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THE DIFFERENCES BETWEEN A TANKLESS AND TANK WATER HEATER: WHICH IS BETTER FOR YOUR HOME?

April 26, 2023

Every time you do the dishes, take a shower, or wash your hands under warm water, you're enjoying a comfort that's easy to take for granted. We all have the water heater to thank for a dozen small favors throughout the day. But, if the time has come to replace your water heater, you might be wondering about the differences between a tankless and a tank water heater.

We have created this guide to discuss the pros and cons of tankless water heater compared to a tank water heater, discussing the differences in features, how they operate, and their costs, so you can determine which option is best for your home.

Table of Contents

WHAT IS A TANKLESS WATER HEATER?

A tankless water heater, sometimes called an on-demand or instantaneous water heater, refers to a water heater that provides you with hot water without requiring a storage tank. It is a relatively new technology compared to traditional tank water heaters.

WHAT SIZE TANKLESS WATER HEATER DO I NEED?

The size of a tankless water heater that's right for your home depends on the unit's flow rate and temperature rise. Flow rate is measured in gallons per minute (GPM); the hotter you want the water, the larger the unit you need.

If you need to supply one or two fixtures at a given time, a 3.5 GPM unit should do. For three to four fixtures, you should consider a 7 GPM unit.

HOW DOES A TANKLESS WATER HEATER WORK?

With a tankless water heater, the water is heated on demand as it passes through a small chamber and runs into the house's plumbing. When you turn on your hot water, cold water flows into your tankless unit. A sensor detects the flow of water and sends a signal to the tankless unit's control system. This is where the heating process begins.

Gas-powered units activate a fan that vents the unit's exhaust gases and opens the gas valve. Then, the burner ignites to heat the unit's heat exchanger. Water passes through the heat exchanger and is heated rapidly.

Electric units are activated when the control system turns on the heating element, where the water passes through, as described above.

Tankless water heaters have a thermostat for adjusting the heat intensity to maintain the desired temperature.

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WHAT IS A TANK WATER HEATER?

Tank water heaters, or storage tank water heaters, are an older form of technology that is more commonly found in homes today. These water heaters include a 30–50 gallon tank that heats water. This hot water remains in the tank, stored for use whenever it is needed in the home.

The tank water heater keeps the water in the tank heated, and when water is used, it refills to compensate. Tank water heaters are powered by natural gas, propane, fuel oil, or electricity.

HOW DO TANK WATER HEATERS WORK?

A tank water heater operates through the following steps:

Cold water enters the tank through a dip tube that fills the tank. The water is stored there and heated to a predetermined temperature.

Gas-powered units have a gas burner that ignites to heat the water, while a thermostat monitors the temperature and controls the gas valve. These units have gases that must be vented through a flue pipe.

Electric units have either one or two electric elements inside the tank that heat the unit. They have the same mechanism as a thermostat and have a high-limit control to shut the unit off if the temperature gets too high.

Hot water rises to the top of the tank. When you turn on your hot water, pressure forces hot water through the heat-out pipe at the top of the tank. As water is depleted, new cold water enters the unit's base, where it begins the heating process.

WHAT SIZE TANK WATER HEATER DO I NEED?

A 30-gallon tank is typically sufficient for one or two people. If you have five or more people in your household, you should consider a tank that holds as much as 80 gallons.

Got questions about the difference between tankless and tank units? Call us at 844-216-9300.

THE DIFFERENCES BETWEEN A TANKLESS AND A TANK WATER HEATER

There are several key differences between a traditional hot water heater vs. a tankless water heater.

SIZE

Because tankless water heaters don't require a large tank, they don't take up nearly as much space. They are about the size of a small carry-on suitcase, whereas tank water heaters can be up to five feet tall.

HEATING METHODS

Another major difference between a tank and tankless water heater is the method of heating the water. Tank water heaters preemptively heat water and store it on hand, regardless of whether a household needs the hot water. In contrast, a tankless water heater heats water only when necessary.

ENERGY EFFICIENCY

Because tankless water heaters only heat water as needed, they are considered far more efficient than tank water heaters. Depending on the type of water heater and size, tankless water heaters can be 8–14% more efficient than tank water heaters, offering significant energy savings. Tank water heaters keep water heated at all times, which uses a continuous source of energy.

COST

Tankless water heaters often cost 2-3 times as much as tank water heaters and have higher installation costs. However, the cost difference can be recouped in energy savings over the life of the system. Since tankless water heaters use less energy and last longer on average compared to tank heaters, the energy savings continue for many years of use.

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PROS OF A TANKLESS WATER HEATER

Tankless water heaters are increasing in popularity for many reasons. Here are a few benefits of owning a tankless water heater over a standard tank water heater:

ENERGY EFFICIENCY AND COST SAVINGS

If you're seeking the most eco-friendly option, a tankless water heater is the best choice. Because tankless water heaters only heat the amount of water you need, their on-demand design has a huge positive impact on your monthly energy bill.

The extra money in your pocket every month is a big motivator for our customers who choose to replace a traditional storage-tank water heater with a tankless version. This makes sense because, over time, the tankless water heater will start to make up the cost of a new installation in energy savings.

LOWER OPERATING COSTS: Tankless water heaters save you money on utility bills by only heating water when you need it.

SPACE-SAVING: Tankless water heaters are far more compact than tank water heaters, meaning you'll free up space in your garage or basement.

LONGER LASTING: You won't have to worry about your tankless water heater giving out anytime soon—most last 20 years or more.

CONTINUOUS WATER SUPPLY: Depending on the amount of water being used, a tankless heater can provide a virtually endless supply of hot water as long as it doesn't exceed the flow capacity, which is commonly around 2 to 5 gallons.

INSTANT HOT WATER: Despite there being no tank required to store a heated water supply, tankless units are still able to provide immediate hot water on demand.

CONS OF A TANKLESS WATER HEATER

Tankless water heaters have many benefits but aren't without drawbacks. Here's what you should know before investing in one:

HIGHER UPFRONT COST: Monthly costs of tankless water heaters may be lower overall than for tank water heaters, but tankless water heaters are more expensive to purchase.

HEATING CAPACITY LIMITS: If you're using a lot of hot water all at once, a tankless water heater may have trouble keeping up with the demand. Large families may even need more than one tankless water heater.

HIGHER INSTALLATION COSTS: Gas-powered tankless water heaters require proper venting for exhaust gases, which may add to the installation work required. Electric units might require upgraded electrical systems to handle the high power demand.

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PROS OF A TANK WATER HEATER

Tank water heaters aren't perfect, but there's a reason they've been the most common type of water heater for such a long time. Here are some of the top benefits of a tank water heater.

MORE AFFORDABLE: Tank water heaters are less expensive than tankless water heaters.

AVAILABILITY: Tank water heaters are readily available in plentiful supply because they are still the type of water heater most homes already have. People usually seek to replace their old unit with something similar.

EASY MAINTENANCE: Tank water heaters are simpler systems than tankless units, meaning maintenance is more straightforward (and often more affordable) than maintaining a tankless water heater. On top of this, they have been around for so long that it is easier to find professionals who know how to recognize issues that call for repair and have parts available.

PLENTIFUL WATER SUPPLY: Despite all the benefits of tankless systems, tanks are reliable because of the sound design concept of heating a full tank of water. Busy households probably won't run out of hot water before the tank refills and heats a new supply.

CONS OF A TANK WATER HEATER

If tank water heaters are cheaper, wouldn't everyone want one? Here are several reasons buyers opt for a tankless water heater instead:

LESS EFFICIENT: Tank water heaters heat water even when you don't need it, making them less efficient than tankless water heaters.

TAKES UP MORE SPACE: The hot water tank is large because it has to hold a large water supply. Residential tanks could be as small as a 20-gallon unit and as large as an 80-gallon unit.

HIGHER MONTHLY COSTS: Because tank water heaters are always heating a tank of water, they continuously use energy. This costs more than activating tankless units when hot water is needed.

SHORTER LIFESPAN: Tank water heaters typically last 10 to 15 years.

LIMITED HOT WATER SUPPLY: Even though the tank can heat a generous amount of water, once the current supply is depleted, it takes time to heat the new water supply. If too much hot water is used continuously, the hot water can suddenly turn cold.

Call us for advice about the capacity of the tank or tankless unit that's right for you: 844-216-9300.

SHOULD YOU CHOOSE A TANKLESS WATER HEATER OR A TANK WATER HEATER?

Choosing the right hot water system for your home requires several different considerations. Both tank and tankless systems are reliable and efficient and will provide your household with hot water for many years.

WHICH IS BETTER: A TANK OR TANKLESS WATER HEATER?

Both tankless and tank designs have merit, so it depends on your primary goal. If you need to save more money upfront and you already have a tank water heater, then you also already have the space it requires, making it an easy adjustment. The tank unit and installation will likely cost you less, but you will pay more in monthly energy bills.

On the other hand, if you're thinking long-term and can afford to consider a tankless unit with plenty of GPM capacity to support the number of people in your household, your tankless unit is more efficient, takes less space, and will likely last many years longer.

WHAT ARE THE DOWNSIDES OF A TANKLESS WATER HEATER?

Price and the limit to continuous use are the main downsides of a tankless system when comparing it to the tank option. Tankless water heaters tend to cost more, and installation can be more expensive as well. Since it heats water quickly on demand, if that demand continues for too long, it will outpace how fast the system can generate heat.

IS IT WORTH SWITCHING TO A TANKLESS WATER HEATER?

If you're worried about switching from a 40- or 50-gallon traditional tank water heater to a tankless system, as long as you choose a tankless unit with a high enough GPM, you should be able to get plenty of hot water at any given time.

TALK TO THE EXPERTS AT YES!

Weighing the pros and cons of tankless and tank water heaters seems logical enough, but it can still be tough to be sure. Why not let us help?

Our professional plumbers can calculate the ideal water heater size for your household, help you weigh the costs and benefits, and help you feel secure about your choice.

Even better, we can help make the cost a little less of a concern. We offer financing options, which include 12-month same-as-cash programs and reduced interest rates for up to 10 years for qualified buyers. Terms and conditions apply, so contact us today for details and eligibility. Give us a call at 844-216-9300 or get in touch here.

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Last Updated: January 15, 2025