.  Ideally all the heat in the tank should all come from the solar.  The output from the tank should then pass thru an on-demand electric hot water heater to add just the right amount of extra energy needed to bring the temperature up to what is desired.

See, we can all get along.  Tanks and tankless, electric and solar, together in perfect harmony…  Now if only I could afford it.

Heat pump hot water heaters?

You can get heat pump hot water heaters.  Basically, these are a small heat pump mounted to the top of a hot water tank.  They are the most expensive of the hot water tanks by a factor of 3 or 4.

They are considered very efficient if you just look at how much electricity you put in and how much hot water you get.  But if you zoom out and look at the bigger picture, you see that they have to get that extra heat from somewhere.

These devices work by “pumping” the heat out of the room and dumping it into your hot water tank. In summer, this is great because they actually help cool your home (like a small air conditioner).  As a bonus, the surface of the exchanger gets very cold and dehumidifies the air around it, which is usually helpful in an earth sheltered home.  However, in winter, these hot water heaters are stealing heat from the home which simply needs to be replaced by the homes heating system.  The energy use just moves upstream from the hot water heater to the main house heater.

One can imagine a humorous situation where a heat pump hot water heater would be used to heat hot water for a radiant floor home heating system…  It would steal heat from its self.

A slight twist on electrical resistance heating

Most electrical resistance water heating runs electricity through a resistance element which heats to over 1000 degrees.  The heat energy is then conducted to the water.  In the process, minerals from the water may be transferred to the heating elements (scale), reducing its efficiency and ultimately causing the heating element to fail.  The thermal expansion cycles of the heating element also contribute to its failure.

There is new technology on the market that uses graphite electrodes to conduct the electricity through the water.  The water is the resistor and the electrodes never need to heat up more than the water.  This saves energy and wear and tear and should be cheaper to produce (even if it isn’t quite yet).  It also operates at lower flow rates than other on demand hot water heaters.

Note: For more information, check out http://myheatworks.com/

Codes

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Posted on May 14, 2014 by

Earth Sheltered homes are “non-standard”.  In many ways, this is a good thing, but, unless you are out in some “wild-west” part of the country where there are no building inspectors, you will still need to meet standard codes.  Many existing earth sheltered homes are built to code, so it is doable, but it does take some care to understand those codes and to understand their intent.

I think I am prepared, but I am just getting started, so I may be naive.  I will be back to discuss lessons learned working with my building inspector.  So far, things have gone a bit smoother than I expected.

Code “Alternative”

Also understand that the codes make allowances for new ideas or “alternatives” if the building inspector can be convinced that they will be sufficient.  To find these exceptions, pull up a PDF of your codes (plumbing codes or mechanical, etc.) and search for the word “alternative”.

You will find sections like this that I found in the mechanical code…

105.2  Alternative materials, methods and equipment.  The provisions of this code are not intended to prevent the installation of any material or to prevent any method of construction not specifically prescribed by this code, provided that any such alternative has been approved.  An alternative material or method of construction shall be approved where the code official finds that the proposed design is satisfactory and complies with the intent of the provisions of this code, and that the material, method or work offered is, for the purpose intended, at least the equivalent of that prescribed in this code in quality, strength, effectiveness, fire resistance, durability and safety  ~ Mechanical Building Code

 

This means that it is up to the inspector to carefully consider your proposed design and approve it if it complies with the intent of the building code, which is generally safety.   They shouldn’t just refuse your permit or ask you to make changes because they haven’t seen it done that way before or because it is not specifically in their code books.  However, it may be up to you to provide the proof that your design is a good one.  In my particular case, my inspector didn’t feel like he was qualified to decide if my shotcrete structure was adequate or not, so he asked me to provide engineered drawings.  You will find sections of the code (such as 304.4.3 of the Mechanical code) that allow for alternatives if they have been “specially engineered.”

Researching and/or meeting up with the local building inspector is a great idea before buying land to build your earth sheltered home on.  I met with my inspector and showed him my rough drawings before I bought land in his township.  He seemed open minded to the earth sheltering idea and told me that he saw his job as making sure my home was build safely and that my contractors didn’t cut corners.  He clearly put himself “on my side”.   He even told me about other earth sheltered homes that had been built in the area.   Had I anticipated an uphill battle against a negative mindset, I would have moved on and looked for land elsewhere.

 

If your inspector will not let you use a good design that you can show is “safe”, then they are being “arbitrary“, which is a legal term that gives you the right to appeal.  The appeals process doesn’t need to involve lawyers or lots of money or time, but make sure that you bring the evidence that what you are doing is safe…

And stay polite…   You need show that you know what your are doing so you can remove the impasse and continue with your build, but you don’t want to poison your relationship with the inspector, and possibly everyone in his office.  Often the threat of an appeal will be enough to convince your inspector to more carefully re-consider your supporting evidence.

Beyond Code

In many cases, you will find that “code” is well short of the kind of home you would like to bring your family into.  Earth sheltered home owners should be interested in going beyond code in a number of different areas, including electrical and waterproofing.  More on this later.

Number Crunch

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Posted on April 15, 2014 by

Embarrassed about the numbers

I am actually still waiting on the appraisal (should know early next week).  This is a quiet time to crunch numbers and prep for the closing on the loan.

I wanted to blog about bank loan numbers and how I made my decisions (in case it is helpful to others), but I am a little embarrassed about how much I plan to spend and about how the new house will be double the size of my current one.

We live well within our means.  We buy used cars and my current one is 14 years old, we don’t own any fancy electronics (we don’t have an i-anything), my wife has a 3 year old laptop and a free flip phone with a minimal plan.  My computer and cell phone actually belong to my work, etc.  We do not try to “keep up with the Joneses.”  On the other hand, I do have a good job with a good salary and regular bonuses.  And the house needs to be large enough to have an office (because I work from home), school room (since we plan to home school) and room for visitors (since our guests come from far away and usually need to spend the night)…

Anyway, my solution is to pretend that I am going for a $100,000 loan so you can see the relative amounts without thinking too badly of me.

Here is the mortgage situation…

In the aftermath of the housing bubble, a lot of banks were severely burned.  The first thing they stopped doing was making construction loans to crazy people who wanted to build earth sheltered homes, especially if they wanted to be their own GC.  There may be a few more doing it now, but back when I was shopping in 2009, there was only one company willing to do it,  GreenStone Farm Credit Services.  They had not played the games and were in very good shape after the crash. We used them to buy our land and now we are just a few days from hearing back on the house appraisal to see if we will get our construction loan.

The Construction loan starts with a 4.25% variable interest rate.   That is normally not something I would risk, but it is only for a year and it has been 4.25% for a very long time.   I would get a line of credit and monthly payments would be interest only (no principle) on the money I already spent.  In June of 2015, the loan would automatically convert over to a 30 year mortgage at a fixed rate without any additional closing fees (they are built into the upfront fees).

There are two problems.

1) Green Stone charges higher interest than anyone else I can find.  At the time of writing, the average mortgage rate for a 30 year fixed, 0 point mortgage is 4.44%.  Greenstone’s rate for the same mortgage would be 5.15%  That makes a big difference in terms of your monthly payment and total interested paid.   When I called them up and asked them why I should pay such a high rate for their loan, they said they offer better service (which is true), and that they wouldn’t be selling my loan to anyone else (which doesn’t bother me).  They also mentioned the patronage program, which has paid about 0.5% back over the past few years, which made their rate half a percent better than it appeared.  They didn’t say it, but I guess they know I am not going anywhere right now anyway.

2) The second problem is uncertainty because we don’t yet know what the interest rate will be 1 year from now when it kicks in.  My insurance guy is pretty sure it will go up, but that is because he wants to sell me something called a “Rate Commitment Fee”.  This fee is 0.75% of the total loan amount and would allow me to fix the rate where it currently is.  We are talking thousands of dollars betting that the interest rate will go up…  I had to crunch the numbers.

Using my fictitious $100,000 loan amount, the “Rate Commitment Fee” would be $750.  So I looked at what the 30 year mortgage would be at the current 5.15%.  I put in a column for monthly payment and one for total interest paid (if I paid for the 30 years).

Of course, I also ran tables for how much quicker it could be paid off if I tossed in an extra few bucks a month (I did a full table with a row for each additional amount).  I totally plan to do that, so I hopefully wouldn’t get hit with the total interest numbers shown here…  I also compared with the lower rate for the 15 year loan which would save even more money, but we decided that while that was doable now, it could make things more difficult if I lost my job (its not flexible enough)…

 

Then I considered what could go wrong…  I created rows where I increased the interest rate to 5.5%, 6% and 6.6%.  I looked at how that affected the monthly payment and the total interest paid. Then I calculated how long (in months) it would take me to pay off the “Rate Commitment Fee” as well as the total savings for each scenario…   The chart looked like this (rough no formatting ;^)

Rate_CommitmentFeeTable

So, what this is saying is that if I pay the 0.75% “Rate Commitment Fee” and the rate only goes up by less than half a percent, I would still end up better off in less than 3 years and I save a considerable amount of interest (nearly 10 times the fee) in the long run.    If it goes up by almost a percent (which is the most that I really think is possible without a major world shift), the fee would be paid off in 14 months and I would save more than 20 times my investment in interest…   In other words, if I think there is any chance that the interest rate will go up, the good bet is to pay the Rate Commitment fee…

So, is there a chance that the interest rate will go up?   I don’t think so.  Obama is working to raise the minimum wage. The natural effect of that would be inflation which would automatically lead to higher interest rates…  But there is nothing natural about an election year.  Obama and the Democratic party will be working hard this year to make sure that the Republicans don’t get to say, “I told you so.” about an inflation until after the election.  Eventually, I expect the interest rate will go up based on market forces driven by a decent economy and increased minimum wage.

So, I do NOT plan to pay the Rate Commitment fee.  But I will want to lock in to a fixed rate before the economic forces to kick in in 2016.

Hedge my bet?

After my construction loan is complete, I will have a normal mortgage on an existing house. There will be lots more banks that would be happy to talk to me.  The “Rate Commitment Fee” is close to the amount I would spend on refinancing my mortgage if I decided to go with another bank…  Other banks are more than 1/2 a percent lower than Green Stone.  So…

If rates go up in a year, I can use the money I didn’t spend on the “Rate Commitment Fee” to pay closing costs to another bank to get a mortgage at a lower rate…  Even if they don’t go up, I may still want to do that…  I’ll do that math when the time comes.