Storage tank water heaters vs. tankless water heaters

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A water heater is considered a long-term investment and a necessity in every American household. At the time of replacing your current water heater, are you planning to buy a water heater or a more energy-conscious tankless water heater?

While the storage water heater is cheaper to start with, the cost savings can add up. According to the US Department of Energy, households with instant water heaters that use less than 41 gallons of hot water per day can achieve energy savings of up to 34%. Higher usage households with an average daily capacity of 86 gallons can still achieve up to 14 percent energy efficiency compared to water heaters with storage tanks.

However, that doesn’t mean that instant water heaters are the best solution for everyone. Storage water heaters have a lower initial cost, and purchasing an insulated water heater can reduce standby heat loss and operating costs. Depending on the household’s hot water consumption, storage models could be a more cost-effective option.

Read below as we compare water heaters to tankless water heaters, including the initial cost, aspects to consider, and the size of a water heater for your home’s needs.

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Storage water heater

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The water heater is the one that most renters and homeowners are familiar with. A conventional storage water heater has a capacity of 20 to 80 gallons.

The tank is full and is heated in the reservoir by your home’s fuel source – electricity, gas, oil, or propane. When the hot water tap is on, hot water is drained from the top of the tank. Then cold water is poured in from the bottom of the tank until it is full so that hot water is always available.

This process of constantly heating the water in the tank contributes to heat loss in standby mode. Standby heat loss is the amount of heat lost when the water heater is not in use. The older the water heater gets, the more standby losses can drive up energy costs.

Further information: How to set the temperature of your water heater.

Water heater

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A flow heater, also known as a flow heater or demand-controlled flow heater, only heats water when it is needed. Water is heated at an average rate of 2 to 5 gallons per minute using one of three fuel sources – electricity, natural gas, or propane.

Instantaneous water heaters are sometimes more efficient than instantaneous water heaters because there is no standby heat loss. A disadvantage of a water heater, however, is the insufficient capacity when more than one hot water tap is operated at the same time.

Gas fired water heaters can also waste energy by burning the pilot flame to heat the water in the tank and achieve higher flow rates than electric water heaters. One way to counteract this is to choose a model with an intermittent igniter instead of a standing pilot flame.

More Info: How To Buy A Water Heater

Other considerations

Purchase price

The capacity required for your hot water needs will determine what price range your water heater is in. If you only consider the purchase price, a water heater is usually cheaper than a water heater without a tank.

The capacity, fuel source, warranty, brand and dimensions of the storage tank water heater will affect the price. Expect between $ 300 and $ 1,500 for a water heater, but some models and brands can cost up to $ 2,000.

Instant water heaters can be bought to heat a single sink, bathtub, or shower (so-called pointless instant water heaters) – or to heat water for the whole house. The purchase price for a water heater can be as low as $ 150 or as high as $ 2,500 or more. Solar-powered water heaters are the most expensive, costing up to $ 6,000.

There are calculators online that you can use to determine the size for both types of water heaters, including storage heaters if required. You can also calculate your expected energy costs for an electric or gas water heater.

Installation costs

Just like the purchase price, installation costs vary widely, including location. Installing a tankless water heater on site is the cheapest, followed by storage water heaters and tankless water heaters for the whole house.

Average prices to install a water heater range from $ 400 to $ 1,000. The national average for installing a tankless water heater is $ 2,500, with estimates going at $ 1,000 and $ 6,000 or more.

Some homeowners can take a DIY route with water heaters and save on installation costs. For instant water heaters, it’s best to have a professional do them because it’s more complicated to set up.


Choosing the right capacity for your water heater shouldn’t run out of hot water. This is one of the reasons the storage tank outshines the tankless water heater. If you frequently run the dishwasher and washing machine at the same time, a tankless water heater may have trouble keeping up with demand.

However, this can be remedied by installing more than one instantaneous water heater to suit your household needs, or by installing a point-of-use model that uses the water. Use the calculators linked above to determine your needs. This is how you can identify the right water heater for your home.

Energy efficiency

Because of their energy efficiency, instantaneous water heaters are an attractive alternative to instantaneous water heaters. Standby heat loss is a major contributor to higher energy costs and efficiency in water heaters, although purchasing an insulated unit can reduce heat loss.

The US Department of Energy estimates that tankless water heaters are 8 to 34% more efficient than water heaters.

Lifetime of the unit

When you factor in the life expectancy of each type of water heater, water heaters are expected to last longer. It is estimated that storage tank water heaters will take around 10 to 15 years per unit, while tankless water heaters can last 20 years or more.

One way to extend the life of a water heater is to replace the anode bars, a component that slows rust and corrosion. The frequency depends on the type of heating and whether there is hard or soft water in the house.


In the battle between water heaters and instantaneous water heaters, the instantaneous water heater wins in almost every category. However, you pay more to buy and install the tankless water heater. Ultimately, if price is a factor, it is a good idea to use calculators to figure out capacity needs, energy consumption, and break even point for the higher initial cost of the water heater compared to energy efficiency savings.

If your family regularly needs hot water at the same time, consider the cost of installing two water heaters to keep up with demand, compared to installing a higher capacity water heater. When choosing a storage tank model, ask about the price of replacing the anode rods and when to do so to extend life expectancy before purchasing and installing.

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