Tankless vs Tank Water Heaters

Tankless vs tank water heaters — which one wins?

What if we told you that you could save energy and money on your bills? Or you could replace the huge tank in your basement for something much smaller? These are only some of the promises of a tankless water heater.

Tankless water heaters produce hot water only when you need it. Many homeowners swear by them, while others aren’t as sold. In this article, we’ll compare these two popular types to see which is best — tankless vs tank water heaters.

How They Work

Tank water heaters have been around for centuries. It’s a tried and tested system, and if anything were to malfunction, it’s easy to find help.

Tankless water heaters, on the other hand, are a newer idea. And switching from one to the other is harder than some might think.

1. Storage Tank Water Heater

As the name implies, storage tank water heaters consist of a tank with heating elements within. The tank can come in many different sizes, depending on your needs. Common sizes are 40, 50 or 80 gallons.

Tank water heaters can mainly run on electricity and natural gas. You can, however, also find models powered by solar or a heat pump.

Inside the tank, you’ll find the heating mechanism. A gas powered unit will have burners at the bottom, and the electric unit will have two electrical elements — one at the top and one at the bottom. Despite having two elements within its tank, electric units tend to be slower at heating water.

A storage tank can take up quite a lot of space. Depending on the capacity, it can be over five feet tall and more than two feet wide.

Homeowners who store their unit in the basement may not mind the size. However, not everyone has that luxury. Some people may have to keep it in a closet, which encroaches on storage space.

You should also keep in mind that newer models are even larger than older units of equal capacity. This is due to new water heater regulations that require units to be more energy efficient.

2. Tankless Water Heater

Tankless water heaters are just that; instead of a tank, they heat water as required. They are also referred to as on-demand water heaters.

When you turn on a hot water tap in your house, the tankless unit will ignite. Then, cold water entering the system quickly heats as it passes through a heat exchanger.

Tankless water heaters mainly run on electricity or gas, but they can also run on propane. By heating water on demand, the tankless water heater eliminates standby heat loss which is a common problem in tank types.

Even though the provision of hot water by tankless heaters isn’t limited by tank capacity, they are limited by output flow rates.

Due to the missing tank, a tankless water heater won’t take up much space. The size depends on the model, but generally, they’re about two feet tall and a little over a foot wide.

And, to save even more space, tankless water heaters can be mounted to a wall.

Installation and Initial Price

Tankless water heaters tend to be, comparatively, more expensive than tank units. They are also difficult to install, whereas, a handy homeowner could easily set up a tank water heater.

1. Storage Tank Water Heater

Replacing your old tank water heater with a new unit is fairly straightforward. It’s a basic plumbing job. Many homeowners do it themselves. However, manufacturers always recommend hiring a professional plumber.

You can run into problems, especially if you change from electric to gas. Gas water heaters require specialized vents for the exhaust, and this has to be done correctly. You might also need to draw a gas line to reach the unit.

The initial outlay for an average 50-gallon tank would normally cost under $800.

2. Tankless Water Heater

Installing a tankless water heater is not as straightforward. It can be a big job if you choose to upgrade from tank to tankless.

Gas models, in particular, can be quite tricky. They often require larger fittings and vents, so you will most likely have to change a few pipes.

Electric models use much more electricity compared to tank heaters — up to 160 amps. This may require you to upgrade your electrical circuit to 200 amps or more.

Finding a plumber to put in your new tankless model can be tricky too. Most suppliers recommend using certified plumbers or electricians. Some manufacturers even require the installation to be done by a factory-trained professional in order for you to maintain the warranty.

Tankless water heaters also command a significantly higher initial price — generally between $500 and $1,200. Paying for installation on top of that adds to the total outlay.

Energy Efficiency and Use

A water heater is such an important part of one’s home. Yet, how much energy it uses is sometimes overlooked.

1. Storage Tank Water Heater

Heat loss is a common problem with storage tank water heaters. To keep the water in the tank heated, a constant supply of fuel is required — even when you’re not home. This results in a significant amount of wasted energy.

The efficiency of a tank water heater is measured by its energy factor. The higher the factor, the more efficient the unit.

The most energy efficient water heaters earn an Energy Star — you can find this on the label. These units generally have an energy factor between 0.67 and 0.70.

Older water heaters (10 plus years) don’t have the same insulation as newer models. If you do have an older model, you can benefit from using an insulation blanket. These are fitted to the tank and will help keep the heat within.

Insulation blankets are available in various materials such as aluminum and fiberglass. It’s an inexpensive way to fix the problem.

A simple way to test if your water heater is losing heat is by placing your hand on the tank. If it feels warm or hot to the touch, it needs insulation (1).

It is also crucial to purchase a tank water heater that fits your requirements. Get one that is too small, it will run out of hot water too quickly. On the other hand, one that is too large will expend unnecessary energy keeping unused water heated.

it’s important, therefore, to figure out just how much hot water you use on a typical day. That way, you know your requirements before buying.

2. Tankless Water Heater

Tankless water heaters are generally thought to be more energy efficient than tank types. This is because they only turn on when needed. However, as we saw above, electric models use much more electricity — compared to tank units — when on.

For the average hot water use of 41 gallons daily, a tankless unit can be 24 to 34 percent more energy efficient than tank types. If you use more — over 80 gallons — it will be less efficient as it requires more energy to work.

Tankless water heaters generally provide hot water at the rate of 2 to 5 GPM. Gas-powered units usually give a higher flow rate compared to electric models.

The flow rate of one tankless unit, regardless of fuel type, may not be enough for homes with high demands. Additionally, tankless water heaters can have a hard time keeping up with simultaneous use since they can only heat water at a certain rate. This does depend on the model and how many gallons it can produce per minute.

For homes with a high demand for hot water, it’s recommended that you install more than one unit. For an energy efficient home, you could install a unit at each hot water outlet. By doing this, you could save between 27 and 50 percent energy compared to regular tank heaters.

Multiple units are installed in parallel connection. They work together to produce the amount of hot water you and your appliances require.

Even though you avoid the problem of standby heat loss with a tankless, there’s one other issue you may face. Gas-powered units tend to waste a significant amount of energy if they have a pilot light burning constantly.

The energy used to keep the pilot light burning can sometimes equal the standby heat loss found in tank types. This can make your gas-powered tankless unit much less energy efficient.

The operation cost of the pilot light varies from model to model. You can ask the manufacturer of the unit you’re considering to inform you what it is exactly.

Not all gas-powered units use a pilot light. But if yours does, you can easily turn it off when it’s not in use.

It’s recommended that you choose a unit that uses an intermittent ignition device instead of a pilot light. An IID works similarly to the spark ignition you find on many gas stoves and ovens (2). This is becoming the standard method of ignition on all new models.

Lifespan and Maintenance

Buying a good water heater is a big investment. So you want to purchase a unit that will last you at least through the warranty.

1. Storage Tank Water Heater

The average life expectancy of a tank water heater is between 10 to 15 years (3). However, the actual lifespan of a tank unit depends on several factors such as manufacturer, usage, maintenance, and installation. If your unit is more than 10 years old and begins to fail, it might be best to replace it.

With tank water heaters, scale and other sediments gather at the bottom. This can decrease the efficiency of your unit by quite a bit.

Maintaining your heater is essential. To get rid of build-ups of any kind, you will need to flush the tank. You should do this by flushing a quarter of the tank every three months.

Additional tasks you can carry out to increase the efficiency of your unit are checking the temperature and pressure valves. This should be done every six months to make sure everything is working as it should.

It’s also essential to check the anode rod at least every three to four years (4). The anode rod is located at the top of your tank. Its purpose is to prevent the water heater from rusting.

The anode rod is one of the most important parts of your tank water heater. It’s a steel core wire surrounded by metal, usually aluminum, zinc, or magnesium (5).

2. Tankless Water Heater

Tankless water heaters generally have a much longer life than storage tanks. Typically they have a life expectancy of more than 20 years. They’re also simpler to fix if anything were to malfunction as parts are readily available and easy to replace.

Tankless water heaters are somewhat low-maintenance. Since there’s no water stored within the unit, sediment is slower to build up. But, that doesn’t mean it can’t happen.

Depending on your local water — whether it’s hard or soft — it’s good to flush the system at least once a year. It’s an easy job to do and you don’t need any expensive tools.

All you need is a three to five-gallon bucket, a hose, and a pump. You can then use a specialized cleaning solution or use white vinegar diluted in water. You can also purchase a specialized flushing kit — they come with everything you need.

For people living in areas with hard water (more minerals), flushing the system once a year may not be enough (6). You might have to do it every six months or so. If you notice a decrease in hot water and the flow, it could be time to flush the unit.

A Heated Debate

Whether you should go tank or tankless is a personal choice. While a tankless unit can be highly efficient for some homeowners, it’s not the right fit for every home.

To make a tankless water heater installation more efficient, it’s recommended to add more than one. However, this can be expensive. So, consider your personal circumstances carefully before you decide.

Tank vs tankless — which would you choose after reading our article? Comment below and let us know your thoughts.

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About the Author

Peter Gray

Peter has been a homeowner for 35+ years and has always done his own repair and improvement tasks. As a retired plumber, Peter now spends his time teaching others how they can fix leaks, replace faucets, and make home improvements on a budget.