Tankless Water Heaters vs. Tank-Based Water Heaters


Are you debating the best type of water heater for your home? Then this guide is for you!

Selecting a water heater for your home can be a monumental task, especially if you are unsure of the differences between different types of water heaters. Generally, you have two main options to choose from — tankless water heaters and tank-based water heaters.

In this guide, we explore the differences between tankless and tank-based water heaters to help you decide which is the right fit for your home. Each type comes with its own set of advantages and considerations, including energy efficiency and installation costs.  

Join us as we explore the perks of tankless and tank-based water heaters to help guide you toward picking the right system for your living space! 

What is a Tankless Water Heater?

A tankless water heater, also known as an on-demand water heater, is a modern and energy-efficient alternative to traditional tank-style water heaters. 

Unlike conventional water heaters that store and continuously heat a large volume of water, tankless water heaters heat water only when needed, providing hot water on demand.

The key features of a tankless water heater include:

  • On-Demand Heating: Tankless water heaters heat water instantly as it flows through the unit, eliminating the need for a storage tank.
  • Space-Saving Design: Tankless water heaters are compact and wall-mounted, saving valuable space compared to bulky tank-style heaters.
  • Energy Efficiency: Tankless models are more energy-efficient as they avoid standby heat loss associated with traditional tanks.

Additionally, tankless water heaters come in two main varieties — gas-powered or electric. 

Let’s take a closer look at the difference between the two:

  • Gas-Powered Tankless Water Heaters: Gas-powered devices use natural gas or propane to power the water heater. These units typically have a higher flow rate, making them suitable for larger households with higher hot water demands. In terms of installation, gas-powered units require professional installation due to gas line connections and venting needs. 
  • Electric-Powered Tankless Water Heaters: Electric tankless water heaters use electricity. These devices generally have a lower flow rate, making them more suitable for smaller households with lower hot water demands. Electric units are also often easier to install, requiring less complex venting and gas line connections.

Choosing between gas-powered and electric tankless water heaters depends on factors like household size, hot water usage patterns, and local utility costs. Each type offers energy-efficient and space-saving benefits compared to traditional water heaters.

What is a Tank Water Heater?

A tank-based water heater, also known as a storage water heater, is a traditional type of water heating system that stores and heats a fixed amount of water in a large insulated tank. These water heaters are commonly found in residential and commercial buildings. 

The key features of tank-based water heaters include:

  • Storage Tank: The tank-based system consists of a large tank that stores a predetermined volume of hot water. Tank sizes can vary, typically ranging from 20 to 80 gallons or more.
  • Constant Heating: The water in the tank is continuously heated to a set temperature, maintaining a ready and available supply of hot water for various household needs.
  • Energy Source: Tank-based water heaters can be powered by electricity, natural gas, propane, or other fuel sources. The choice of energy source depends on factors such as local utility availability and cost.
  • Standby Heat Loss: One drawback of tank-based water heaters is standby heat loss. Even when hot water is not being used, the heater must keep the water in the tank at the desired temperature, leading to energy inefficiency.
  • Limited Hot Water Supply: The amount of hot water available is limited to the tank’s capacity. Once the stored hot water is depleted, a delay may occur before the system reheats a new supply.
  • Space Requirements: Tank-based water heaters are relatively large and require dedicated space for installation. They are commonly found in utility rooms, basements, or other designated areas.

While tank-based water heaters have been a reliable and common choice for many years, newer technologies like tankless water heaters offer advantages such as on-demand hot water, increased energy efficiency, and space savings. The choice between tank-based and tankless water heaters depends on factors such as hot water demand, available space, and energy efficiency preferences.

Tank-Based vs. Tankless Water Heaters: Base Cost 

Purchasing and installing a water heater often goes hand-in-hand, as many retailers that sell water heaters also offer installation services. 

According to Angi (formerly Angie’s List), the cost of purchasing and installing a tank-based water heater ranges between $600 to $2,500. For a tankless water heater, this cost increases to between $1,200 to $3,500. However, it is important to note that installing a tankless water heater for the first time can incur additional labor costs, depending on the difficulty of the installation process.

Additionally, water heaters of both varieties can differ in cost depending on their size. Tank-based water heaters are sized according to how many gallons they can hold, while tankless water heaters are sized based on how many gallons of water they can handle per minute. 

In either case, a larger water heater will almost always be pricier than a smaller one. 

Tank-Based vs. Tankless Water Heaters: Installation Process

The installation process for tank-based water heaters and tankless water heaters differs due to the distinct characteristics of each system. 

Here’s a comparison of the installation processes for these two types of water heaters:

Tank-Based Water Heaters:

  • Location Selection: Tank-based water heaters require a dedicated space, usually in a utility room, basement, or another designated area. The location should have proper ventilation and comply with local building codes.
  • Power Connections: For gas-powered units, a gas line connection is needed, along with proper ventilation for exhaust gases. Electric units require electrical connections.
  • Water Connections: Both cold and hot water pipes connect to the tank. A T&P (temperature and pressure relief) valve is installed for safety.
  • Ventilation: Gas water heaters need proper venting to expel combustion byproducts. Vent pipes may extend vertically or horizontally, depending on the model and local codes.
  • Space Considerations: The size of the tank influences the available hot water supply. Adequate space is needed for the tank, and considerations are made for potential expansion if the household’s hot water demand increases.

Tankless Water Heaters:

  • Location Selection: Tankless water heaters are often wall-mounted and can be installed in more compact spaces. They can even be installed outdoors, saving indoor space.
  • Connections: Gas-powered tankless units require a gas line connection, and electric models need electrical connections. Gas units may also need proper venting for exhaust gases.
  • Water Connections: Similar to tank-based units, both cold and hot water pipes connect to the tankless unit. T&P valves are still required for safety.
  • Venting for Gas Models: Gas tankless water heaters may require venting for combustion byproducts. However, tankless units may have a direct vent option, allowing for more flexible venting configurations. Additionally, gas-powered tankless water heaters may need a sufficient gas supply to meet the unit’s demands. 
  • Electrical Considerations for Electric Models: Electric tankless units may need sufficient electrical capacity and sometimes require a dedicated circuit.

Overall, while both types of water heaters require specific considerations during installation, tankless water heaters often offer more flexibility in terms of location, space requirements, and venting options. 

Gas-powered tankless units may have similarities in installation to tank-based gas units, while electric tankless units typically have simpler installation requirements. Professional installation is recommended for both types to ensure safety and compliance with local codes.

Tank-Based vs. Tankless Water Heaters: Efficiency

The efficiency of water heaters is measured by the Uniform Energy Factor, or UEF for short. 

A UEF measurement considers both the efficiency of converting input energy into hot water and the losses associated with standby energy use and cycling losses. This measurement is the standardized rating system developed by the U.S. DoE to provide consumers with a consistent way to compare the energy efficiency of different water heaters.

According to the Department of Energy:

“The higher the uniform energy factor, the more efficient the water heater. However, higher energy factor values don’t always mean lower annual operating costs, especially when you compare fuel sources.”

In general, tankless water heaters are considered more energy efficient overall than their tank-based counterparts. This higher level of efficiency can be attributed to tankless water heaters only heating water on demand, reducing the occurrence of standby heat loss. 

Tank-Based vs. Tankless Water Heaters: Life Of Unit

The lifespan of a water heater — whether tankless or tank-based — can vary based on factors such as usage, maintenance, water quality, and the specific model. 

Here’s a general comparison of the expected lifespans:

  • Tankless Water Heater: A well-maintained tankless water heater can typically last 20 years or more. The absence of a storage tank and the on-demand heating mechanism contribute to the longer lifespan. Regular maintenance, such as descaling to prevent mineral buildup, can help extend the lifespan of a tankless water heater.
  • Tank-Based Water Heater: Tank-based water heaters generally have a lifespan of around 10 to 15 years. The presence of a storage tank, which is continuously subjected to heating and cooling cycles, can contribute to wear and tear over time. Regular maintenance, such as flushing the tank to remove sediment, can help extend the lifespan.

Of course, these lifespans are dependent on the external factors impacting your chosen water heater. To gain a better idea of how long your water heater can last, let’s look at these external factors and how they influence the longevity of your water heater:

  • Water Quality: Hard water with high mineral content can contribute to scaling and reduce the lifespan of both types of water heaters. Regular maintenance to address scaling is crucial.
  • Maintenance: Routine maintenance, such as flushing the tank or descaling the heat exchanger, is important for both tankless and tank-based units to prevent issues and extend lifespan.
  • Usage: Heavy usage may impact the lifespan of a water heater. Units subjected to high demand may experience more wear and tear.
  • Installation Quality: Proper installation by a qualified professional is essential for the longevity of any water heater. An improperly installed water heater can not only diminish efficiency and lifespan but also pose potential health and safety risks.
  • Technology Advancements: Advances in technology may influence the lifespan of newer models. More recent models may incorporate improvements in efficiency and durability.

Ultimately, both tankless and tank-based water heaters can provide reliable hot water for many years with proper care. Regular maintenance, attention to water quality, and adherence to manufacturer guidelines are key factors in ensuring the longevity of either type of water heater.

Final Thoughts

Choosing between tankless and tank-based water heaters depends on factors such as hot water demand, space availability, initial budget, and preferences for energy efficiency. 

As you make your decision, consider the advantages and disadvantages of both types. For more modern homes, choosing a tankless system can help increase your home value and prepare the structure to adapt to new technological advancements in the coming years.

Regardless of which you choose, remember that proper and regular maintenance is the key to longevity. 

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