Tankless vs. Hot Water Tank Heaters Comparison
Pros and Cons

Compare tankless vs. traditional water heaters to choose the best option for efficient, reliable, and long-lasting water heating in your home.

Choosing between tankless or regular water heaters and buying the right water heating option is very important because, as stated by the U.S. Department of Energy, gas-fired water tank heaters are the second highest energy consumer, right after space heating. Between 14% and 25% of the home's annual energy usage goes toward water heating, so your water heater can be a costly investment if you don't select it wisely.

Check out how tankless and tank-type water heaters work, compare the benefits, including the pros and cons of each type. It is almost imperative to consider initial and operating costs, energy efficiency, available features, longevity, and warranty, in order to make an informed decision.

After figuring out which type is better for your home, tankless or hot water tank, see our recommendation of the best models to buy.

Selecting the right water heater is not an easy decision because the best models are often expensive. In contrast, cheaper models usually come with the lowest efficiency and quality and could cost more at the end of their lifetime.

Highlights

Comparing tankless vs. traditional water heaters – Major differences in short

Features/Type Tankless Hot Water Tank
Size Small Large
Heating process On-demand Heats/Reheats
How water availability Endless Limited
Diagnostics Advanced Basic
Electronics Advanced Basic
Efficiency High Low
Warranty Long Short
Lifespan Over 20 years 10-15 years
Initial costs High Low
Operating costs Low High
Savings High Low

Tankless water heaters

In general, buy a tankless water heater if you have a large family, hot water demand is high, every inch of the available space counts, you are often away from home, and need an advanced but "green" technology. And, of course, money is not an issue.

How does it work

Rinnai tankless water heaterRinnai tankless water heater

Tankless water heaters heat water on demand or per request and provide hot water in endless and continuous supply.

Tankless does not store water as the tank-type, and since water is heated only when passing through the heat exchanger, heat loss is often minimal.

The tankless unit activates only when a hot water tap is open and has sufficient water flow. When the water flow sensor is satisfied with the required flow rate, the unit activates. Then the heating element on electric heaters, or a gas-fired burner of the gas models then starts heating the water, but as long as the tap is open. Water is heated inside the heat exchanger while passing through.

Most of the gas tankless water heaters are equipped with electronic ignition, which ignites the gas burner. The "brain" of the tankless heater is the circuit board, which monitors and controls the heating operation, and is used to diagnose the problems and help in troubleshooting.

In gas models, due to gas burning, products of gas combustion are vented out through the venting system, while in electric models, due to the absence of flue gases, vents are not needed.

When the hot water tap is closed, the water flow stops, shutting down the heater. So, if you don't need hot water, a tankless unit is not working.

Either you are buying a point-of-use or the whole-house tankless water heater; you will find many benefits over the traditional tank-type cylinders. Keep reading to find more about tankless benefits below.

According to Bosch manufacturer, if you have a tank-type water heater that is more than eight years old, it is time to upgrade it to tankless, a modern and advanced unit that can help you save space and reduce energy bills, and lower gas emission.

Pros

On-demand heating. Tankless water heaters heat water on demand and deliver it in endless supply. Hot water is provided as long as you needed it, so you don't have to worry about running out in the middle of the shower or during peak hours.

Ideal for demanding families. They are suitable for demanding homes and large families. Some models can deliver up to 11 GPM of hot water, sufficient even for homes with up to 5 bathrooms. You can also combine two or more tankless models if the demand for hot water is high.

Great for small jobs. Tankless are ideal for sites, such as vacation homes, cottages, and cabins, as they operate only when hot water is needed, periodically, reducing energy costs significantly. Tankless is also recommended where hot water is required in continuous supply and for remote or distant sinks.

Fast, hot water delivery. While tank-type works well with recirculating systems, recirculation in tankless is more complicated unless the unit comes with the built-in feature, such as found in Rinnai RUR98 models. The recirculation feature brings hot water faster to the tap.

Ultra-high efficiency. Tankless also provides better energy and water savings due to the ultra-high energy efficiency, which can reach a high 98%, as found in gas tankless models with the condensing technology. As the tankless does not use the storage tank and water is heated while passing through the heat exchanger, there is no standby heat loss as found in the tank-type.

It saves on energy bills. According to the manufacturers, tankless can save up to 50% on heating costs. This translates to savings of several hundred dollars per year.

Small and compact. Tankless heaters are designed lightweight and compact. They are the size of a small suitcase, making them great for installation on the wall or inside the cabinets, indoors and outdoors.

No smelly water. There are no problems such as the rotten egg odor; sediment build up in the tank, discolored water, and leaking, which is typical in conventional heaters.

Advanced technology. Tankless water heaters are equipped with advanced electronics, allowing better monitoring, control, diagnostics, temperature accuracy, consistency, and overall comfort. The temperature control is more accurate, and the power can modulate for greater savings and comfort, so hot water is delivered at a constant temperature.

Smart. Some tankless can also use Wi-Fi technology for remote monitoring, diagnostics, and management, and Alexa voice control commands for added convenience. A great example is the Rinnai RUC98 (sold on Amazon.com).

Ultra-low gas emission. The low NOx gas burner and pre-mix combustion process ensure reduced gas emission. The advanced tankless models often meet the ultra-low NOx requirements.

Long-lasting. The tankless usually last longer, with a lifespan of over 20 years. Almost all components can be replaced, resulting in reduced waste.

Long warranty. The warranty is also longer. Most manufacturers provide a warranty of up to 15 years, while the tank type comes with a 6-10-year warranty.

Cons

Buying and installing a tankless will cost you more than the gas tank-type installation. Retrofitting will even increase the cost of installation, mainly when replacing the old tank-type with the tankless in older homes, where the upgrades are required.

While both tank and tankless can work in low and high demanding applications, the minimum hot water flow is required in tankless. So, if you need just a trickle of water, the unit won't turn on. Sometimes, you will have to wait a bit longer for hot water to reach the tap.

Frequent "cold water sandwich" or temperature fluctuation could affect comfort, as found in some models.

Tankless are more prone to freezing than tank-type, while tank-type models to sediment buildup.

Tank-type water heaters

Regular water heaters have been around for over 100 years. They use proven technology, provide more-less reliable operation, and are covered by the extensive service network.

In general, buy a standard water heater with a storage tank if there are only a few residents at home, and use already heated hot water in low demanding applications, and don't want to spend too much money.

How does it work

Tank-type water heaterTank-type water heater

Tank-type heaters use a gas burner (gas type) or heating elements (electric type) to heat water stored inside the tank. A thermostat controls both. They turn on only when the temperature of the stored water drops below the set temperature.

When the hot water tap is open, water is drawn from the top of the heater and replaced at the bottom with cold.

The heater uses the dip tube to deliver water, anode rod, and glass lining to protect the metal tank from corrosion, and safety elements, such as the TPR valve, to protect the unit from high pressure and temperature.

See in detail how gas water heaters work and how the electric works here.

Pros

Affordable. The greatest benefits of tank-type water heaters are low upfront costs, easy installation, and simple operation.

Variety of fuel sources. Tank-type water heaters can use various fuels; natural gas, propane, electricity, oil, or solar. Most models have low energy efficiency, while some, such Vertex or Polaris are ultra-efficient and condensing, heating water with an efficiency of up to 98%.

Flexible venting. Gas models offer several different venting options: atmospheric, direct vent, power vent, and power direct vent, giving you more flexibility. Also, some models do not require electricity to operate.

There is no minimum water flow required.

The tank type works well with recirculating systems.

Cons

Tank-type models, no matter do they come with 20 or 100 gallons, have limited capacities, so water will eventually run out. If the tank is undersized, hot water is depleted quickly. If the tank is too large and demand is low, the energy is wasted as the thermostat is trying to maintain the temperature of unneeded hot water. Also, if hot water is depleted fast during heavy use and the recovery rate is not high, there can be a delay in supply.

Due to their big and bulky design, tank-type cylinders require a designated room and a greater installation space. That is why they are usually located in a garage, basement, or utility room, sitting on the floor. They cannot be installed outside.

Tank-type heaters are prone to standby heat loss. With the lower energy efficiency, energy bills are higher as the water is heated and reheated at a pre-set temperature, regardless of your hot water needs.

Water is often not fresh and could often lead to rotten egg odor and sediment buildup issues.

Most of the models have a short warranty of six years (standard).

An average lifespan is between 10 and 15 years.

Note: Both gas tankless and tank-type heaters require an exhaust venting system and air intake to work correctly and safely.

If replacing a tank with the tankless heater, a gas line and venting system have to be changed most likely or upgraded to accommodate a new demanding unit.

Both tankless and tank-type water heaters come in various capacities to provide hot water from the single sink to the whole-house applications.

Hot water tank vs. tankless - Which is better?

If comparing the prices, traditional tank-type heaters are more affordable, no matter if it is electric or gas. The average cost of tankless units with the installation can easily reach several thousands of dollars, approximately twice as much as the storage tank type.

Yes, the tank-type models are cheaper, but the operational costs are higher because the energy efficiency is 60-65% on average, while the tankless, come with the efficiency ranging from 85% to 98%. As it can be seen, energy savings are substantial (30% on average). However, in an emergency, power outage, for example, hot water stored inside the tank-type unit, is still available for some time, while in tankless is not.

When calculating the overall costs of these two types, you should also consider the lifespan of the heaters. It is worth mentioning that the tankless life expectancy is approximately twice as long as the tank-type so that you would buy two tank-type heaters over a lifetime of one tankless unit.

Also, if the annual savings are, for example, $100 over 10 years, the tankless can save you close to $1000. This isn't even considering the 15-year warranty of the tankless, vs. 6 years of the tank-type, giving you even more savings.

It should also be added that almost all components in tankless are replaceable, so any malfunctioning element can be replaced, which is not the case with the tank type.

As you see, tankless water heaters, even with the higher up-front cost, are a better solution for demanding homes – they have higher energy savings, last longer, and can increase the home resale value. However, if you are on a budget and need a quick replacement, the conventional type might be a better solution for you.

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