Smart Water Heaters: What They Do, Which Ones Work Best, and Are They Worth It

Smart home technology has reached water heaters — and unlike some smart home additions that offer marginal value, smart water heater features can deliver meaningful energy savings, early warning of developing problems, and integration with utility demand response programs. Here is a practical guide to what the technology actually does and whether it's worth the investment.

What "Smart" Actually Means for Water Heaters

Smart water heater features generally fall into four categories:

• Remote monitoring and control: Adjust temperature, operating mode, and schedule from a smartphone app. See current water temperature, energy consumption, and unit status from anywhere.
• Learning and scheduling: The unit learns when hot water is typically used and pre-heats accordingly, avoiding keeping water hot during unoccupied periods. Reduces standby energy loss.
• Utility demand response: In participating utility territories, the utility can briefly reduce the water heater's operation during peak grid demand periods (with your consent) in exchange for bill credits. Water heaters are ideal demand response appliances because the thermal mass of the tank buffers short-term changes in heating.
• Diagnostic alerts: The unit monitors its own performance and sends alerts for conditions that may indicate developing problems — unusual energy consumption patterns, temperature anomalies, or error codes — before they become failures.

Units With Built-In Smart Features

Rheem ProTerra with EcoNet

The Rheem ProTerra heat pump water heater includes WiFi connectivity and the EcoNet app. Features include remote temperature and mode control, energy usage tracking, vacation scheduling, and utility demand response participation. The EcoNet app is one of the more polished manufacturer apps in this space. Available on iOS and Android. Compatible with Amazon Alexa, Google Home, and Rheem's broader EcoNet ecosystem if you have other Rheem appliances.

Navien NPE with NaviLink

The Navien NPE tankless series offers WiFi control via the NaviLink adapter (sold separately, approximately $80). NaviLink provides remote temperature control, hot water scheduling, error code history, and maintenance alerts. The flow monitoring data can identify if usage patterns are leading to higher than expected energy consumption.

A.O. Smith iCOMM

A.O. Smith's connected water heaters use the iCOMM technology platform. Available on select models, provides similar remote monitoring and control features to the Rheem EcoNet system.

Smart Controls for Non-Smart Water Heaters

If you have a standard non-connected water heater, you can add some smart functionality:

• Smart outlet timers: For electric water heaters, a smart outlet on the circuit (or a smart relay for 240V) can implement time-of-use scheduling — heating water during low-rate electricity periods and turning off during peak rate periods. Simple and effective for households in time-of-use electricity rate territories.
• Smart leak detectors: Products like the Moen Flo, Phyn Plus, or simple under-unit leak sensors provide early warning of developing water heater leaks. The Moen Flo installs on the main water line and can automatically shut off the water supply if a significant leak is detected — valuable protection particularly for vacation homes or upstairs installations.

Utility Demand Response: The Hidden Value

In states with active demand response programs — California, New York, Texas, Colorado, Washington, and others — utility-connected smart water heaters can earn meaningful bill credits. Pacific Gas and Electric's SmartRate program, Southern California Edison's Summer Discount Plan, and similar programs in other states pay customers for allowing brief, controlled reductions in water heater operation during peak demand periods.

In PG&E territory, demand response credits for a qualifying smart water heater can run $50–$150 per year depending on participation frequency and utility rates. This credit alone can make the smart unit economics compelling on a long-term basis.

Is It Worth the Premium?

For most homeowners replacing a standard tank unit, the smart features available on the Rheem ProTerra (heat pump) don't add significantly to the cost since the WiFi capability comes standard. For someone choosing between a standard tankless and the NaviLink-equipped Navien, the $80 adapter is worth it if you value remote diagnostics and scheduling.

The strongest case for smart water heater technology is in utility territories with time-of-use rates or active demand response programs — where the combination of smart scheduling and demand response credits can generate $100–$200 per year in savings on top of the unit's inherent efficiency.