15 Differences Between Tank and Tankless Water Heaters

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Quick Answer: Difference between Tank and Tankless Water Heaters

Tankless water heaters are different from tank styles heaters in various aspects including the build, efficiency, power requirements, space requirements, costs, hot water output, and service life. Although the initial costs for tankless water heaters are more, they have higher energy efficiency and limited energy expenditure. However, as the size of a household increases, the relevance of having a tankless unit becomes questionable. Therefore, all the above factors should be considered before purchasing a new water heater.

Water heating accounts for 18% of a household’s energy usage and hence, saving energy in this can help reduce the total energy expenditure.

There are five types of water heaters available in the market. They are conventional storage water heaters, tankless water heaters, heat pump water heaters, solar water heaters, and tankless coil and indirect water heaters.

Storage type water heaters are the most commonly used type in American households. However, there has been an increase in the demand for tankless water heaters in recent years.

Comparison Table: Tankless and Tank Type Water Heaters

Here is a quick snapshot of the main differences in brief between the two types of water heaters – 

Parameter Tank Water Heater Tankless Water Heater
Operating principle Water stored in a tank is continuously heated. Water is heated directly as it flows through the heater unit.
Capacity It can store up to 80 gallons of water. It is capable of providing multiple applications running simultaneously with hot water It virtually has an unlimited amount of hot water. However, when multiple taps are running at the same time, the temperature of the hot water decreases.
Installation It is commonly installed in the basement of a household because of its large size. For houses without basements, a dedicated closet with proper venting and air intake requirements is necessary. Due to its compact nature, it can be installed anywhere in the house. Electric tankless water heaters are best suited for point-of-use applications as they can be installed in closed spaces.
Total cost The purchase and installation costs are low. However, operating costs are comparatively high. The initial and installation costs are quite high and the cost of operation is low.
Standby losses It is not energy efficient as the water being stored is continuously heated, and standby losses occur. Due to the instant heating of water, there is no standby loss, resulting in greater energy efficiency.
Service life ~15 years. It can last as long as 20 years.

Differences between Tankless and Tank Type Water Heaters

Tank and tankless water heaters are different from each other in numerous aspects. Let us take a look at these differences in detail.

1. Working

Storage tank water heaters heat the water stored in a reservoir. When the tank empties, water is automatically filled in the tank again.

In a tankless water heater, the water is heated only when required and hence, there is no storage tank. When a hot water tap is turned on, water flows into the heater and it is immediately heated and let out to the hot water faucet.

2. Heating Technology

The water in a storage type water heater is continuously being heated. The heating of water is regardless of whether hot water is necessary or not. This means that energy is continuously being spent even when not required.

In a tankless water heater, a flow sensor detects the flow of water in the heater as soon as it enters the heater. The heater is activated only when this happens.

At other times, the heater remains idle resulting in higher energy savings.

3. Standby Losses

Standby energy losses occur in a storage-tank water heater when the water in the tank keeps dissipating some amount of energy to its surroundings.

In a tankless water heater, since water is heated instantaneously, no energy is being given out to the external surrounding. Therefore, there is no standby energy loss associated with tankless water heaters.

4. Availability of hot water

In a tank water heater, once the tank becomes empty, there is a waiting time for the water to fill up in the tank and get heated.

Until this process is complete, hot water will not be available to use.

In a tankless water heater, the heating of water continues to take place as long as water flows through the heater unit.

That is, as long as a hot water faucet remains on, hot water will be available at that tap.

5. Hot Water Flow Rates

Tank water heaters are capable of holding 20 – 80 gallons of water based on their models. There is no need for concern regarding hot water flow rates because of the large amount of water stored.

Tankless water heaters are capable of heating water at the rate of 2 – 5 gallons per minute. Gas tankless water heaters have higher flow rates than the electrical ones.

6. Hot Water Temperature Control

Hot water from a storage type water heater remains at the same temperature regardless of the number of simultaneous applications in use.

In a tankless water heater, if the output flow rate of water is more than the rating of the device model, then the water will be at a temperature lower than what is set in the control. This happens when multiple applications of hot water are in use.

7. Hot Water Transit Time

Sine storage tank water heaters are usually installed in basements when a hot water tap is turned on, there is a significant time gap until hot water starts flowing out from the tap.

Although the transit time of hot water is present in tankless hot water heaters, this can be avoided by installing them close to the hot water taps.

Their small size allows them to be placed in any location. However, a gas tankless water heater requires venting adjustments.

8. Size

On average, storage tanks are 5ft tall or taller and 2ft wide or wider. This makes their placement in a household without a basement quite difficult.

A tankless water heater is much smaller than a tank style heater. It is usually 2ft tall and a little over a foot wide. They can be easily installed in small spaces.

Their small size makes them ideal for point-of-use applications.

9. Power requirements

A storage-type tankless water heater gradually heats the water in the reservoir until it reaches the preset temperature. For this, an electric water heater requires no more than 5kW of power.

A tankless unit, however, has to instantly heat water as it flows through the unit. The energy required is greater due to the rapid exchange of heat.

Depending on the model, the power requirements for an electric tankless water heater can anywhere in the range of 2.4 – 28 kW.

10. Purchasing Costs

A tank water heater costs significantly less than a tankless water heater. A typical tank-style water heater costs around $300 – $350.

The initial cost for an electric tankless water heater costs around $500 – $700. A gas tankless water heater is much more expensive ranging from $1000 to $1800.

11. Installation costs

Installing a tank style water heater is not very expensive if you are replacing an older water heater with a new one of the same capacity. You might have to spend around $500 on plumbing charges.

Replacing a tank style water heater with a tankless unit is costlier as the requirements for venting and gas supply may be different.

For an electric model, if the power requirements are high, expensive upgrades from the current electric configuration may be necessary. The installation cost ranges from $800 to $1500.

12. Operating costs

The operating cost for a tankless water heater is higher than its tankless counterpart.

For a gas model, the annual operating cost is about $245, and for an electric type storage heater, it is $580.

The annual operating cost for a gas type tankless water heater is around $190 and for an electric tankless water heater, the operating cost per year is $535.

The above prices are based on the average prices of natural gas, which is $10.86 per 1000 cubic feet of natural gas, and electricity, which is $0.132 per kWh.

13. Energy Efficiency

Energy efficiency is measured in terms of energy factor (EF) which is a measure of the amount of input energy that is converted successfully into hot water.

The energy factor for conventional storage type heaters that run on gas is around 0.5 to 0.7. For those that run on electricity, it varies from 0.75 to 0.95.

Since standby losses are eliminated in tankless water heaters, they have higher energy efficiency. The energy factor for gas tankless waters heaters is between 0.69 and 0.85, and that for electric type tankless water heaters is between 0.98 to 0.99.

14. Energy Savings

A tank style water heater continuously heats the water in the tank even when a hot water tap is not in use. Also, there are standby losses associated with a tank heater resulting in energy wastage.

Energy savings of up to 24% – 34% can be achieved by using a tankless water heater.

For a larger household using around 86 gallons per day, 8% -14% of energy can be saved. Savings can be increased by installing point-of-use heaters for dedicated use.

15. Life expectancy

A storage-type water heater can function for 10 to 15 years. A tankless water heater can last up to 20 years if handled and maintained properly.


How can a tankless water heater heat water instantly?

A tankless water heater directly heats the water flowing through the heater unit without the help of a storage tank. When a hot water tap is turned on, water flows into the heater, immediately converts to hot water, and flows out through the hot water tap.

Is it worth replacing my tank style heater with a tankless unit?

Replacing a tank style heater to a tankless system will not be cheap. If you are planning to install a tankless unit in the same place as that of the previous heater, you can save a lot on plumbing changes.

A tankless unit is extremely energy efficient compared to a tank style heater. Paybacks on tankless heaters are usually 5 to 6 years, and for its service life of 20 years, the payback is quite high.

How much money can I save?

Depending on the model of tankless water that you install, its proper operation, and maintenance, anywhere around 10% to 59% of money can be saved on your heating bills.

What is a cold water sandwich?

A cold water sandwich is when in the pipelines contain a layer of cold water due to the continuous switching on and off of the heater unit. This is more common in tankless water heaters.

Will a tankless unit never leak as there is no storage tank?

This is a common assumption that is not always true. If maintenance is not done properly and regularly, there can be a lime-scale buildup in the pipes within the heater. This mineral deposit may gradually corrode the pipes resulting in leakages.

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