Tankless and Tank Water Heater Comparison
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Tankless and Tank Water Heater Comparison

When considering a replacement for your hot water heater you have two options; a traditional tank water heater and a tankless water heater. Both units have advantages and disadvantages based on the size of your home, the number of people using hot water, and the condition of your water. This article will discuss the maintenance, installation costs, operating costs, and usage factors that will assist you in selecting the right type of hot water heater for your home.

When considering a replacement for your hot water heater you have two options; a traditional tank water heater and a tankless water heater. Both units have advantages and disadvantages based on the size of your home, the number of people using hot water, and the condition of your water.

Heating water accounts for up to 30 percent of the average home's energy budget. Some makers of gas-fired tankless water heaters claim their products can cut your energy costs up to half over regular storage heaters.

Tank Water Heater

A tank water heater uses gas or electric to heat the water. There are also indirect-fired hot water heaters which use hot water produced by a boiler to heat the water inside the tank. Indirect-fired hot water heaters are usually installed in homes that use oil-hot water heating for baseboard or radiant floor heat. The gas and electric water heaters have an inner steel tank that can hold 40 to 75 gallons of hot water in reserve for use. The tank is insulated to retain heat and a thermostat is used to control the temperature of the water.

Tankless Water Heater

Tankless water heaters heat water as its needed, as opposed to keeping a holding tank filled with hot water. Tankless systems come in two varieties; point of use or whole house units. Point of use heaters are typically installed where you use hot water, such as a bathroom or kitchen, are placed inside a cabinet or closet. Whole house are larger units, designed specifically to handle the hot water heating needs of an entire home.

Electric tankless water heaters are usually point of use since the power requirements for a whole-house model would mean most homeowners would have to upgrade their electrical service.


The cost difference is broken down in two ways. First, the cost of the unit itself. And second, the amount of savings by using a system on an everyday basis.

Tankless water heaters can cost between $800 to $1,150, compared with $300 to $480 for the standard storage tank type. Tankless models need electrical outlets for their fan and electronics, upgraded gas pipes, and a new ventilation system. That can bring average installation costs to $1,200, compared with $300 for storage-tank models.

Typically, a tankless water heater will cost two to four times as much as the traditional tank water heater, depending on size and model. And if you use the point of use units, you may end up with two or three units within your home in order to keep up with demand meaning that you will spend more money the units themselves. Since most people sell their homes once every 5 to 7 years, installing a very expensive tankless hot water system will not pay for itself.

A tankless system will save on the overall energy efficiency of having to heat and reserve water. Savings can be anywhere from a few dollars to a few hundred, depending on the size of your home and how much you use. If you choose a tank hot water heater, focus on the highest efficiency rated model. You can install a hot water recirculation system that provides instant hot water and will not be wasting water waiting for hot water to reach the faucet.

Operating Costs and Payback Period

Gas tankless water heaters use high-output burners to quickly heat water as it runs through a heat exchanger, are over 20 percent more energy efficient on average than the gas-fired storage-tank models. That translates into a savings of between $75 to $100 per year. But because they cost much more than tank water heaters, it can take up to 22 years to break even which is longer than longer than the typical 20-year life of many models.  Tank type water heaters have a typical life of from 8 to 15 years depending on how well it is maintained and water conditions.


Tankless water heaters are very complex appliances and will need trained technicians to work on them if there is a problem. Most manufacturers of tankless water heaters warned of scale buildup. Do it yourself flush valve kits or a service call from a plumber is recommended once a year to flush the heat exchanger of the unit. Calcium buildup can decrease efficiency, restrict water flow, and damage tankless models. Experts suggest installing a water softener if your water hardness is above 11 grains per gallon. Failure to do so can void the warranty.

Tank type water heaters can be maintained by a homeowner with basic knowledge of plumbing and electricity. Replacement parts are readily available and inexpensive. Routine maintenance such as flushing the tank and testing the temperature and pressure valve and thermostat are basic requirements.

Water Temperature

Manufacturers of tankless water heaters often state that their products can provide an endless amount of hot water. But inconsistent water temperatures are a common complaint among users. When you turn on the faucet, tankless models feed in some cold water to gauge how big a temperature rise is needed. If there's cool water lingering in your pipes, you'll receive a momentary shot of cold water between the old and new hot water. The tankless water heater's burner is activated by water flow and it might not ignite when you use a very small amount of hot water for hand washing and shaving.

Also tankless water heaters do not deliver hot water instantaneously. It takes time to heat the water to the target temperature, and just like storage water heaters, any cold water in the pipes needs to be pushed out. Since tankless models use digital controls, you'll also lose hot water during a power outage.

Some plumbers have started to correct temperature and pressure issues by installing small 10-gallon electric water heaters after the tankless heater to temper the cold water coming out of the unit or when there is very low flow. On occasion, recirculating pumps are also installed to along with the small tank to maintain pressure.

Other factors

Maintenance on tank-type heaters is simpler, and it’s easier to find people who can work on them.

Parts for tankless heaters are more difficult to obtain.

Tank heaters are more tolerant of hard water. Calcium buildup in tankless heaters cuts efficiency; adding flush ports allow the heater to be cleaned with white vinegar.

A tankless heater generally outlasts an unmaintained tank type.

Tankless heaters pose less risk in an earthquake due to wall mounting and lower weight.

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Comments (2)

Excellent work, Daniel

Ours failed last year and we considered both of these options.  We stayed with the tank water heater.