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Tankless Water Heater Vs. Tank: Which Is Right For You?

Note: This post may contain affiliate links. This means that at no cost to you, we may receive a small commission for made purchases.

Tankless water heaters use less energy than traditional models because they do not require a large reservoir of hot water.

This means you won’t need to run your heater as often. However, these heaters cost more up front.

Tankless water heaters are often more efficient than storage tanks because they don’t need to hold as much hot water.

So, if you want to save money in the long run, maybe you should buy a tankless water heater (see also ‘Why Using A Tankless Water Heater For Radiant Floor Heating Is A Good Idea‘).

With all that being said, it might be a confusing choice to make! Hopefully our guide will help you out.

About Tankless Water Heaters

Tankless Water Heater

Tankless water heaters are used to heat water quickly without wasting energy. These devices use less electricity than traditional ones.

However, there are still some issues with these systems.

For example, they may be more expensive than conventional models. Also, they need to be installed properly to work efficiently.

Tankless water heaters are more expensive than traditional ones, but they are still affordable.

They are easier to install and maintain, and there are many types of maintenance that you can do yourself, including cleaning.

Switching to tankless water heating requires upgrading your home’s plumbing system and increasing the capacity of energy powering them.

You must also plan properly financially.

How Tankless Water Heaters Work

A tankless water heater uses a heating element instead of a tank to hold hot water. This allows the water to be heated as soon as you turn on the fountains.

Tankless water heaters are more efficient than traditional models. They use less energy because they heat water on demand.

Turning on the washing machine, dishes, taps, and showers together could reduce the efficiency of the device.

Tankless water heaters only warm water when you need it. This helps you save up to 70% on your energy bill.

Tankless water heaters are better because you can install them anywhere.

They’re also cheaper than tank storage water heaters since there’s no need to buy a large tank. On-demand water heaters are better than tank storage water heaters because they have a longer lifespan.

Tankless water heaters are more efficient than traditional ones. They heat water right away. They don’t need to store hot water in a tank.

They don’t use electricity as much either.

Tankless water heaters are very efficient, but they’re also very expensive. There’s a higher upfront cost, and you’ll need to pay extra for installation.

Tankless water heaters are very popular now. They are used by many people because they are easy to install and maintain.

They are also energy efficient. Tankless water heaters (see also our guide on transporting a water heater) are great for conserving energy.

They save a lot of space because they’re mounted on walls, and they fit into tight places. They also vary in size, but most are about two feet tall and a bit under a foot wide.

Tank Storage Water Heaters

Tank Water Heater

Traditional tank storage water heaters are very common in many homes.

They are highly insulated to prevent loss of heat. They can hold up to 50 gallons of hot water. Most of them usually have an output of 50 gallons.

They can be about 5 feet high and 2 feet wide, but some can be larger than that.

Most people put their heaters in basements, but if you’re living in a house without a basement, you can still use a closet.

How Tank Storage Water Heaters Work

Storage water heaters can be set to 140 degrees or any other temperature.

They use various sources of energy. During heating, water flows through the heat exchangers and then goes to the holding tank.

A storage tank is used to store hot water. It has heavy-duty insulation to protect the hot water from losing its heat.

The tank has an output pipe at the top to supply hot water to different locations, such as bathrooms, kitchens, and sinks.

When you use hot water, cold water gets heated. The tank has an internal thermostat that triggers the heating.

A water heater stores hot water in cycles. When there is an outage, the hot water remains in the tank until the next cycle begins.

This means that hot water will be available even if the power fails.

Tank water heaters are big because they can hold up to sixty gallons of water. They need large spaces for installation if there isn’t a basement.

If the tank water heater malfunctions, it might leak and spill gallons of water onto your floor, destroying some stuff and even causing bodily harm!

Luckily, some tank heaters come with sensors that can detect leaks.

How Long Does A Tankless Water Heater Last?

Tankless water heaters work by circulating hot water through pipes instead of storing it in tanks.

This makes them more efficient than traditional tank-style units because there is less energy used to heat the water.

Purchase Price And Installation

Tank-style water heating is less expensive than tank-style water heaters. Tank style water heaters come in different sizes.

A bigger size costs more.

Plumbing jobs usually involve replacing an old tank with a new one.

A certified plumber should be used when doing this kind of work.

You may need a plumber because the old tank was made differently than newer ones. Installation costs vary depending on how much work needs to be done.

Tankless water heaters are expensive but save money over time. You’ll pay more up front, but you’ll save money over time because you won’t be paying for hot water as long.

Tankless water heaters use less energy than traditional ones, and they’re easy to install. A professional should install them.


Storage tanks deliver a steady supply of hot or cold water. Tankless systems are more efficient than traditional ones because they use less energy.

Electric models work well in warm climates while gas-powered ones do better in colder regions.

Energy Use And Efficiency

A storage tank water heater takes up more space than a tankless water heater. A tankless water heater uses less electricity than a storage tank water heater.

Gas models are more expensive than electric models.

However, both types of water heaters are very efficient. The gas model uses less energy and costs less money over time.

Tankless water heaters are efficient, but you need to pay extra for them. You’ll save money if you use them instead of regular ones.

Gas water heaters are less efficient than electric ones, but they’re cheaper to operate. Electric models are more efficient, but they’re more expensive to operate.

Payback Time

Payback times range from 22 ½ to 27 ½ years.

Labor costs are lower when replacing a tankless unit than when replacing a tank.

Tankless Water Heater Advantages

Tankless Water Heater

Tankless water heaters (see also ‘Gas Vs Electric Tankless Water Heater‘) save you money over time.

You should buy them if your home uses up to 41 gallons of hot water per day. Gas-fired tankless water heaters are the most cost-effective option.

Longer useful lives than storage tanks. Tankless water heaters typically last 20-30 years, double the forecast life of storage tank water heaters.

Hard water areas may shorten the useful life of both kinds of water heaters.

On demand water heaters are small, and they can be installed in tight spaces. They can also be installed on outside walls. They provide hot water whenever you want it.

Tankless water heaters heat up two to three gallons of water per minute.

Most storage tank water heaters require more time to heat up water, since they have to heat up a large amount of water.

Tankless water heaters are cheaper to operate because they use less energy than storage tank models. However, they also cost more up front.

You’ll pay about $1,000 more for a tankless heater than for a storage tank model. Over time, however, tankless water heaters (see also ‘Tankless Water Heater Installation Cost‘) save money by using less electricity.

In fact, over the course of a year, a tankless heater uses about half as much electricity as a storage tank model.

Drawbacks Of Tankless Water Heaters

Higher purchase cost than storage tank. Tankless water heaters are expensive when you’re replacing a storage tank water heater with a tankless type.

Plumbers need to relocate pipes before installing a new tankless water heater. This increases the costs of installation.

You should always check the temperature of your tankless water heater (see also ‘Why Hot Water Temperature Fluctuates In Tankless Heaters?‘) before using it. If you have more than one person taking showers simultaneously, make sure you turn off other faucets.

Tankless water heaters put out less than half as much hot water as conventional ones. This means that they can’t be used simultaneously to wash dishes or run a washer/dryer.

Their lower output also makes them more likely to cause the “cold water sandwich” effect. Conventional tanks have a higher flow rate, but they’re harder to control.

Not all flow rates are calculated the same.

Some companies list their GPM as 35 degrees rise and others as 45 degrees rise. The more heat the hot water requires, the slower it flows.

Storage Tank Water Heater Advantages

Water heaters should be simple to use and maintain.

Heating systems should be easy to install and inexpensive to purchase and maintain. Newer, high-efficiency models save money by using less energy.

They also last longer than older models. Older models were more expensive but used less energy

Drawbacks Of Storage Tank Water Heaters

Occupying more space than an on-demand water heater is a disadvantage. Tankless water heaters are also difficult to install outside (see also ‘Can Water Heaters Be Installed Outside?‘) your house.

Your average home water heater can hold up to 3 showers at once.

However, if you have more than 3 people in your household, you should consider getting a bigger water heater.

A large water heater can handle 4 or 5 showers at once. This means that you will be able to take multiple showers without running out of hot water.

Electric water heaters are more expensive than gas ones initially. You should consider the price before choosing an electric or gas heater.


Tankless water heaters (see also ‘Cold Weather And Your Tankless Water Heater: How To Prevent Freezing‘) are great if you want to save money on your energy bills. You can install them yourself without any help.

But for peace of mind, it’s often best to get a professional installation.

Hopefully this guide has helped you to decide which type of water heater is best for you!

author avatar
Anthony Barnes
Anthony Barnes is the founder of Water Heater Hub and a second-generation plumber by profession. Before developing Water Heater Hub, Anthony Barnes was a full-time plumber, and he has undertaken a wide variety of projects over the decades. As a second-generation plumber, it was easy for Anthony to get used to the technicalities of all from a tender age


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