Tankless vs. Tank Water Heaters: Which Is Better?

Tankless vs. tank water heater comparison – which is better? A million dollar question.

Are you looking to buy a new water heater but not sure whether to get a tankless or regular type with the storage tank?

Here, we will compare tankless vs. tank type  and examine differences, advantages, disadvantages, costs, and benefits, so you can make an informed decision and select the best water heater for your home.

There are several factors that will determine which water heater type and model to get, including your family size, costs, efficiency, water usage, reliability, durability, warranty, and other more or less essential elements.

Tankless vs. Tank Water Heaters: Key Differences

Comparing Purchase and Installation Costs

When considering tankless vs. tank water heater options, it’s important to weigh both initial costs and long-term savings.

Buying a tankless water heater will cost you more than a regular type, but tankless can save you more over the life because they last longer (over 20 years) and have a better warranty (15 years).

According to Home Depot, regular water heaters with a storage tank and powered by natural gas or propane can cost you between $900 and $1300, while the installation cost is between $1000 and $3000.

The purchase price of the tankless with installation and material can cost you between $2000 and $6000. This is also an estimation from homedepot.com.

An average price for a storage water tank is around $1000 or higher for condensing models. According to homeadvisor.com, the installation cost is from $800 to $1500, depending on how much your plumber charges, which can go from $45 to $150 per hour.

Gas tankless water heaters go from $600 for non-condensing to over $2000 for condensing models, while the average installation cost is around $2000.

Important: If you require professional assistance, contact a local water heater expert today!

How Tankless Water Heaters Work

Tankless water heaters are designed to heat water on demand. They don’t store water in a tank but heat water as it passes through the heat exchanger, using natural gas, propane, or electricity. With the tankless, you will heat only water you need, so water is always fresh, energy is used only when your turn on the tap, and there are no standby heat losses as found in the standard storage tank type.

How Tank Water Heaters Work

Tank-type water heaters are considered regular or traditional because they have been present in North American homes for over a hundred years, making them the industry standard. They are equipped with water storage tanks with capacities ranging from 30 to over 80 gallons when used as whole-house models.

Water is heated by using natural gas, propane, oil, solar, and electricity. As opposed to tankless, tank-type heaters heat water even if you don’t use it, maintaining the water temperature set on the heater’s .

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Discover the Key Benefits

Since a water heater can be a costly investment and as you will be living with one for many years, choose wisely. Here are some important factors to consider:

Energy Efficiency

Most tankless water heaters are energy-efficient and Energy Star approved, while only some are from the regular tank-type models. The efficiency goes from 0.82 for the non-condensing tankless to 0.96 for condensing models, where the best models such as Rinnai RUR199 and Takagi T-H3 can provide the highest savings and lowest emission.

Tankless heats water on demand, so there is no need to store water and heat. If you buy a model with a recirculation pump, such as any model from the Rinnai RUR series, hot water is available instantaneously, so no more waiting for a warm shower. And no more energy and water waste.

As hot water is heated on demand, it is supplied in a continuous flow with no interruption (as long as you have water, electricity, and gas). Sometimes, when other applications are running simultaneously, you might notice temperature fluctuation. Still, if you buy a tankless such as Rinnai or Takagi mentioned above, your comfort won’t be compromised, and you will be happy.

In addition, regular water heaters with the storage tanks such as AO Smith Vertex and Polaris are also ultra-efficient,  and thanks to the condensing technology, are capable of producing hot water with an efficiency of over 90%.

How Tankless Can Save You Money

Since most tankless water heaters have high energy factors, and as the condensing models use exhaust gases to preheat water and reduce energy loss, it is evident that tankless can save you money. Rinnai manufacturer states that savings are approximately 40% when compared to gas, or even more when compared to electric tank-type models.

As per Rinnai manufacturer, annual operating costs for one standard 50-gal tank-type heater are around $300 while for tankless around $200. In general, you could expect savings from 30-70%, depending on your usage habits and energy prices. Savings are even greater with households with larger families or higher demand. Additional savings such as government rebates are available to qualified tankless models.

According to energy.gov, tankless heaters can be 24% to 34% more efficient than the tank-type.

You can use this calculator to compare water heating costs for various systems.

Tankless Are Small, Saving You a Lot of Space

Tankless is small and lightweight, so they require less space. For example, Noritz NRCP1112 comes with a size of approximately 28” X18” X9” and weighs around 50 lbs.

This makes tankless easy to install on the wall, freeing up the space underneath the heater for other use.

In addition, gas tankless models can be installed indoors or outdoors and in any part of the house, giving you more installation flexibility.

At the same time, bulky and heavy tank water heaters usually come with the approximate size of 63” in height, 21” in diameter, and 140 lbs in weight, and that requires a dedicated room and some floor space for the installation.

They are meant for indoor installation only and mainly in the utility room or garage.

Tankless Is Modern, While Tank-Type Heaters Are Old-Fashioned

Tank water heaters are bulky and not attractive that deserve spots somewhere behind the door and in a designated room.

Tankless are modern, sleek, look nice, and can be installed even in the kitchen or a bathroom. At the same time, tankless is much more advanced. They have many sensors, a built-in computer, a user-friendly control panel, a remote controller, and advanced electronics for safe, reliable, and precise control. Tank-type heaters are mostly forgotten in our basements and utility rooms until something happens.

Tankless Last Longer and Have a Better Warranty

What would you rather pick; a 15-year or 6-year warranty, over 20 or 10 years lifetime?

Yes, tankless can last pretty long, and what is important is that you can replace any of its components.

According to Noritz manufacturer, nearly 3 of 4 tank-type water heaters fail due to tank bursting or leaking, which results in the unit replacement. If any tankless element leaks or breaks, that part can be easily replaced.

How to Select a Water Heater: Sizing Tips

Sizing a Tankless

Tankless water heaters are selected based on the water flow in gallons per minute (GPM). You need to determine the maximum number of devices you want to run.

Temperature rise is another important factor, and it depends on the temperature of the incoming groundwater and set temperature output.

The highest water flow I have seen on the residential tankless water heaters is around 11 GPM, found on Noritz.

It is important to understand that you cannot run out of hot water no matter the water flow or temperature rise with the tankless. The problem here is if you run more applications, the tankless might struggle to keep up with demand unless you install more units.

Sizing a Tank Water Heater

When selecting a tank-type water heater, see the first-hour rate or how many gallons of hot water one unit can supply per hour. Get a model that can produce enough hot water during the highest demand.

Recovery rate is also vital as it shows the amount of hot water your water heater can deliver in a given period of time or how fast it can heat water.

Keep in mind that even you choose the right capacity or even oversize the unit, your storage tank-type unit can run out of hot water.

Feature Highlights: Pros and Cons

Tankless

Pros

• Modern Technology: Tankless units use advanced technology for precise temperature control and efficient heating.
• Endless Hot Water: They provide an on-demand hot water supply, ensuring you never run out.
• Fresh Water: Since there’s no storage, you’ll always get fresh, clean water, free from the risk of contamination.
• High Efficiency: Tankless models are highly energy-efficient (85%-98%) as they heat water only when needed, cutting energy waste.
• Compact Size: Their small size saves space, making them ideal for homes with limited storage.
• Low Operating Costs: With better efficiency, they reduce operating costs over time.
• Self-Diagnostic: Many models include self-diagnostic features, simplifying troubleshooting without a technician.
• Lower Emissions: Tankless units produce fewer emissions, especially ultra-low gas-powered models, making them more eco-friendly.
• Rebates and Grants: Utility companies often offer rebates for energy-efficient units, lowering initial costs.
• Long Warranty: Tankless heaters typically come with warranties of 10 to 15 years, ensuring long-term protection.
• Durability: They can last over 20 years, almost double the lifespan of traditional tank heaters.

Cons:

• High Upfront Cost: Initial purchase and installation are more expensive than traditional tank heaters.
• Electricity Dependence: Many models require electricity to operate, so they won’t function during power outages unless backed up.

Tank-Type

Pros:

• Proven Technology: Tank-type water heaters rely on tried-and-true technology that has been used for decades.
• Constant Hot Water Supply: These units store a set amount of hot water, offering a continuous supply until the tank is emptied.
• Fresh Water: The water remains fresh in the tank until used, though prolonged storage may affect quality.
• Moderate Efficiency: Tank-type models offer decent energy efficiency (60%-65%), though not as high as tankless heaters.
• Variety of Sizes: Available in various sizes, these units can suit different space requirements.
• Affordable Initial Cost: Tank-type heaters are generally less expensive upfront compared to tankless models.
• Lower Operating Costs: While operating costs are higher than tankless units, they remain affordable for most households.
• Electric and Gas Options: Available in both electric and gas-powered versions to suit your home’s energy needs.
• Simple Maintenance: Their straightforward design makes them easy to maintain and repair.
• Rebates and Grants: Many utility companies offer rebates for energy-efficient tank models, reducing overall expenses.
• Reliable Warranty: Tank-type water heaters typically offer warranties ranging from 6 to 10 years.
• Durability: These units can last between 10-15 years with proper care and maintenance, offering long-term value.

Cons:

• Bulky Size: The storage tank requires considerable space, making it less ideal for homes with limited room.
• Limited Hot Water: Once the tank is depleted, it takes time to heat more water, which may be inconvenient during high demand.
• Higher Operating Costs: The lower efficiency results in higher operating costs compared to more efficient options like tankless models.
• Energy Waste: Tank-type units tend to waste energy as they maintain hot water in the tank at all times.
• Regular Maintenance: These units need regular maintenance, such as flushing the tank to remove sediment buildup.

When Tankless Is the Right Choice

• You have a large family or people staying often
• If you often run out of hot water
• Gas bills are too high
• If you have a smaller home where every inch of the floor space counts
• You are away from your home often
• If you prefer a greener choice

When Tank-Type Is the Right Choice

• You are on a budget
• If your household is not too big (demand is not too high)
• You are generally at home during the day and will be using hot water often
• You have a dedicated room for a water heater, such as the basement, utility room, or garage

Are Tankless Water Heaters Better Than a Tank-Type?

When choosing between tankless vs. tank water heaters, consider your needs and budget. Tank-type models are more affordable upfront, but their operational costs are higher due to lower energy efficiency (60-65%). Tankless units are more expensive initially but offer significantly better energy efficiency (85-98%) and long-term savings, with up to 30% lower energy costs.

Tankless water heaters also last about twice as long as tank-type models, meaning fewer replacements over time. Additionally, they come with a longer warranty (15 years vs. 6 years for tank-type units), and most components are replaceable, making repairs easier.

If you have a large family, high hot water demand, limited space, or plan to stay in your home for many years, a tankless unit is a great choice. It offers on-demand heating, an endless supply of hot water, and advanced control and diagnostics.

However, if you prefer a simple design, lower cost, proven technology, and reliable hot water regardless of flow rate, a traditional tank-type water heater may be the better option.