Tankless vs. Tank Water Heaters: Pros and Cons

Choosing the right water heater can be puzzling for many. Tankless water heaters outlive traditional ones by up to 30 years. Our article breaks down the pros and cons, helping you make an informed decision.

Dive in to discover more!

Definition and Working Principle of Tankless Water Heaters

Tankless water heaters, also known as on-demand or instant hot water heaters, revolutionise how we access hot water. Unlike traditional storage tank systems that constantly heat a large reservoir, tankless heaters operate by swiftly heating water only when needed.

This clever design eliminates standby heat loss, ensuring energy isn’t wasted in maintaining the temperature of stored water.

The heart of a tankless system lies in its heat exchanger. Water flows through this component and gets heated by electricity or natural gas to the desired temperature. When you turn on your dishwasher or shower, the device detects the demand for hot water and activates.

This ensures an efficient and rapid hot water delivery directly to your appliances or fixtures without waiting for a storage tank to warm up. This innovative approach allows households to enjoy endless hot showers while significantly reducing their energy consumption and utility bills.

Advantages and Disadvantages of Tankless Water Heaters

Tankless water heaters offer significant energy savings by heating water only when needed. However, their higher initial cost may deter some homeowners from switching.

Energy Efficiency

Energy efficiency stands out as a major advantage of tankless water heaters. These systems are 22 per cent more energy efficient than their traditional counterparts.

They achieve this by heating water only upon demand rather than constantly maintaining a large reservoir of hot water that may not be immediately needed. This approach significantly reduces the energy used, leading to considerable savings on monthly energy costs for homeowners.

Homeowners who switch to an on-demand water heater often notice reduced operating costs. By eliminating the need to keep water warm at all times, these units avoid the continuous energy consumption that plagues storage water heaters.

This helps with energy conservation and aligns with environmentally friendly practices by reducing the overall carbon footprint associated with heating water in homes.


Tankless water heaters boast an impressive lifespan, generally outliving their traditional counterparts. Owners can expect these units to serve for 20 to 30 years, a significant improvement over storage heaters.

This extended service life makes tankless options more appealing, especially when considering long-term hot water system solutions.

Proper maintenance plays a crucial role in achieving this lengthy lifespan. With regular care and checks, tankless water heating systems consistently provide on-demand hot water without frequent replacements or repairs.

Their durability contributes to cost savings and ensures households have uninterrupted access to hot water.

Upfront Costs

The initial purchase and installation costs of tankless water heaters present a significant investment compared to traditional tank models. Buyers often find that while the long-term savings on energy bills can be substantial, the immediate outlay for an on-demand system ranges significantly higher.

Specifically, where a standard storage tank heater might come at an installation cost close to $900, opting for a tankless variant could see expenses exceeding $3,000. This stark difference is partly due to the need for extensive modifications like upgrading natural gas lines or improving the exhaust system to accommodate the new unit.

Adding complexity, electric tankless water heaters require electrical upgrades and entail additional considerations such as ensuring sufficient capacity for simultaneous hot water demands in multiple locations – say, kitchen and bathroom.

Given these factors, it becomes clear why leaping to a more efficient but pricier option requires careful financial planning from homeowners. With efficiency gains acknowledged by sources like EnergySage and support from entities including the US Department of Energy highlighting long-term benefits, those upfront costs remain a pivotal deciding factor for many looking into their hot water systems upgrade options.

Understanding Traditional Tank Storage Water Heaters

Traditional tank storage water heaters store a large volume of hot water when needed. They commonly use natural gas or electricity to heat the water, which remains in an insulated tank until it is called upon for use.

This method focuses on readiness, ensuring that hot water is available at all times without the need to wait for heating.

These systems are less expensive upfront than their tankless counterparts, making them popular for many households. Components like thermostats and pilot lights maintain the temperature of the stored water.

Although they occupy more space due to their size, installation tends to be straightforward without the complex requirements sometimes seen with on-demand heaters. Regular maintenance and repairs can extend their lifespan significantly, providing families with reliable access to hot water over many years.

Pros and Cons of Storage Tank Water Heaters

Storage tank water heaters offer a familiar solution to many households, providing reliable hot water—however, their size and ongoing energy use present challenges for some homes.

Initial Costs

Tankless water heaters, often called on-demand or point-of-use systems, present higher upfront costs than their traditional storage tank counterparts. Purchasing the unit and covering installation expenses, including any necessary adjustments for gas lines or electric systems, can substantially increase initial outlays.

Costs can range from $800 to $1,500 more than you would pay for a conventional water heater setup.

Conversely, storage tank water heaters offer an affordable alternative at the outset. Their lower price tag makes them accessible for households looking to minimise immediate spending.

The difference in upfront investment is notable; opting for the traditional route saves money initially before considering long-term energy savings or lifespan benefits associated with tankless models.

Space Consumption

Storage tank water heaters take up considerable space, making them less suitable for homes with limited room. They often find their way into basements or furnace rooms where they stand tall and broad, holding large volumes of water.

This requirement for significant space can pose challenges in smaller living areas where every square foot counts.

On the other hand, tankless water heaters offer a compact solution, freeing up valuable space within the home. These on-demand models are small enough to be mounted on a wall, even in tight spaces like closets or under sinks.

Homeowners prioritising saving space might find gas tankless water heaters or their electric counterparts more appealing due to their minimalistic footprint.

Comparing Tankless and Tank Water Heaters: Which is Right for You?

Deciding between tankless and water heaters depends on your household’s hot water needs, space, and budget considerations. The following table summarises the essential differences to help you make an informed choice.


Feature Tankless Water Heaters Tank Water Heaters
Energy Efficiency More efficient due to no standby heat loss Less efficient with some standby heat loss
Lifespan Longer lifespan than tank models Shorter lifespan in comparison
Upfront Costs Higher initial costs Lower initial costs
Space Consumption Requires less space, ideal for smaller homes Needs significant space for installation
Operation Runs more efficiently without standby heat loss Can be expensive to operate due to standby heat loss
Installation Challenge Replacing a tank model with a tankless can be complex Easier to replace if already using a tank model
On-demand Hot Water Supplies hot water on demand, but may struggle with high demand Constant hot water supply, but efficiency drops with high usage
Efficiency for Low Use 24%–34% more efficient for homes using 41 gallons or less daily Less efficient for homes with low hot water use

What size of water heater do I need? [Sizing Your Water Heater: Comprehensive Guide](https://plumberpenang.com/sizing-your-water-heater-comprehensive-guide/)

Determining the correct size for your water heater is essential whether you choose a tankless or traditional storage tank model. Your decision depends largely on your hot water usage habits.

For those leaning towards on-demand water heaters, sizes vary significantly from compact 20-gallon models suitable for small flats to extensive systems of 80 gallons or more, adequate for large families with higher hot water demand.

Calculating the flow rate and tallying up the number of appliances and taps that require hot water help pinpoint the needed size for tankless units. Similarly, understanding these factors is crucial when opting for a storage-tank model by A.O.

Smith Corporation, Rheem, or any other brand renowned for reliability and efficiency in electric heating and natural gas options. The provided comprehensive guide offers detailed steps to make this calculation easier, ensuring you get a heater that meets your needs without excess wastage or shortage of hot water in peak times.


Choosing the right water heater depends on your specific needs and situation. Tankless models offer energy efficiency and longer service life but have higher initial costs. On the other hand, traditional tank heaters are more straightforward regarding upfront expenses and installation. Yet, they require more space and may cost more in the long run due to lower efficiency.

Consider your household’s hot water usage, available space, and budget before deciding. This choice significantly impacts both comfort and energy consumption in your home.


1. What is the main difference between tankless and tank water heaters?

Tankless water heaters heat water directly without using a storage tank, while traditional tank heaters store and keep the water hot with insulation until needed.

2. Can you save money by switching to a tankless water heater?

Despite the initial higher cost and possible reliance on non-renewable fuel like natural gas, the efficient burning process of a tankless system may reach a break-even point over time due to lower operating costs.

3. Do both types of water heaters come with warranty coverage?

Indeed, both types typically include a warranty. However, duration and what’s covered can vary and should be checked before purchase.

4. How do I know which water heater is better for home comfort?

Consider your home’s needs, such as how much hot water you use daily, including demands from appliances like washing machines, and whether sustainability or upfront costs are your priority since heat pump models offer an energy-saving alternative.

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